Studio RTA Finds New Ways to Draw Up Profits
By growing a niche market with art supply furniture, this Southern California RTA manufacturer and supplier has opened other doors of opportunity in the office superstore market.
By John Iwanski
Not many manufacturers would look at artist and design furniture as the conventional way to gain a foothold in the home office and supply superstore marketplace. But then again, Vernon, CA-based Studio RTA is anything but your conventional ready-to-assemble furniture manufacturer.
Founded in 1988 by Paul Reitzin and Bob Hughes, Studio RTA opened for business as a supplier of drafting tables for the art industry. Today, the company has sales approaching $30 million, has expanded its product lines to include home office furniture and storage items, and furnishes products to customers such as Office Depot and Staples. Though Studio RTA manufactures product for many of the nation’s largest office superstore suppliers, the company still keeps its design flair, looking for new and innovative products.
“Once you get your foot in the door and these companies (office superstores) see you can provide what they need, they will come back to you,” says Hughes. “We want that business to continue and expand. We know we can maintain a hold with the products we offer and the price points we offer. At the same time, we are always looking for new products and new ideas that will help us expand and improve on what we already manufacture.”
Drafting a Future
However, it wasn’t long before the company began to realize quality control issues with the products that were coming over. That spawned the first change in the business, according to Hughes.
“We would have drafting tabletops coming over that had discoloration, spots and problems like that,” says Hughes. “They (the company’s Asian suppliers) were actually having problems with acid rain. The water would interact with the table and produce those spots.”
Following one incident when Hughes and others had to manually remove and replace the tops with others from domestic sources, the company decided to start purchasing the tops from a source in the U.S.
“It just made good sense,” says Hughes. “We could control the quality of product better, and it was a better situation for us.”
The company continued to purchase bases from overseas suppliers, but committed to Masonite to produce the tops for its drafting tables. With the improvement in quality and increased product awareness, sales began to increase. Studio RTA was producing up to 50,000 drafting tables a year, and more were being ordered.
Discovering New Markets and New Ideas
“We realized that this (drafting tables) wasn’t going to be the ticket,” says Hughes. “We actually got to the point where we were topping out our customer base. We needed to find other areas to expand into.”
Because the company was also extending its supply source , it began seeking new ways to improve profitability. One of the first things Studio RTA came up with was eliminating the source for its tables.
“We just realized that it might be better if we brought everything in-house,” says vice-president of operations George Federoff. “We said, ‘If they can do it, what would it take for us to do it?’ We looked at the product quality, weighed the options and decided to start making the laminated tabletops in our own facility.”
The decision in 1995 to change roles from a distributor to a manufacturer was a big step for Studio RTA, but one which paid big dividends as well. The company no longer had to deal with supply issues and the plant, which was located next door to the company’s distribution area, could easily move product over when it was required.
The plant, which is equipped with a Holzma CNC panel saw, a pair of Weeke CNC routers, Brandt and Homag edgebanding machines, and a pair of Brandt T-moulding machines from Stiles Machinery, was only tasked to support Studio RTA’s product lines. But as the industry continued to evolve and product quality at the company’s overseas plant improved, allowing it to once again outsource its tabletops, Studio RTA began looking at new ways to generate revenue out of its machining capabilities.
Larger Customers, Larger Production
As Studio RTA began to increase sales to larger customers, the company expanded its processing capabilities in the plant to handle the requirements. The company purchased a Heian twin-table CNC router to produce two styles of tabletops for companies like Office Max.
“That was very important for us,” says Federoff. “Because we have to produce such a high volume of product, having the twin-table capability that the machine does is crucial to us in creating enough product for our customers.”
As the company continued to increase its machining capabilities, the industry provided it with another challenge — and other opportunities.
“We saw that more and more of what people were looking for and what our customers were looking for was glass and metal in the RTA market,” says Federoff. “We began to add that to our product lines. Customers were starting to shy away from the laminates a little bit. That, combined with the fact that much of our laminate tabletop product was now produced overseas, meant that much of our plant was being underutilized. We needed to find ways to infuse business and make the machinery more profitable for us.”
Moving in a New Direction
“We’re a marketing-driven company,” says Reitzin. “We know that we compete on price points, service and our ability to deliver our products on time. That’s why we are always looking at new ideas or trying different combinations. We want to find the best way to do something, and then do it that way every time.”
The company is planning on another big move, though this one is physical. The current distribution center, which has nine tractor-trailer docking bays, is being moved to a new, 112,000-square-foot facility in Pico Rivera, CA. The plant will remain in the current location, with a truck bringing products over from the plant to the distribution site.
“It will be a huge advantage for us when it happens,” says Federoff. “We are limited in (the current facility) by the ceiling height. We can’t stack anything above 15 feet In the new facility, we have double the ceiling space.”
So even though actual footage is similar to the facility the company is located in now, Studio RTA will have twice the space to dedicate to distribution and storage of product. And the facility will be equipped with 28 docking bays, something Federoff likens to a luxury.
“Last week, we had 45 inbound containers from the Orient, and we have nine bays here,” says Federoff. “On top of that, we had between 55 and 60 loaded trailers go out. It’s like a juggling act in here right now, but we always get the product out the door. With the new facility, we’ll have so much more flexibility.”
In addition to the flexibility of distribution, the company is looking at flexibility in the marketplace as well. Currently, the company has three distinct product lines: home office, storage, and art, hobby and presentation. It hopes to expand and supplement these lines with a variety of products.
“We’re really trying to diversify and grow the business; find new avenues that might work for us and our customers,” says Hughes. “There are a lot of things that go into that. We need to see if we have a product that we can produce, that the end-user is going to want to put it in their home or business, and that our customer will put it in their store at a certain price point.”
Another avenue the company has actively explored has been shopping out its plant’s services to others. According to Federoff, the company started performing outside work about eight months ago, to supplement work for Studio RTA.
“With the reduction in the amount of laminate that we produce, we’ve looked to companies that might have a need for our capabilities,” says Federoff. “Now, we do some cabinetry work and some innovative motor home interiors. There is a manufacturer out here who designs and distributes architectural wood ceilings, and we have worked with them because of increasing orders.”
But Federoff sees long-term profitability in working with a few clients who will require the plant to produce a certain amount of product each month.
“What we are looking for is consistency,” says Federoff. “We can produce it if someone needs it. The experience that we have here is a huge asset.”
A Vision for the Future — Now
“We are doing a lot more OEM business now,” says Hughes. “We have companies buying an entire container of product from our overseas factory and we can ship it directly to them, without it ever touching our distribution center racks. It offers us greater savings and reduces congestion in the warehouse.
“We also have a strong base in the home office market,” continues Hughes. “ We just placed two new SKU’s into Best Buy. That’s another market that we want to tap into. We want to move into the home office and the home marketplaces, because we feel we have the products that can do well in those areas. We also see the plant as an area of solid growth for the company, one which will be profitable for us in a variety of ways.”
Studio RTA also continues to pioneer with new ideas and technologies. The company actually put together a product line utilizing powder coating technology for MDF products. Unfortunately, the price line the product required wasn’t something that the company could sell to larger home office vendors — yet.
“I think because it’s a new technology, it’s going to cost money to produce and the price is going to be high for somebody who is looking for RTA home office furniture,” says Reitzin, who now uses the furniture to make up his desk at the company’s headquarters. “But as more people come on line and see the advantages — no need to edgeband, no seams — it will be a huge plus.”
Hughes agrees, saying that “most people, if they can spend $299 on powder coating or $399 on a mahogany desk, they’ll choose the mahogany desk. But as the price goes down, those products will begin to look much more attractive to consumers.”
One thing that will remain attractive to end-users and purchasers alike is Studio RTA’s commitment to product excellence and product development.
“Everyone here is always looking for new ways to do something,” says Federoff. “We even have a background and an area to do photo shoots in the design area to help us get a feel for how something might look. This company never stops looking at new ways to make something that may seem ordinary to someone else be very special.”
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