FBI to beef up global presence
By Jeff Linville -- Furniture Today, December 16, 2001
ST. LOUIS — Furniture Brands International says its pending purchase of three LifeStyle companies will strengthen FBI's overseas presence.
Early this month, Furniture Brands announced it was acquiring the assets of Henredon, Drexel Heritage and Maitland-Smith from LifeStyle Furnishings International for $275 million in cash and stock. Last week, the company revealed initiatives to make use of Maitland-Smith's Asian manufacturing, including a plant in Indonesia and a plant and foundry in the Philippines.
"The Maitland-Smith acquisition — in addition to providing us with another outstanding brand name and great product values — gives us significant leverage opportunities," said Mickey Holliman, FBI chairman, president and chief executive officer. "We plan to take full advantage of their contacts and expertise."
The Indonesia plant and warehouse have 131,000 square feet of space. In the Philippines, the plant and warehouse take up 354,000 square feet and the foundry, which makes decorative hardware, has 94,000 square feet.
"We have already addressed how we might leverage that company's accessory sourcing capabilities across not only Henredon and Drexel Heritage, but at the 150 existing Thomasville Home Furnishing Stores … and potentially some 700 Broyhill and Lane dedicated distribution dealers," Holliman said.
He called the foundry "particularly attractive." FBI will use it to provide metal components to several divisions including Broyhill, Lane, Thomasville, Henredon and Drexel Heritage. "Appropriate hardware is an important design element in furniture, but also represents a significant cost factor," he said.
In another overseas sourcing move, Furniture Brands said it is ramping up imports through its alliance with Hong Kong Teakwood Works, which is run by principals Paul Lin and Rick Bowman. FBI is absorbing virtually all of Hong Kong Teakwood's manufacturing capacity, a 600,000-square-foot plant in Taiwan and a 325,000-square-foot support facility in mainland China. Under an agreement, Hong Kong Teakwood will guarantee scheduling and production preference to Furniture Brands products.
Holliman said that just as it has realigned its customer base to focus on top retailers, the company wants to consolidate its 40 manufacturing partners to a select few.
"This is only the beginning of a process for us," he said. "These relationships will give us significantly greater control over quality and logistic issues, critical elements in Far East sourcing."
Meanwhile, Outlook International continues to grow in its role as FBI's "eyes and ears" in the Far East, he said. Owned by Ken Shanks and Mike Glover, Outlook has an exclusive relationship to coordinate and oversee the manufacturing of all Furniture Brands product made in China, Indonesia, Malaysia, The Philippines, Singapore, Taiwan and Thailand. Those responsibilities include all manufacturing, quality control and shipping logistics.
"Other manufacturers who seek to establish a presence in the Far East, and retailers seeking to buy direct, will find that quality control and logistic issues will outweigh any perceived cost advantage to be gained from offshore sourcing, absent the extensive infrastructure which Outlook represents for us," Holliman said.
He added that one reason the company needs additional import capacity is the planned growth of the Thomasville Home Furnishings stores. FBI is plans to open 100 more over the next four years.
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