One year after reopening, Norwalk Furniture is rebuilding its business
Company had closed under former ownership
Gary Evans -- Furniture Today, October 23, 2009
NORWALK, Ohio - A year after reopening, upholstery manufacturer Norwalk Furniture seems well on its way to rebuilding the dealer confidence and relationships it lost when the company abruptly closed and left retailers stranded without merchandise to sell.
Though far from the powerhouse it was at its peak, with 1,200 employees and sales of $163 million in 2005, the new Norwalk has a positive balance sheet, limited debt and a growing work force.
Dan White, Norwalk's president, is hesitant to give sales figures, but told Business Week he expects to hit $25 million in sales by 2011.
"Let's just say that we started at zero a year ago and we have over 350 active accounts today with more coming on board every month," he said at the just-concluded High Point Market, where the company had a showroom. "Sales are growing and we're working overtime to keep up. We're posting profits."
Norwalk employs 150 people and plans to add more, White said.
It was gloomy day in Norwalk, Ohio, (pop. 16,637) when the former company couldn't meet the demands of its lender, Comerica, and closed last year.
But then 12 investors, including White, put together a last minute offer to purchase the 430,000-square-foot Norwalk factory, its work-in-progress, inventory and equipment for about $4 million - not including several million in working capital.
The deal was lightning fast and involved local people who didn't want to see the century-old company go down the drain.
"I was overseas at the time," said White, "and got a call on Monday night. I flew home on Tuesday morning, arriving in Norwalk Tuesday afternoon. From Tuesday afternoon until Friday morning of that week we assembled the 12 investing families, did our diligence, negotiated and closed the deal."
The new company didn't want the old retail network of 57 franchise or company-owned stores. Nor did it want other Norwalk facilities, including the Hickory Hill factory in North Carolina, whose dealer base and product niche didn't fit the new company's model.
Now, a year later, it appears that Norwalk has made amends with many in its large network of mostly independent dealers. "I think the proof that we've repaired those relationships is that, from Jan. 1, 2009 through now, we've opened 107 new accounts," said White.
When the former company stopped shipping, a number of companies with similar lines were happy to step in and take up the slack. And several of the former franchisees formed a cooperative buying and marketing brand called Luxe, and stocked from other vendors.
"Yes, we lost floor space," said White. "But we've been able to get the vast majority of that back and, in fact, we've expanded it quite a bit."
He said the old Norwalk "was a little bit schizo because it also had the franchise network. They would block off whole markets and not sell to independent retailers because they hoped some day in the future to have a franchise store there or a company-owned store."
White said the company has worked hard to restore the confidence of its retail network, it also to rebuild confidence from its employees as well as its suppliers.
One of his biggest surprises this past year was the disenfranchisement of the company's union, a United Steelworkers local that had represented workers since the 1970s.
"The people who worked here went through some very difficult times," White said. "I think the evidence we were successful in repairing those relationships is in the fact that our people, on their own initiative, voted the union out. That was a major hurdle."
Forums on Norwalk's daily newspaper, the Reflector, have changed from antagonistic and bitter toward the company to supportive. The culture of the workplace has changed and is more team-oriented and transparent, according to White.
"Folks from the shop floor all the way through management are empowered," he said. "We make decisions within teams and don't put the burden on any one person to make decisions."
Since several of the old company's suppliers were stung by the shutdown, the new company has gone out of its way to pay its suppliers promptly. White said the new Norwalk has a top rating from Lyon Credit Services.
In addition, the company no longer acts as a bank for dealers. Norwalk works with dealers as much as possible, but, "We have had accounts where they weren't paying their bills and we've had to shut the door on them," said White.
Since its rebirth, Norwalk has implemented efficiencies to reduce overhead - like purchasing a CNC router to make its own frames instead of having them shipped from North Carolina. Since he isn't privy to the old company's books, White isn't sure how much has been saved by the improvements but he suspects it is "millions."
Norwalk was always known as a quality manufacturer, and the company's quality has gotten even better, according to White. In next year's budget projections, the company is allowing for just 0.5% in warranty guarantees and damage returns, well below the industry standard of around 4%.
Before taking leadership at Norwalk, White was the founder of Geotrac of America, a company that specializes in flood zone research required by mortgage lenders. He sold Geotrac in 2004 and went into retirement. Tom Bleile, another investor in the company who sometimes serves as its spokesman, is co-owner of Saw Mill Creek Resort, a half-hour north on the shore of Lake Erie.
White said the investors don't have furniture experience, but are "all smart business people in their own right. They knew that this company, right out of the gate, needed to be well capitalized. We've come out with a strong balance sheet, no bank debt (the company has a $1.8 million loan from the state of Ohio and a $225,000 equipment loan from the town of Norwalk), and with a strong commitment to our community," he said. We've proven that over and over this year."
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