Sigla establishes new sourcing in Vietnam
By Thomas Russell -- Furniture Today, June 22, 2009
Los Angeles — Accent chair specialist Sigla Furniture has adopted a new sourcing strategy after ending a three-year effort to run its own factory in China.
The company has shifted much of its production to two factories in the Ho Chi Minh City area of Vietnam and also has increased the use of its Los Angeles factory, which mostly finishes and upholsters imported whitewood frames.
In addition, the Los Angeles facility produces samples of finished goods, which the company shows at the High Point Market.
The changes have occurred in the wake of a decision last year by President and CEO Ben Bakian to close his factory in Dongguan, China. Bakian said the 200-worker factory operated for three years.
At its peak, he estimated that it produced up to 15 containers a month, or $375,000 a month in finished goods.
Bakian said he closed the factory in March 2008 due to issues involving his workers. He said he had learned that the factory workers were getting kickbacks from suppliers after charging him artificially high prices for raw materials.
"They were invoicing me at higher prices and someone was getting the difference," he said.
He also said that workers were providing chair samples to other area factories to produce.
"If I cannot trust my own people, how can I do business?" he said.
Bakian said he ran into further problems after selling his plant's machinery to another local producer. He said the producer agreed to store the equipment and remaining inventory including some 4,400 chair frames, along with his inventory of fabric and leather.
Bakian said he was supposed to have collected the inventory — valued at $1 million — at a later date. But when he tried to do that, the principals involved allegedly claimed it for themselves, arguing that they had not received a fair price on the machinery.
In the past few months, Bakian said he has seen knockoff chairs marketed as Sigla products at a few stores. He said he has alerted his customers to the problem and told them that the products are fakes and that he is willing to match prices on the real Sigla product.
Looking back, Bakian said he had grown tired of the deceptive business practices of his former Chinese associates.
"I wanted to bring production back to the States because I was frustrated and tired," he said.
"You cannot trust your own people."
Today, his Los Angeles operation accounts for roughly 50% of his volume and employs 50 people. That's up from 20 when the Chinese factory handled 90% of his production.
He also said he is comfortable with the two factories he is dealing with in Vietnam, noting that he has done business with them for as long as 10 years.
"We are back on our feet and have our production going," he said.
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