Orman Grubb files for Chapter 11
By Tom Edmonds -- Furniture Today, April 12, 2004
ANAHEIM, Calif. — Wood furniture producer and importer Orman Grubb Co. has filed for Chapter 11 bankruptcy court protection to escape a lease obligation that would have choked off the company's cash flow, according to its president.
Having recently restructured to move to more imports and less U.S. production in the company's key categories of entertainment and office furniture, President Jeff Grubb said he had to make the difficult decision to reorganize through the bankruptcy court because the lease on a 250,000-square-foot building was more than the company could support.
The 26-year-old company has moved its U.S. production back to the 140,000-square-foot Anaheim building where it was based prior to moving to the larger site. It is leasing a warehouse in nearby Ontario.
Grubb said the continued weakness in the company's main specialty, home office, has contributed to sales declines that were made worse by the emergence of imports. Over the past several years, he said, the company has allowed its production staff to diminish through attrition to about 250.
Grubb said company assets and liabilities were about equal at about $10 million each.
Orman Grubb has retooled its domestic production to hit lower retails, and is sourcing from abroad for its established stepup collections. On the domestic line, the company hit lower retails partly by replacing oak veneers on backs and sides with paper laminates. Tops and fronts are still made from solids and veneers.
For stepup designs, Grubb has begun to import parts that are assembled, stocked and shipped from the Orman Grubb facility in Southern California. That move allowed the company to drop prices on existing collections such as Avenue, Victory and Century.
"Those are big, powerful engines now, and with the drop in price, we'll be able to support greater sales gains," Grubb said.
Prices per piece were reduced at least 10% and some by 20%, he said. The merchandising changes were implemented at the San Francisco market in January and were well received by buyers, he said.
"We are in China," Grubb said. "We have five staff people over there, and we are working with Chinese suppliers to bring more value back to our customers."
He said he expects the company will emerge from Chapter 11 near the end of this year.
"I may not be the smartest guy in the world, but I do know that you have to adjust in a changing world, even if it's unpleasant and nasty," he said.
