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Lane pulls plug in Virginia, aims to grow import lines

By Gary Evans -- Furniture Today, October 7, 2001

Now a marketing company

Altavista, Va. — At the Lane plants here, the last lathe has turned and the paint booth compressors have been turned off. As production winds down, The Lane Co. is doing what a lot of wood producers already have done — pulling the plug on domestic manufacturing and becoming a marketer.

The remaking of Lane, with the closing of factories here and in nearby Rocky Mount and the moving of office and distribution operations to the company's upholstery center in Mississippi, is a big step the company hopes will be only marginally disruptive to its longstanding customers.

The payoff? "Good values — the best we've ever had," said Tom Foy, president and chief executive officer.

The company naturally is a bit concerned about the glitches that could occur as it moves wood production offshore. The mantra at company headquarters in Mississippi seems to be, "We hope our customers will bear with us."

"We have a build-up of inventory in Virginia to keep serving our dealers," said Foy. "Some product is already flowing out of China and we hope we have a seamless (transition). But there's going to be a miss somewhere."

With all that's going on, change is the byword at Lane, with $750 million in annual sales and some 4,000 employees on its payroll. Instead of two companies — Lane making case goods and Action Lane making upholstered products — there is now one Lane, with everything under one umbrella at headquarters in Tupelo, Miss.

The sales staffs in most instances have been merged. All operations have been moved to Tupelo, where the company will be able to take full advantage of one of the industry's largest transportation fleets — 153 tractors and 405 trailers.

And next April, visitors to the company's showrooms on the eighth floor of the International Home Furnishings Center will find a merged presentation of upholstery and case goods. In addition, the company is working on a branding program to unify the two divisions' separate identities.

A 500,000-square-foot distribution center is under construction near Tupelo, expected to be ready early next year to receive goods from Asia, South America and Europe. The management team has been centralized in Tupelo, drawing from the strength of the upholstery division, a whiz-bang manufacturing organization that turns out 9,000 pieces a day.

Foy is the former president and CEO of the Action division. Randy Spak is executive vice president of sales and marketing, Roger Bland is executive vice president of operations, W.G. "Skip" Holliman is vice president of marketing, and John Moody is vice president of sales. All come from what was the company's Action division.

Jerry Ruff, former president of the Virginia case goods operations, who was to be president of Lane International, has left the company, as has another long-time case goods executive, Lee Booth.

Now a marketing company

The move to Mississippi, company executives said, makes good sense. Unlike Action's production facilities, which have been continuously modernized, Lane's four Virginia factories were antiquated and were having a hard time turning a profit.

Parent company Furniture Brands International previously had closed two Virginia plants and, according to Foy, told Lane case goods it would become a marketing company if significant improvements weren't forthcoming. When profitability didn't materialize, the 90-year-old operation, which began by making cedar chests to hold young girls' dreams and old women's memories, came to an end.

Now Lane, which already was importing half its wood offerings, is moving all production offshore. Product quality will be monitored by Outlook International, Furniture Brands' import affiliate, which has 80 people in China. The company will have a quality control person in each plant with which it does business, and will maintain testing labs (see map at right).

"The No.1 problem over there is moisture," said Foy. "Sometimes storage is a tarpaulin in the parking lot."

Goods from Asia will be warehoused in South China for container shipment to Mississippi — or directly to larger customers. The goal is to mix and match product in China, perhaps even combining shipments with sister company Broyhill. The mix-and-match approach also will be taken in Mississippi, where case goods and upholstery would be delivered to a customer in the same truck.

"We want to deliver (product) when our customers want it," Foy said, "not whenever the cutting schedule says."

Lane's upholstery business is "fairly mature," he said, adding, "Our growth will be in case goods. Our goal is to double the size of our wood business in three years. That's very doable in my mind."

Part of the strategy is to expand the cedar chest business and broaden offerings in youth bedroom and entertainment. In addition, the company wants to extend its reach to large dealers who can give it container-load volume.

For growth in upholstery, Lane will launch its first collection of stationary upholstery next April. Foy said it's too early to discuss details, but the line will be in the "moderate to upper-moderate" price points and will be shown to dealers beforehand to make sure it passes muster.

Making salable product is paramount for the "new" Lane, and overall production goals can be summed up in Foy's comments about the new upholstery line: "We've got to do it in large quantities."

Lane has hired Britt Beemer's American Research Group to study consumer wants, so the manufacturer can tailor products accordingly. Foy noted that half the country's adult population is female, potential customers for a recliner, but most "don't like it, don't want to talk about it, and don't want it in their home. We want to make sure that (product) will sell."

The new Lane

Merging its upholstery and case goods divisions, Lane is:

Restructuring management
Merging sales teams
Combining showrooms
Expanding its wood business
Adding stationary upholstery
Solidifying its brand
Researching consumer needs to develop products that sell

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Foy

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