Struggling Flexsteel considers moving production overseas
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DUBUQUE, Iowa - Flexsteel Industries, one of the largest residential furniture makers in the U.S. and number 26 on the FDMC 300, says it's considering moving some production to Mexico and Asia.
 
The potential move is part of a renewed effort to expand the company's global footprint. 
 
"Today’s business climate requires a more agile supply chain than ever before," CEO Jerry Dittmer told the Telegraph Herald."There is always pressure for faster delivery, and right now, we have long lead times."
 
In the second quarter of the current fiscal year, which concluded on Dec. 31, the company reported losses of $5.4 million. The quarter before that Flexsteel reported a net sales decline of 11.6 percent.
 
“Our first-quarter results reflected both the challenges we continued to experience due to the 25% tariff on furniture imported from China and customer and consumer resistance to price increases to offset the tariff, and also the early benefits from our restructuring activities,” said Dittmer. “While the environment remains difficult, we did see bright spots with improving demand in select residential categories as well as continued sequential growth in our e-commerce business.
 
In May 2019, the company shut down its commercial, office, and hospitality furniture lines. It also closed a manufacturing facility in Riverside, California, laying off 130 workers. The sale of its Riverside plant gave it a substantial pre-tax net earnings boost. See the full report here.
 
In June, the company shut down an Arkansas plant, laying off 109. That closure is part of a major restructing effort from Flexsteel. The restructuring also means job cuts at its main manufacturing location in Dubuque, Iowa, despite it receiving millions of dollars in tax incentives to build a new facility there.
 
The plan includes "right-sizing", which aims to save $32 million in employee-related costs and increasing efficiencies.
 
Flexsteel's main manufacturing location is in Dubuque, with five other plants throughout the United States and Mexico before the closure. Its sales were an estimated $469 million in 2017. Flexsteel employed around 1,400 workers before the closure.
 
We will see if the company can recover.

 

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Robert Dalheim

Robert Dalheim is an editor at the Woodworking Network. Along with publishing online news articles, he writes feature stories for the FDMC print publication. He can be reached at [email protected].