Durham eyes rebound
By Michael J. Knell -- Furniture Today, August 28, 2005
Durham, Ontario — Keith McSpurren, recently named CEO of Durham Furniture, has been charged with leading a turnaround at the solid-wood producer, not long ago a shining star of Canadian furniture manufacturing.
He's not a furniture industry veteran, and he's been on the job for only a few months, but the initial strategic moves already have been made. They include the mothballing of the new state-of-the-art Plant No. 3 in nearby Chesley, the exiting of the dining room category, and the conversion of all production to a lean manufacturing system.
Like other Canadian manufacturers, Durham has been hard hit by the softening retail environment on both sides of the border, the rising tide of imports from Asia and, most critically, the drastic weakening of the U.S. dollar, which has stripped away the price advantages it once enjoyed in a market that accounts for 78% of its volume.
That triple whammy led to an 11.4% sales drop last year to C$75.3 million from C$84.7 million in 2003.
McSpurren takes over as CEO from John Scarsella, who retired as Durham's president and CEO earlier this year. Scarsella remains on Durham's board and is involved in marketing and product development.
Prior to being elected CEO, McSpurren sat on the board as a representative of Flagstone Capital, a private equity fund with a stake in the company. He founded Flagstone after launching and then selling his own software development company. Before that, he was a brand management/marketing specialist for consumer goods giant Proctor & Gamble.
McSpurren said his mandate is to transform Durham from the entrepreneurial company it was under Scarsella, and before that the late Orville Mead, into a stable, mature company. Mead took Durham from bankruptcy in 1992 and transformed it into a fast-growing success story.
"Durham's issues are textbook, not unique, because after a while growth always flattens out," McSpurren said. "Durham is in a turnaround situation. We are transitioning from an entrepreneurial company to a large, stable, growing company. We have to stabilize the company, stop the bleeding and get it into rehabilitation. Our growth will be re-ignited in a very positive, responsible way."
The shift to lean manufacturing will make Durham more responsive to changing customer needs, McSpurren said. "Sales have been the biggest bottleneck in our factory. The biggest problem we must overcome is to stop running out of things that we're still selling," he said.
At one time, Durham had backlogs of 26 weeks or even longer because every cutting would be devoted to maximizing the production of a single collection. It wasn't unusual for 5,000 pieces to be produced in one cutting. "We didn't worry about when it was sold because it was always sold," McSpurren said.
But that's changed over the past couple of years. Under the new system, runs will be reduced to between 1,000 and 1,200 pieces, meaning more collections will be built more often.
"Lean means a lot of different things to different people, but its basic principles are to deliver higher levels of service to your customers while decreasing the resources needed to accomplish that goal," McSpurren said, adding that by shortening runs, Durham should be able to ship product more on an as-ordered basis while reducing both finished goods and work-in-progress inventories.
"We're going to be doing a much better job of matching up what we make with what we sell," he said.
Shifting to this new system won't be painless. Plant No. l in Durham is in the midst of a five-week shutdown to clear out existing inventory and prepare for lean production. Plant No. 2 in Chesley is already on the system and so far has completed three shorter runs. When it reopens sometime in late 2006, Plant No. 3 also will be on the system.
"What started as a simple examination of our customer needs developed into something much more valuable to our company," said Steve Wilson, president of Durham USA. "The move to lean allows us to be more responsive and supports a new product development schedule by significantly reducing our lead times. The impact has been immediate, with two brand new suites being moved up from a November ship date to our early September schedule."
Exiting dining room wasn't a tough decision. "Our dining room initiative wasn't hitting all the marks that we were expecting it to," McSpurren said. "We have tremendous opportunities in bedroom. I don't think Durham will top out any time soon by concentrating on bedroom."
One thing that won't change is Durham's longtime commitment to selective distribution. "We need to increase our geographic reach throughout the United States," he said. "Our ratio of U.S. to Canadian sales is three to one, while population would dictate the ratio should be seven to one."
This reaching out will be coupled with a renewed focus on product development. "People in Asia have been knocking off our designs," McSpurren said. "We have a lot of collections that have outlasted what would be considered a normal lifecycle. We need to refresh our product and not let our maturing collections die a slow, painful death while we're watching."
Durham is known as a traditional style house with only one marginally contemporary collection in its portfolio. Product development will focus on bringing out new styles while renewing traditional offerings. At least two new bedroom collections will be launched at October's High Point market.
-
Case goods sources focus on what works
Apr 28, 2011 -
Home Meridian hires Rayle, reassigns 2 execs
Apr 14, 2012 -
Ide in new VP post at Fairfax Home
Dec 13, 2011
VIEW ALL GALLERIES
