Palliser spins off solid-wood unit
By Michael J. Knell -- Furniture Today, October 6, 2003
Winnipeg, Manitoba — Palliser Furniture, exiting the traditional solid-wood case goods business, has sold its DeFehr case goods division to a group of investors in the DeFehr family.
The group is lead by Irene Loewen and Frank DeFehr, siblings of Art DeFehr, president and chief executive officer of Palliser. The new company will be known as DeFehr Furniture Ltd.
Terms of the deal, which becomes effective Oct. 31, weren't disclosed.
Spinning off the DeFehr division, based at Palliser's headquarters here, is part of the company's previously announced strategic plan to become a resource for casual contemporary upholstery and case goods, made in North America or overseas.
"We are confident this will permit the DeFehr division to regain its traditional strength and competitive position in the marketplace," Art DeFehr said. "The ownership group has significant experience in this kind of manufacturing and will bring additional energy and experience into the business. It is my hope the new company will enjoy success.
"This makes sense for (Palliser) for two reasons," he continued. "It takes us out of the business which is the most difficult to compete in against China, and takes our focus away from having to be a hard-core manufacturer in North America. It allows us to put our energies into the global side of the business, where I'm the most comfortable."
The DeFehr division represented about 13% of Palliser's sales. Palliser had estimated 2002 sales of C$518.8 million, and should remain this country's largest producer of assembled household furniture, and No. 2 after ready-to-assemble powerhouse Dorel.
With its emphasis on traditional designs, solid-wood construction and by-the-item merchandising, the DeFehr division needs a different set of management skills and marketing focus, DeFehr said.
"In many ways, it was the part of the company that was the most challenging to run," he said. "We got to the point where it was either get out of that business or invest heavily in it."
He believes that his brother, Frank, and his team, which includes Frank's son Rick DeFehr, have the skills to lead the new company. "My brother and his son are very production oriented," he said. "They have the ability to make wood manufacturing work in Canada."
DeFehr Furniture will take possession of the DeFehr division's plant here. "Frank and his group will focus on becoming low-cost manufacturers," DeFehr said.
In the wake of the spinoff, Palliser has restructured. Its upholstery business will be segmented into three areas — stationary upholstery, motion upholstery and chairs — each headed by its own management team. "We will remain very strong in the leather business," DeFehr said.
The company will continue to have a strong laminate and veneer case goods offering through its Logic division, which in addition to youth and juvenile furniture offers master bedroom, dining room, wall systems, entertainment centers and home office. Almost all the line is manufactured in Winnipeg.
Palliser has retained its import division, whose line includes occasional groups and other case goods categories, including master bedroom and dining.
The company will remain firmly in the casual contemporary camp, which is very much the forte of EQ3, the dealer-owned store network and in-store gallery program that has seen significant growth in recent months, including the opening of stores in San Francisco and London, Ontario.
DeFehr Furniture will share space this market with Palliser in the latter's High Point showroom at 220 Elm, but will move into its own space in the building when it becomes available.
Retailers should notice no differences in service or delivery, DeFehr said.
