By Mike Wilson

Jonathan Smith, who recently became President and CEO of Kindel Furniture, talks about his future plans and strategies for the company.

"I think the biggest change I’ve made is to empower the people of Kindel to make customer-focused decisions," says Kindel Furniture President and CEO Jonathan Smith.

A fresh face has big plans for a 106-year-old furniture company. Jonathan Smith, who was recently appointed president and CEO of Kindel Furniture, is implementing original ideas to boost the high-end furniture manufacturer’s business. Smith says the Kindel name has been a "well kept secret to an entire generation of Americans" due to minimal advertising and marketing, which is something he is looking to change.

Smith came to the company, which employs about 100 people at its 170,000-square-foot facility, with a background heavy in consulting, finance and banking. When he took the reigns of the business in January 2007, he outlined plans to expand the Kindel furniture brand globally, with a focus on Russia and the Middle East.

Already, Kindel has taken a major step into the international luxury furniture market through a partnership with Sala Azabu, the largest fine furniture retailer in Tokyo. The exclusive distribution contract signed with the Japanese store, which was announced in November, marked Kindel’s first entry into the country’s market. It is just one of the new markets Kindel is looking to enter this year.

ISWonline recently caught up with Smith to talk about his future plans for the company, his strategies to expand the Kindel brand and his outlook regarding the industry as a whole.

ISWonline: What do you see as your biggest challenge in your new role at Kindel Furniture?

Jonathan Smith: While it has a wonderful reputation and great brand recognition for a certain group of consumers, Kindel is a very well-kept secret to an entire generation of Americans. My biggest challenge is to make Kindel a well-recognized name to a wide range of individuals, both here and in foreign markets. During the past 15 years, Kindel has done minimal advertising and marketing to consumers and professionals, such as interior designers. We are starting to make adjustments to that situation, but name recognition isn’t built overnight. Thankfully, I don’t have what I call the “tainted Tylenol” problem of a bad image that must be overcome first. To some extent, we have a 106-year-old start-up company. We already build some of the highest quality furniture in the world, and now we need to build our brand and innovate with new products that anticipate our customers’ tastes.

ISWonline: How does your background in banking and finance help or hinder your new position within the woodworking/furniture-making industry?

Jonathan Smith: I think it always helps to have a well-rounded view of how a business operates, and my financial experience allows me to understand some of the more abstract forces that can impact a company. From my resume, one may come away with the misconception that my experience is centered strictly on corporate finance and accounting. But in reality, I have had some extensive hands-on experience with managing workouts and corporate restructurings in my 25 years with City Group that go well beyond bean counting. Good business practices are exactly the same regardless of what the product is. So I think I would say that my experience is less about finance and more about implementing strategies to build a successful business.

ISWonline: What changes have you made to improve business since you took over?

Jonathan Smith: I think the biggest change I’ve made is to empower the people of Kindel to make customer-focused decisions. We have many talented and experienced individuals at Kindel who have a great sense of how to build strong relationships and partnerships with our customers, dealers, vendors and suppliers. By asking our employees for their input and encouraging them to make decisions, we are responding quickly and appropriately to the constantly changing furniture market. But that management philosophy also builds morale and gives employees a stake in the future.

ISWonline: What is your strategy to expand sales and generate new business? Are you planning to expand your brand into any new products or foreign markets?

Jonathan Smith: We are implementing strategies to expand our markets both domestically and internationally. For instance, we have just re-established our relationship with Robert Allen|Beacon Hill, which means Kindel will have permanent displays and increase its market presence in New York City, Los Angeles, Chicago, Atlanta, Boston, San Francisco, Seattle, Houston, Washington D.C., Philadelphia, Dallas, Dania Beach, FL, Westbury, NY and Troy, MI. Our renewed relationship means that interior designers and their clients in America’s major cities can become acquainted with Kindel furniture more conveniently. Internationally, a strong potential market for our furniture is in Japan, where consumers purchase about 40 percent of the world’s luxury goods.

Several weeks ago, we signed an exclusive agreement with Sala Azabu in Tokyo for the rights to distribute Kindel furniture throughout Japan. Sala Azabu is one of Japan’s largest retailers of high-end furniture. The result of that agreement will be a nearly 4,000-square-foot display of Kindel furniture in Tokyo — the largest display of Kindel outside the United States. In addition, we are expanding our markets in Kuwait, the Ukraine and India this year, and we are assessing whether to open a wholesale showroom in Dubai.

ISWonline: How important to your business is Kindel’s reputation for producing high-end, top-quality furniture? What is your strategy to maintain and improve the company’s brand image to potential customers?

Jonathan Smith: The number-one asset that Kindel has and must protect is the quality of its product. Everyone here focuses on ensuring that the products that leave our shipping dock are among the best in the world — every day. We have no “final inspection” operation because anyone involved in the manufacturing process is empowered to reject a piece of furniture if he or she feels it isn’t up to Kindel standards. Our strategy to maintain and improve the brand image is being developed now for implementation sometime in the first quarter of 2008.

ISWonline: Are low-priced imports from China and elsewhere affecting business? If so, what are you doing to combat these effects?

Jonathan Smith: Certainly, lower-cost imports from China or elsewhere impact everyone’s business. Kindel is more insulated than other furniture manufacturers because we operate at higher price points, but we always have to be sensitive to the fact that others may focus on producing similar products for a much lower cost and much lower quality. We always have to return to emphasizing the value of our quality.

A great example of that is our ReNew program, a service we are offering nationwide to refurbish at our original factory any of the some 250,000 pieces of furniture that the company has made during the past 100 years, using many of the same color schemes, finishes and time-honored craftsman techniques. Our first piece was an 80-year-old crib that looks brand new after our ReNew service. We think we compete quite well against low-priced competition when we offer that kind of lasting quality.

ISWonline: What opportunities and problems do you see in the current high-end furniture market?

Jonathan Smith: Clearly, Kindel sees an opportunity in raising the profile of our brand and the increased sales that come from higher brand recognition. At the same time, I think we see the need to be aware of — and react to — two other dynamics. One is we need to be responsive to the growing informality in American lifestyles. We live a more informal lifestyle than our parents or our grandparents, which exhibits itself in the way furniture is used in the home. For instance, the living room and, to some degree, the dining room don’t hold the same degree of importance that they did for prior generations.

The other dynamic of great concern to us is the throw-it-away mentality, which is a natural outgrowth of technology that obsoletes items on a regular basis. When something breaks, we tend to throw it away and purchase another new one rather than repairing the item. Similarly, there is furniture out there that one can buy and replace with something else when it breaks — without being concerned about the overall quality of the product. I think education becomes the key here. We need to make sure we have educated customers and educated dealers who appreciate the value added in purchasing Kindel furniture.

ISWonline: A major industry-wide concern is the availability of skilled labor. Does Kindel Furniture share this problem? If so, how do you plan to address this issue?

Jonathan Smith: Kindel is fortunate to have nearly 100 skilled craftsmen in its factory today. We have the luxury of having some excess capacity in that workforce, therefore, we have the ability to grow without being overly concerned with a short-term shortage in skilled labor. Long-term, it is a critical issue for us to retain our workforce as manufacturing businesses dwindle in Michigan. Employees will naturally migrate to places where those jobs are available. We respond generally by remaining competitive in pay in the furniture industry.

ISWonline: Have you learned anything new about the industry or your company that has surprised you since taking over as president?

Jonathan Smith: I’ve been surprised to find that many people between the ages of 35 and 50 have a very limited knowledge and product awareness of Kindel products, unless they are intimately involved in the furniture business or they happen to come from Grand Rapids. I was also surprised that Kindel did not have stronger relationships with interior designers, both in the United States and globally, because those designers control an enormous percentage of the dollars that high-net-worth individuals spend on home furnishings.

ISWonline: What are two goals you want Kindel Furniture to achieve? What is your long-term vision for the company?

Jonathan Smith: I have a goal that by December of 2008, Kindel’s annualized sales will double from its sales at the beginning of 2007. I want Kindel to diversify and grow its product line to be innovative, creative and sought after by all buyers of furniture globally.

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