FBI division asks suppliers for 7% cut
By Susan M. Andrews -- Furniture Today, July 4, 2005
High Point — HDM Furniture Inds., the new operating unit of Furniture Brands International formed by the consolidation of Henredon, Drexel Heritage and Maitland-Smith, is asking its suppliers for a permanent 7% cost reduction.
Furniture/Today received a copy of a memo containing the request, dated June 1 and addressed to "Dear Valued Supplier." Several suppliers confirmed they had received the memo, signed by Tom Mangum, senior vice president, wood manufacturing of HDM; Thad Monroe, senior vice president, upholstery manufacturing; and Bryan Milleson, executive vice president and chief financial officer.
Milleson said the company would not comment on the memo. Neither Jeff Young, head of HDM, nor Lynn Chipperfield, corporate spokesman for Furniture Brands, returned calls from Furniture/Today.
The memo said in part: "As you are well aware, this is a very challenging time for our industry's domestic manufacturing operations and we need your help in order to lower our cost to the consumer. Accordingly, we are requesting a permanent 7% reduction for all materials that HDM purchases from your company, to be effective 7/1/05. Your HDM purchasing agent will contact you as a follow-up to this letter."
Ty Pruitt, Greensboro division manager for veneer supplier Interforest, confirmed that he had received the HDM request for lower prices, but said last week that there have been no further discussions.
"We were supposed to be contacted by individual purchasers, but haven't heard from them yet," he said.
Pruitt said it was too early to comment on Interforest's reaction to the proposal.
"We'll have to go on a case-by-case basis," he said.
The president of one American fabric mill said his company would refuse the request, calling it "outrageous" and "an arrogant approach to vendor relations." An upper-level executive at another major mill called the request "ridiculous. Of course we won't do it." Both executives asked not to be identified.
Another supplier, also requesting anonymity, acknowledged receiving the memo and said, "Let me put it this way, we ain't doing it."
Mickey Holliman, chairman and CEO of Furniture Brands International, said in a statement last month that the consolidation of the back-office operations of Henredon, Drexel Heritage and Maitland-Smith into HDM "demonstrates our commitment to get our operating expenses under control and to gain the leverage of our size."
Case Goods Editor Powell Slaughter contributed to this story.
