Mastercraft of Omaha reborn

Brothers meld two mfrs. into state-of-the-art plant

Gary Evans, June 9, 2003

When 75-year-old upholstery maker Mastercraft of Omaha announced it was going out of business a year ago, the Nadler brothers saw nothing but opportunity.

While the Nebraska-based manufacturer's upper-priced seating seemed a little behind the times, the company had a good name in the industry and was respected as a producer of traditional lines for a regional market.

The base of business was there, but the company's former owners, Mike and Rick Katzman, found their 130,000-square-foot Omaha factory in the path of urban redevelopment and told their dealers they were hanging it up.

Barry and Jamie Nadler, principals in the Ames, Iowa, investment firm Nadler Bros., had earlier acquired Heritage, a mid-priced upholstery producer, which included a contemporary upholstery line called Sabata with Crate & Barrel-type looks. Acquiring Mastercraft would give them entry into a new price range.

"We looked at Mastercraft and decided to try our hand at it," said Barry Nadler, a former trial attorney of 20 years and now Mastercraft's president. "We're a company that acquires companies and tries to consolidate their facilities and use synergies of scale to make them work."

Operations at Mastercraft's Omaha plant and Heritage's Eldora, Iowa, plant were combined in a new 66,000-square-foot, $2 million facility in Council Bluffs, just across the river from Omaha, and Heritage became a collection of seating within Mastercraft.

Nadler said Mastercraft was able to halve the manufacturing space it required because the old Omaha plant was inefficient. "There was a tremendous amount of what you would call 'travel time' in the factory," he said.

With the help of Iowa State University in Ames, Mastercraft executives used computer modeling to virtually move the equipment around and track travel patterns to determine the most effective ways to run the factory.

"We were able to design, finance and construct it in five months and move in, which I think is nothing short of amazing," Nadler said.

Heritage upholstery starts at $799 retail and moves into Mastercraft's $999-and-up retail price points, "so we have broadened the base," said Nadler. The line is now "broad enough to succeed. When you're a small regional company, you can compete when you have that depth," he said.

With updated designs and 80% to 90% of its fabric changed, Mastercraft started shipping in January to an account base that Nadler described as "nicer independents, maybe one to three stores ... companies that actually have salesmen who can sell the merchandise based on the quality, who actually know it."

The company serves the Midwest, stretching from North Dakota to northern Texas. It has been showing at regional markets. "We seriously are thinking about Las Vegas when it gets up and going," Nadler said.

The company employs about 50 people, including all the former Omaha plant employees, and expects to add another 100 to 150 in the next two years. Doug Perentis, former owner of Heritage, is now director of marketing and design for Mastercraft.

"We're continuing to go through the 'lean' manufacturing process to improve our efficiencies and quality control procedures. We're running fairly efficiently now but we have a long ways to go to get where we want to be," Nadler said.

The lean manufacturing process includes such steps as just-in-time delivery of raw materials and a focus on reducing waste. New procedures and technology in the plant have allowed employees to triple production, he said.

Nadler won't divulge the company's annual sales, but expects them to double this year. He said Mastercraft is focused on expanding its dealer base of about 300 accounts with aggressive prices that, despite increases in the cost of raw materials, haven't been raised in 18 months. That may weaken margins, but Nadler is counting on improved efficiencies to keep them high enough and doesn't want to do anything to stymie sales.

"Nobody knows us from a hole in the ground," he said. "We've got to prove ourselves."

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