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Shermag moving to centralized line structure

By Michael J. Knell -- Furniture Today, February 20, 2005

Sherbrooke, Quebec — Full-line producer Shermag will abandon its divisional organization in favour of a more traditional line structure at the start of its fiscal year April 1.

President and CEO Jeff Casselman said the move will make Canada's third-largest furniture manufacturer more efficient and more customer-oriented.

To oversee the transformation, industry veteran Luc Quirion has been named vice president of restructuring, a new post.

Casselman said last year's labor disputes prompted Shermag to re-examine how it did business.

"The process will include a complete review of all operations and cost structures," he said. "Quirion is familiar with the industry and brings a strong background in finance, operations and general management."

Quirion has been president and chief operating officer of Quebec-based Bestar, the publicly held ready-to-assemble furniture maker.

Under the old structure, each Shermag division — HPL, Chanderic/Conant Ball, Scotstown, Nadeau and others — functioned independently in product development and marketing. The idea was to give each factory flexibility to address changes in the marketplace.

The new structure will centralize product development and marketing, allowing Shermag to exploit the strengths of all its factories in a common effort.

Casselman noted that one of its more successful collections, introduced last October, included a metal bed made in Asia with case pieces produced at more than one Quebec factory.

"We will create product management functions that don't exist today," he said. "The planning and marketing functions currently under divisional responsibility also will be consolidated.... These changes are expected to better align customer service and inventory control with customer demand, as well as improve the depth of market segment management."

Casselman said product vice presidents will be appointed in the coming months. Beyond that, Shermag's senior management team will consist of vice presidents with functional responsibilities in operations, finance, marketing, global sourcing, business development, human resources, manufacturing, sales, restructuring and customer service. While most of these posts already are filled, the search is on to fill the roster, he said.

In addition, Shermag will spend about C$1.5 million to build a new research and development center in Sherbrooke.

"One of the things we learned during the strikes was that we can develop and engineer product here and then have it made anywhere," Casselman said, adding the R&D center will ensure a flow of new product and speed the time to market for both domestic and Asian-produced introductions.

"We see time-to-market and execution of design as critical factors," he said.

The center is expected to be completed before the end of April. Its priorities will be set by the marketing group and its operations managed by the manufacturing group.

"The company remains focused on achieving speed, innovation and flexibility in new product development in order to provide a wide range of furniture that offers consumers choice and a response to their lifestyle tastes," Casselman said, adding it amounts to a move from mass production to a more cellular approach.

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Shermag moving to centralized line structure

Feb 20, 2005

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