FBI closing more plants
1,200 jobs at Thomasville, Broyhill to vanish
By Jeff Linville -- Furniture Today, June 27, 2005
St. Louis — Citing rising imports and soft sales, Furniture Brands International said last week it will close and consolidate some U.S. plants, eliminating more than 1,200 jobs.
Half the losses will be at Thomasville Furniture Inds., which is reducing its domestic case goods production. The rest are at Broyhill, which will shutter two case goods plants and convert an upholstery plant to a distribution center for imported case goods.
"The continued advancement in the capabilities of our offshore resources has made it very difficult for us to compete with domestically produced product," said Tom Tilley, Thomasville president and CEO. "We must be cognizant of the need to provide the consumer with not only the designs they desire for their homes, but also at a price they can afford and which is competitive in the marketplace."
For Broyhill, "The plant closings are a result of the changing dynamics of the furniture industry today that include major dealer bankruptcies, overall softness in home furnishings demand and the impact of imports," said Tom Lentz, vice president of marketing and advertising.
Mickey Holliman, Furniture Brands International's chairman and CEO, said the moves will help the corporation "gain greater efficiencies in our domestic facilities. Consolidation of our manufacturing into fewer facilities will improve capacity utilization, and it will help with absorption of fixed costs. All of these initiatives are for the purpose of improving our margins and delivering greater value to our shareholders and to our consumers."
Thomasville will close Plant A in Thomasville, N.C., by November, and also six support facilities, including a veneer face plant and lumber processing operations. The company also is moving a leather-cutting operation in Hickory, N.C., to its factory in Conover, N.C., a move that cuts 20 jobs.
Broyhill is closing the Harper bedroom plant and the Occasional 1 case goods plant, both in Lenoir, N.C. Production will cease in August, while shipping and some departments will work until November to clear out inventory. Most of the 770 jobs will be cut, but 285 positions will be added to the nearby Pacemaker plant to handle the shifted production.
Broyhill's Upholstery Plant 68 is only five years old and won't be shut down. Rather, the 434,000-square-foot plant in Rutherfordton, N.C., will be converted to warehouse and distribution space beginning in August. Production will be shifted to Plant 3 in Lenoir and Plant 5 in Taylorsville, N.C. Some 80 jobs will be added to handle production, but 240 workers will be cut from the converted plant.
Holliman said, "The conversion of the Rutherfordton facility ... will improve our logistic efforts, and in addition will enhance our efficiencies as a result of consolidating three upholstery plants into two."
While lamenting the loss of the 1,200 jobs, Furniture Brands noted that it was only 8% of its U.S. workforce and that it will still employ 14,500.
When the economy began to soften in summer 2000, Thomasville employed about 7,000 workers; after November it will have about 3,500. In the past five years, FBI divisions Thomasville, Broyhill and Lane have each cut more than 1,000 jobs.
Throughout Furniture Brands — which includes Thomasville, Broyhill, Lane, Henredon, Drexel Heritage, Founders, Vignettes, Laneventure, Hickory Chair, Action Inds., Creative Interiors and Maitland-Smith — about 36% of sales in the first quarter of 2005 came from imports, according to Lynn Chipperfield, FBI senior vice president and chief administrative officer.
By the end of the year, he estimates that will reach 40%.
The ongoing shift has caused a culture shock in the corporation, Holliman told securities analysts at a presentation in New York last Thursday. Three and a half years ago, Furniture Brands had 60 U.S. factories, and since then has closed 21 case goods plants and six upholstery plants.
Holliman said 8,000 people have lost their jobs, and the toll on the affected communities is immeasurable.
"But we haven't closed plants fast enough," said Denise Ramos, FBI's chief financial officer, treasurer and senior vice president. U.S. plants have been working at less than 80% capacity, which has significantly hurt profit margins, she said.
Holliman agreed, and said it's hard to be nimble with such a large company. The shift can occur only as fast as the company's infrastructure and its sources' capacity will allow, he said.
Total U.S. furniture imports rose 15% in 2004 to $18.4 billion.
A Thomasville executive said imports will make up 75% of its case goods by the end of the year. Wood furniture accounts for 70% of the brand's sales and upholstery 30%.
The U.S. case goods come from four plants: one in Thomasville, one in Lenoir and two in Virginia. The company also has four upholstery plants in the Hickory/Conover area of North Carolina, plus a cutting plant and a frame operation.
While Thomasville's bedroom production is moving overseas, Chipperfield said Broyhill's moves are more about shifting the U.S. work around, not necessarily adding more imports.
Because Thomasville and Broyhill have used many small to medium facilities over the years, there was more consolidation needed than in some other FBI divisions, he said.
Henredon and Drexel Heritage have only closed one plant apiece, but they were basically using just two plants each, Chipperfield said.
While Lane had a 1,000-employee layoff in 2001 as it closed its U.S. case goods operations, its strong Tupelo, Miss.-based upholstery division has been less affected by imports, he said.
FBI is having success with cut-and-sew operations overseas and will continue to grow this, said Holliman.
But with both upholstery and case goods, import growth can't be allowed to threaten quality and a company's ability to provide service, he said, adding that the consumer is unforgiving when quality is bad.
