Lincolnton explores options
Thomas Russell -- Furniture Today, January 14, 2013
LINCOLNTON, N.C. - Case goods manufacturer Lincolnton Furniture is looking at ways to reopen its plant here, including a possible sale of its operations and assets.
The company, which suddenly closed its doors in early January due to lack of capital, has hired Charlotte, N.C.-based merger and acquisition specialist Stump & Co. to explore its options.
Lincolnton Furniture formed in late 2011 and began producing solid wood bedroom and dining room furniture last year. It gained attention in newspapers around the country due to the interest in bringing jobs back to the U.S., and because it's very rare for an American case goods plant to reopen.
Company CEO Bruce Cochrane told Furniture/Today last week that the company has excellent equipment and production processes, including an eco-friendly water based finishing system.
"We had a great facility and a great process, and I think it is the footprint of furniture manufacturing," Cochrane said. "We have had people who are interested and who have visited the facility. My hope is that we will be able to continue with the Lincolnton Furniture line and have the opportunity to consider some of the significant OEM opportunities that are out there."
He said he believes those opportunities are there because of the challenges involved in sourcing in Asia, ranging from rising labor costs to logistics.
"Many companies know they have to figure out some type of domestic manufacturing element to offset some of the problems they are having from a sourcing aspect in Asia," he said.
Cochrane, whose family has been involved in the furniture industry in North Carolina since 1850, decided to start the new company in a former 300,000-square-foot Cochrane Furniture plant in Lincolnton, N.C., just west of Charlotte. He estimated the startup costs were about $5 million, including equipment.
While there was significant interest among the media and some retailers in the domestic, solid wood product line, he said the company ran into unexpected challenges that raised the costs of running the plant by at least $500,000.
One was that the entire facility had to be rewired due to electrical problems that could have caused safety issues for workers, he said. The company also had to run a larger gas line into the factory for the necessary heating and combustion capabilities for a new water-based finishing system.
Converting to the 100% water-based finishing system itself was a challenge, Cochrane said.
"What we addressed from a finishing standpoint with water-based finishes was trial and error," he said. "It was a different technology, a different technique and a different formulation (from oil-based finishes), and it took us a while to figure out how that process worked and how it worked properly. I know a lot more about water-based finishes than I probably ever wanted to know."
The company also could not get a new router, one of its most important pieces of equipment, to run properly. That issue was only resolved when officials learned the equipment wasn't anchored properly.
These issues led to production delays, with lead times stretching out to seven to eight weeks for initial orders. After reducing its backlog over the summer months, it had cut lead times to about three weeks by late September.
Unfortunately, that was when Lincolnton began to run out of capital necessary to run the plant, Cochrane said.
He said the company initially looked into government grant funding, particularly to deal with the utilities. But that would have taken time, and the company needed to redo the wiring and install a new gas line immediately.
The closing comes about a year after Cochrane received a significant amount of publicity and public accolades about his new furniture manufacturing venture.
Cochrane sat next to Michelle Obama during the president's State of the Union address in 2012 and also was invited to speak with the president and business leaders about bringing back jobs to the U.S. from overseas. In November, North Carolina's governor presented the company an award for workforce development.
The company produced solid wood bedrooms that retailed from $3,900 to $5,500 for four pieces. When the venture was announced, Cochrane said he had hoped to employ as many as 130, but said the company never hired many more than the 55 that it had on the payroll in early December.
Cochrane said the company took orders until the week of the closing and is hoping to reopen the plant to fill those orders. In addition to selling the assets, he is also considering taking on OEM work from furniture companies that have voiced interest in Lincolnton's manufacturing capabilities.
"If we can get this figured out over the next two to three weeks, we can get it up and running again," he said. "We are basically saying (to retailers), ‘Just be patient with us and we have a degree of confidence that we can get this worked out and fill these orders.'"
Tim Stump, president of Stump & Co., said that there is some interest in the company among investors and others in the industry.
"This factory, with its state of the art CNC equipment and its water-based finishes, which support a green story - plus a made in America story - we think that sufficiently makes this factory worth serious consideration," Stump said, noting that the factory also may have the opportunity to produce hospitality furniture.
"There is a great interest among suppliers of the hotel industry to re-shore some if not all of those goods to meet not only the delivery needs of initial orders, but also refurbishing projects," he said.
Interested parties can contact Cochrane at (704) 472-9155 or Stump at (704) 905-2058.