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Ekornes to Stress Consistency with N.C. Plant

Gary Evans -- Furniture Today, September 8, 2011

SOMERSET, N.J. - If consistency is what retailers want, then contemporary seating company Ekornes wants to provide it.
     That's why the Scandinavian manufacturer recently said it would open a plant in Morganton, N.C., to assemble its Stressless brand of sofas, another step in a planned process to make sure retailers carrying the company's high-end line get fast and consistent delivery and are never faced with surprises, according to Peter Bjerregaard, president of Ekornes Inc., the North American arm of Ekornes ASA (worldwide).
     Each Feb. 1, the company lays out a catalog of everything it plans to do for the year. The plan includes new product, promotions, incentives for retail salespeople, and prices for product that will be in effect until the company issues a new list 12 months later.
     Dealers also know at that time what new product will be available. The company might make some introductions in April, but usually not many.
     For retailers sick of price increases, the price promise may be the most important factor of all, company officials say. The company guarantees that pricing will remain unchanged for the year. If transportation or raw material costs rise, the company will absorb them, according to Bjerregaard.
     The plan clearly appeals to customers of publicly traded Ekornes, which is having its best year ever with a growth rate of 18% over 2010. Twenty-three percent, or $86 million, of last year's global sales for Ekornes were in North America.
     The company stocks 80% of its Stressless chairs, which are made in Norway, at its 90,000-square-foot warehouse in Somerset, N.J., so it can be consistent with delivery, putting product at the retailer's door in 10 days. However, the warehouse doesn't stock as many Stressless sofas, with 70% coming from the Norway factory and delivery running as long as 14 weeks.
     Bjerregaard said the company commissioned a study to see how long consumers would wait before turning elsewhere for faster service.
     "It turned out to be eight weeks," he said, and added, "The only solution was to have some kind of product locally."
     Ekornes decided to lease a shell of a factory in North Carolina to assemble sofas. Frames with cold-cured foam will be shipped from the highly automated Norway factory, with everything else - cutting, sewing, etc. - done in Morganton. Renovation of the factory should take three or four months and is expected to begin immediately, officials said.
     Hendrick Construction of Charlotte, N.C., announced it had won the contract to renovate the 100,000-square-foot Morganton building for manufacturing.
     To ensure consistency, the sofas initially will be shipped to New Jersey for delivery. Eventually, they will be shipped directly from North Carolina.
     Bjerregaard said the company looked at sites in several locations, but decided on North Carolina because of government incentives and the availability of skilled workers.

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