STI: Mill's makeover spurs 500% growth in 5 yrs.
By Susan M. Andrews -- Furniture Today, April 12, 2004
KINGS MOUNTAIN, N.C. — STI recently completed an $8 million, 60,000-square-foot expansion, the mill's fourth in less than five years, most of which were funded largely from operating income.
All but dead in the water five years ago when it was shipping about 15,000 yards of dobby fabric a week, STI has increased its business by 500% since then, weaving and shipping an average of 300,000 yards of preordered woven upholstery fabric every week from its 250,000-square-foot mill here.
Revenues this year are projected to be more than $50 million, up from an estimated $9 million five years ago.
So dramatic has been STI's turnaround, especially in the face of daunting economic conditions and foreign competition, that some in the industry say they think the company is an importer masquerading as a U.S. mill, or that it can't possibly be making money at prices that are in line with the imports.
Neither is true. But the story of the company's turnaround sounds almost like fiction, with enough gutsy moves to evoke images of Indiana Jones teetering at the edge of a cliff with nothing to do but jump.
In the late 1990s, price competition was increasingly brutal for U.S. producers of middle to upper-end residential upholstery fabric, the segment where STI squarely sat.
In 1999, the company made a bold decision to remain a U.S. producer and change its focus from what it was then making to what it believed the market wanted — mid-market looks at promotional prices.
"We were making product for the high-end, low-volume segment," said John Kay, vice president of product development and marketing, "and we decided to make product for the high-volume, value-oriented promotional segment of the market."
Shifting its price points to $2.50 to $3.75 — half its previous price per yard — STI spent a year and a half selling its fabrics below cost while waiting for volume to "catch up" with its projected cost structure and produce a profit.
STI invested in weaving machines and finishing equipment to improve softness and backcoatings even before the business was there. Thus, when volume grew, customers didn't have to endure even a hiccup in the flow of goods.
Having such equipment in place early has helped STI develop strong ties with big players like Rooms To Go and its upholstery suppliers.
STI has what may be the largest installation in North America of high-speed electronic double-wide Dornier weaving machines. It also has finishing machines such as a recently installed softening machine, two high-speed Asselin needle looms and tentering and backcoating equipment that can run 70 yards of fabric per minute.
The challenge of offering more value for less money "is all about efficiency, so that's where we stay focused," said Sean Gibbons, vice president of sales and marketing.
Like many of its competitors, STI considered moving its production offshore, he said, but customers were happy to have STI's value, quality and delivery from a U.S. source because of the flexibility inherent in domestic production.
"We're very close to our customers and can adjust quickly," said Jim Brown, STI's president
The latest chapter includes the successful launch of a flat-woven jacquard line to round out offerings.
"We've changed the rules on what you can get for the price," said John Kay, vice president of product development and marketing manager. "We were one-dimensional six months ago. Now we offer a complete package of jacquards and dobby base cloths."
