Broyhill Furniture Industries, Inc. History

Address:

One Broyhill Park
Lenoir, North Carolina 28633
U.S.A.

Telephone: (704) 758-3111
Fax: (704) 758-3666

Wholly Owned Subsidiary of Interco, Inc.
Incorporated: 1926 as the Lenoir Chair Company
Employees: 6,700
Sales: $540 million
SICs: 2511 Wood Household Furniture; 2512 Upholstered Household Furniture

Company History:

Broyhill Furniture Industries, Inc. is a leading American manufacturer of medium-priced wood and upholstered household furniture. The company got its start making chairs in North Carolina in the 1920s, and grew steadily under the hand of its founder, who had first entered the furniture business under the eye of his older brother, and who involved many members of his family in the business as it flourished. In 1980, the Broyhill family sold the company to a conglomerate, which made it part of a group of furniture makers but retained the Broyhill name and identity.

Broyhill was founded in 1926 by James Edgar Broyhill, known as Ed. Broyhill had worked in his older brother's furniture business as a salesman, bookkeeper, and clerk since 1919, when he was 27 years old. The company had started out producing single pieces of furniture, but had moved into the marketing of multi-piece coordinated bedroom suites in 1920. Three of these pieces, a chair, rocking chair, and bench, were supplied by another manufacturer. In 1926, this company was destroyed by fire. Seeing an opportunity, Ed Broyhill took out a loan for $5,000, using his house as collateral, and founded the Lenoir Chair Company, named after the North Carolina town where it was located.

Broyhill started his company by buying a number of chair frames, which he planned to upholster in his basement. Soon a blacksmith and buggy shop near the railroad tracks became available, and Broyhill moved his operations to this location. The chairs were finished in the buggy shop and upholstered in the dirt-floored blacksmith shop. In the summertime, upholstering work was done in the shade of a sycamore tree out back.

After two months, Broyhill took over a small ironing board factory across the street, and used the woodworking machinery he found there to make his own chair frames instead of purchasing them. In June of 1927, the fledgling company expanded its physical plant further when it built a two-story building on the site of the old blacksmith shop, which contained space for upholstering, packing, and shipping, as well as two small offices. Throughout this time, Ed Broyhill continued to work full-time for his brother's company. By the end of its first full year in business, the company had produced more then $150,000 worth of furniture.

Ed Broyhill joined with his brother Tom, who owned the Lenoir Furniture Corporation, to buy the Harper Furniture Company, another local business that made colonial-style bedroom suites, secretaries, and desks, in 1929. With a more diversified line of products, the Broyhills hoped to gain access to a greater number of sales outlets. Later in that year, however, they came to regret their hasty expansion, as the stock market crash brought on the Great Depression.

Hard times, not surprisingly, caused a constriction in furniture sales. Despite the general economic difficulties, however, the Lenoir Chair Company's sales increased every year throughout the 1930s, pushed by the efforts of the company's sales force, which numbered 16 men by the end of the decade. Ed Broyhill continued to sell furniture both for his brother's company and his own up through 1938.

In 1932, the Broyhill brothers embarked on another joint venture with two other investors, when they bought the bankrupt Newton Furniture Company in a nearby town for $12,500. This company had been manufacturing a low-priced line of bedroom furniture, which Ed Broyhill was convinced would be marketable in the current economic conditions. In late 1934, he bought out his other three partners, and in 1935 he reopened the plant, renaming it Lenoir Chair Company No. 2. Within six months, over 100 men were working in the factory, making a newly designed line of low-priced goods, which, along with the other 'Lenoir lines,' were shipped in carload lots to dealers.

In an effort to reduce duplication of activity, all office operations for the four Lenoir firms were consolidated under one roof in 1935. In the following year, after a series of heart attacks, Tom, the older Broyhill brother, removed himself from active involvement in the business, turning over responsibility for many of the day-to-day decisions to Ed. Despite its steady expansion, the Lenoir Chair Company had been under funded at its inception, and it remained cash-poor throughout most of its first decade of operation, a condition that forced the company to take long-term loans and thus pay excessive interest. In 1939, however, the company was finally able to arrange a $100,000 bank loan that enabled it to consolidate its debts and begin paying its suppliers with cash.

On a firmer financial footing and with the American economy starting to expand under the wartime demands for goods, the Lenoir furniture enterprises moved to take on two additional plants in 1941. The McDowell Furniture Company owned a factory that made a line of furniture that fit in between the low-priced Newton line and the medium-priced Lenoir goods, and the Conover Furniture Company manufactured knee-hole desks, a new product for Lenoir. For $110,000, Broyhill was able to obtain both operations. The following year, the Wrenn Furniture Company was acquired at a bankruptcy auction, and its antiquated facilities were converted into storage space. Ed Broyhill's enterprise had grown to include six different plants operating under five different names when the sales efforts for these operations were consolidated into the Broyhill Furniture Factories to reduce confusion.

After the entry of the United States into World War II, Ed Broyhill was named to head the Furniture Industry Advisory Committee of the Office of Price Administration. In this capacity, he helped the federal government decide how to allot precious resources between the civilian and military worlds. On November 3, 1941, prices for all furniture were frozen by the federal government for the duration of the war.

In 1943, Broyhill was also elected head of the Southern Furniture Manufacturers Association. In this position, he worked to get price controls on furniture lifted after the end of the war, since uncontrolled materials costs had virtually eliminated the sale of unprofitable low-priced furniture items. By the end of 1945, a five percent rise in prices had been granted.

In the later years of the war and the early postwar years, strong demand for the limited supply of consumer goods allowed Broyhill to sell its furniture on allotment, meaning that all of the pieces it produced were taken immediately by buyers. By the spring of 1948, however, this unusual situation had come to an end, as production caught up with demand. For the next year, the company's fortunes suffered severely. By the spring of 1949, Broyhill was forced to cut back its plant operation to three days a week.

To combat the company's declining profits, the company began to develop new lines of furniture in updated styles under the direction of one of Ed Broyhill's sons, Paul. Rather than the very elaborate and ornate 'borax' style popular in the 1930s and 1940s, Broyhill began to market a more sleek, simplified, and modern series of products. Broyhill also made the transition from a sales force that worked on commission to one that was paid a salary, thus increasing the loyalty of its salesmen to the company.

The company had regained sufficient strength by the mid 1950s to expand operations again. In 1954, Broyhill built a new plant from the ground up for the first time. On a 65-acre tract outside Lenoir, the company designed and built a facility for upholstering chairs previously completed at the Lenoir Chair Company. In the following year, Broyhill purchased a plant, which it subsequently re-built and improved. In addition to the construction of new plants, Broyhill modernized many of its old factories, wrapping its old wooden buildings with a new steel and concrete structure then dismantling the old walls. In many cases, this transformation was completed while the plant was in operation.

As the American population grew steadily more affluent throughout the 1950s, Broyhill recognized that tastes in furniture were shifting. In the past, buyers of moderately priced furniture had sought massiveness and elaborate embellishment, but the company's executives felt sophisticated styling and quality were becoming more important. In 1957, in an effort to meet this demand, the company established the Broyhill Premier line. The old Lenoir Chair Company plant was given over to production of these pieces, and a separate, additional sales force of 30 men was established. In addition, Broyhill began to institute a quality control program, complete with a lab, to insure that its Premier products lived up to their name. In 1958, Broyhill began an expensive national advertising campaign to support the introduction of its Premier products.

Although the new line won consumer acceptance, it did not turn a profit until the 1960s. Broyhill added upholstered products to its Premier line, as the concept began to bring in revenues. Once the Premier line had been established, the company grouped its remaining products under the label 'Lenoir House,' which included a variety of medium-priced, moderate styles of bedroom and dining room furniture that made up the bulk of the company's sales.

Of Broyhill's expansion throughout the 1960s, the gem was a three-story office and showroom building, which filled an entire acre. Set in a fifty acre park, the building was decorated on all sides with aluminum columns and fountains, which were lit at night. By 1966, when this site became a landmark in Lenoir, Broyhill's sales had topped $75 million a year.

As Broyhill entered the 1970s, its expanded in new ways. In 1970, the company entered the field of plastic furniture, opening a facility to manufacture these products. In 1976, Broyhill purchased a plant that manufactured upholstered furniture in Arcadia, Louisiana. With this move, Broyhill extended its operations to an area outside its geographical hub in North Carolina for the first time. In 1978, Broyhill expanded its product offerings to include a line of furniture that customers assembled themselves, and also a line of wall units, in an Early American style. In addition, the company set out to increase sales by emphasizing furniture in contemporary styles. In its upholstered furniture lines, Broyhill set out to upgrade its fabric patterns. By the end of the 1970s, Broyhill sales had reached $265.2 million a year. The company ran 20 factories with more than 7,500 employees.

The company, which had previously made acquisitions, turned the tables when it announced that it would be purchased by another company. Broyhill's new owner was St. Louise-based Interco, Inc., a manufacturer of shoes and clothing which had recently purchased another furniture company, Ethan Allen, Inc. In August 1980, Interco purchased Broyhill for $151.5 million. The company planned to use Broyhill and Ethan Allen as the foundations of a furniture and home furnishings group.

Under its new owners, Broyhill moved to shore up its market share. As part of this strategy, the company reintroduced its 'Premier' brand name for furniture, which it hoped would help it to capture more of the market for upscale furniture. By 1984, Broyhill had turned its attention to marketing in its quest for higher sales. The company made changes in the way its distributed its products, reviewing its operations territory by territory. In addition, Broyhill began to focus more closely on competition from products manufactured overseas.

In 1987, Broyhill announced that it would close a bedroom furniture operation it had acquired in Austin, Texas, and seek to sell the property. Three years later, the company moved out of the furniture field for the first time, developing a line of products called 'Accents 'n Stuff,' consisting of decorative home accessories.

Throughout the 1980s, Broyhill's corporate parent, Interco, had expanded rapidly, buying up a number of other companies, including another Broyhill competitor, Lane, in April 1987. By the end of the decade, however, the company's resources had become overextended. At the end of June 1989, it was forced to sell its Ethan Allen furniture subsidiary, and in January 1991, the company declared bankruptcy, filing for protection from its creditors under Chapter 11 of the Federal Bankruptcy Code. One month later, Broyhill announced that its own revenues had fallen to $785 million.

Broyhill continued its efforts to increase its market share, despite the bankruptcy proceedings. As a result of its study of the most effective and efficient ways to distribute and sell its furniture, Broyhill began to contract with dealers to open outlets dedicated entirely to Broyhill products in the early 1990s. The company chose the name Broyhill Showcase Galleries for these facilities. By September 1991, eight Showcase Galleries had been opened in seven states, and the facilities had earned a positive response. These stores continued to open in the following year.

In March 1992, Broyhill announced that it had reorganized its corporate leadership, naming longtime employees to key posts to insure stability despite Interco's difficulties. At the same time, the company rolled out a further extension of its product line, called Comfort Time. These products were designed to recline and extend, without looking like typical recliners. Six months later, the company extended its Showcase Galleries concept, introducing Custom Sofa Gallery stores that were slated to open across the nation.

As it moved into the mid 1990s, Broyhill could look back on a solid history of growth in the furniture industry. Firmly ensconced in the market for medium-priced furniture, and skilled in efficient and low-cost manufacturing techniques, the company appeared well-suited to maintain its position in the American home furniture market for years to come.

Broyhill Furniture Industries, Inc. History

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