Wood Products Firms Battle to Right the Ship
August 15, 2011 | 5:08 pm CDT
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The old adage, "The bigger they come, the harder they fall," has been widely evidenced in the headlines of dozens of news stories posted on Woodworking Network over the past few months. From Chapter 11 filings and major restructurings to plant layoffs and facility shutdowns, the major players have pulled out all the stops to navigate through the "Great Recession." Example No. 1:

St. Louis-based Furniture Brands Intl, parent company of Thomasville, Broyhill, Drexel Heritage and other furniture companies, recently announced that its third-quarter sales declined to $272.0 million from $293.7 the previous year. In spite of the sales drop, FBI reported its net sales loss of $2.1 million was dramatically better than the $23.5 million loss it experienced a year before.

Yet, tough decisions continue to be made in the FBI boardroom. The company recently announced it will close its unprofitable Thomasville RTA furniture plant in Appomatox, VA. FBI will save an estimated $5 million, while costing some 200 people their jobs as the company shifts some production to a facility in Lenoir, NC, plus Asia and South America.

"Our manufacturing philosophy for the RTA and contract businesses is the same we've used for our core residential furniture production -- consolidate facilities to rationalize overheads, obtain logistics synergies, and take advantage of our scale and global supply chain," said Ray Johnson, senior vice president of global supply chain for Furniture Brands.

Example No. 2: Cardell Cabinetry, San Antonio, TX, shaken by the severe housing downturn, inked a deal with equity firm H.I.G. Capital of Miami, FL, to make a significant investment in its business. H.I.G. also has investments in American Hardwood Industries, Linden Lumber, Witex and others.

Example No. 3: Pfleiderer, a global enterprise whose holdings includes composite panel plants throughout Europe and the former Soviet block, also owns Pergo laminate flooring and Uniboard of Canada. The company has been hit by the world-wide recession and recently announced it would close two of its Western Europe facilities and layoff approximately 300 people.

The company has also been forced to recognize the especially difficult economic North American marketplace. It's response? Build a Uniboard "mega" mill in Moncure, NC, that is capable of producing MDF, HDF, LDF and particleboard, and offer customers melamine panels, as well.

The moral of all three of these examples is that companies that believe in the future prospects of their businesses are taking the steps they feel are necessary to make it through these troubled times.  As the ebbs and flows of economic history have shown, the business cycle does bounce back in a positive direction.

Be ready. Better times are coming.

Read more of Rich Christianson's blogs.

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