Flexsteel Industries Inc. History

Company Perspectives:

Flexsteel Industries Inc. is committed to building its brand as a successful seating specialist. The company is committed to exceeding customer expectations. With emphasis on high quality Home Seating, Recreational Vehicle Seating, and Commercial Seating, Flexsteel will remain focused upon strengthening its product integrity and customer service programs, expanding its customer base, and profitably growing our business in order to increase shareholder value. Key Dates:

Key Dates:

1893:

The Rolph & Ball Furniture Company is founded.

1901:

The company is renamed Grau & Curtis Co.

1902:

The firm's first catalog is introduced.

1917:

Bertsch buys out his partners and brings his son into the business.

1927:

Flexsteel spring is added to furniture designs.

1929:

The company is renamed Northome Furniture Industries.

1934:

Sanitas Spring Company is renamed Flexsteel Spring Corporation.

1946:

Company-owned trucks begin delivering furniture.

1955:

A plant is established in Lancaster, Pennsylvania.

1958:

The firm is renamed Flexsteel Industries Inc.

1965:

The Brunswick Converting Division is created.

1970:

National Furniture Manufacturing Co. is acquired.

1982:

A plant begins operations in New Paris, Indiana.

1984:

The Commercial Seating Division is established.

1991:

Revenues drop due to a recession.

1993:

The company celebrates its centennial and launches the Centennial Royale Collection.

1996:

The Comfort Seating program is introduced.

1999:

The company enters the Western U.S. market by opening a Comfort Seating Showroom in Arizona.

2000:

The company is named one of Forbes '200 Best Small Companies.'

Company History:

Flexsteel Industries Inc. is a leading manufacturer of furniture seating for the home and office, the hospitality and healthcare industry, and the recreational and marine vehicle markets. Flexsteel's Home Furniture line, which ranges from upholstered chairs, recliners, sofas and sectionals, and convertible sofa beds to seating and sofa bed units for vans, mobile homes, and marine vehicles, features the company's patented Flexsteel spring, a uniquely flexible and durable design backed by a lifetime guarantee. The company's collections--Metropolitan, Big Horn, Timeless Traditions, and Casual Classics--can be found in 259 Flexsteel Galleries located in retail stores across the United States. Flexsteel operates nine factories that utilize state-of-the-art computer technology and a large fleet of delivery trucks to ensure quick delivery time to its dealers. In fiscal 2000, Flexsteel's nine manufacturing plants, 21 Comfort Seating Showrooms, and 259 retailer-positioned gallery showrooms combined to produce more than $286 million in revenues for a net income of $11.9 million.

Company Beginnings: Early to Mid-20th Century

Flexsteel's origins may be traced to Frank Bertsch, an upholstery apprentice born in Wurttenberg, Germany, who immigrated to the United States in 1881. Arriving with just 50 cents in his pocket, Bertsch traveled first to Dubuque, Iowa, then to Chicago, and finally to Minneapolis in search of work. By 1893, Bertsch had found employment with the McCloud & Smith Furniture Company. In that same year, a new company was founded in Minneapolis, called the Rolph & Ball Furniture Co., which manufactured upholstery. In 1901, Bertsch, together with three employees from McCloud & Smith, bought Rolph & Ball, and renamed it Grau & Curtis Co., after two of the partners. Bertsch initially functioned as the company's director of upholstery. The company's first catalog was sent out in 1902; by the following year the catalog's 64 pages offered furniture not only for the home but also for commercial use in hotels, lounges, and churches. Already, however, the company's focus was on seating. By the end of its first decade, the company employed 22 people, who crafted and assembled its furniture by hand.

Frank Bertsch bought out his partners in 1917 and brought his son, Herbert T. Bertsch, into the company. The Grau & Curtis Co. next attempted to move into other areas of the furniture industry, purchasing a dining room and bedroom furniture maker during the 1920s. Although the company lost that plant during the 1929 stock market crash, the rest of the Bertsch business survived and, under the new name of Northome Furniture Industries in 1929, actually grew during the Great Depression. Part of the reason for this was its introduction of the 'flexsteel' spring in its furniture designs.

The flexsteel spring was conceived initially by E. Werner Schlaprittzi while studying at the University of Zurich early in the 20th century. Schlaprittzi modeled it after the springs found in clocks, while also incorporating the springlike action of tree branches. He was able to sell the spring design for use in the seats of European railroad cars, and upon immigrating to the United States in 1918, he founded the Sanitas Spring Company in Minneapolis.

Nearby manufacturer Northome added the spring to its furniture designs in 1927, and soon purchased a 50 percent stake in Sanitas Spring, which was renamed the Flexsteel Spring Corporation in 1934. From the beginning, Northome products featuring the Flexsteel spring carried an extended guarantee, initially for 25 years, and later for the lifetime of the product. In the 1990s, the company could boast that they still received trade-ins of furniture from this era.

Northome furniture continued to be built by hand until 1936. In that year, attempts at unionizing the company's workers led the Bertsches to relocate their operations to Dubuque, Iowa, where they purchased the former Brunswick Victrola plant, a 480,000-square-foot facility. For the new plant, the Bertsches decided to incorporate the line production techniques developed by the Ford Motor Company. Northome, which had to replace and retrain its entire production staff, was among the first in the furniture industry to incorporate the moving assembly line in their manufacturing process. Over the next decade, production jumped from one million to four million units per year. In 1946, the first company-owned trucks began delivering its furniture; by the 1990s, the Flexsteel fleet would grow to 350 trucks traveling ten million miles per year. In 1948, Frank Bertsch died, and Herbert Bertsch took over the company.

Company Expansion: 1950s--80s

Northome moved toward national distribution and greater expansion during the 1950s. The company built a second, 220,000-square-foot plant in Lancaster, Pennsylvania, in 1955. During that decade, Northome also initiated separate departments for design and development and for central engineering and rolled out its first national advertising campaign. By 1958, the Flexsteel spring had become so well known that the company renamed itself Flexsteel Industries Inc.

The company also kept up with the changes in furniture styles of the era. Through the 1920s and 1930s, mass market furniture styles had seen little change from the standard overstuffed Victorian design, but as the country emerged from World War II, furniture styles underwent dramatic and more frequent changes, from the simple look of the 1940s to the more dramatic styles of the 1950s.

By the mid-1960s, Flexsteel's revenues had topped $15 million per year. That decade saw the rise of the recliner, and Flexsteel began producing its own 'Flex-o-Lounger' recliners and reclining mechanisms. During this time, the company also bought its first aircraft--turboprops, which it used to fly dealers to the company's factories. In 1965, Flexsteel created the Brunswick Converting Division for production and printing of its own 'space age' nylon fabrics. The company also opened several more manufacturing plants and by the end of the decade expanded its line to include seating for the growing recreational vehicle (RV) market. The company went public in 1969, after posting a net income of $1.17 million on revenues of $25 million.

The company made a cash purchase of the National Furniture Manufacturing Co. in Evansville, Indiana, in 1970, and entered the exposed-wood furniture market with the introduction of its Charisma chair division. Flexsteel moved forward in RV seating, developing its own line of sofa sleepers specially scaled for the limited space requirements of mobile homes and other vehicles. By the end of the decade, the company had gained the entire seating and sleeping business for General Motors Corp. RVs. Flexsteel also brought in computerized automation to its production line, beginning in 1974 with the introduction of Gerber fabric cutting machines. These machines allowed far more precise cutting of fabrics, reducing waste while allowing more precise pattern matching. Sales climbed steadily through the decade, from $38.5 million in 1972 to more than $96 million in 1979. In that year, Flexsteel's net income reached nearly $4.5 million.

By then the third generation of Flexsteel's founders was leading the company, and the fourth generation was entering the business. The company opened a new plant in New Paris, Indiana, in 1982, moving part of its RV seating capacity closer to the van conversion center of Indiana. Flexsteel also opened showrooms, called Flexsteel Total Concept Galleries, the first of which was called Furniture Manor in Osseo, Minnesota; the company opened two factory showrooms as well. Recliner sales became a more important part of the business, particularly with Flexsteel's invention of an adjustable lumbar support mechanism. Then the company moved into a new market in 1984, creating its commercial seating division with a separate sales force and a product line for healthcare and other institutional settings. Sales increased throughout the 1980s, reaching $130 million in 1984, and $173 million in 1990.

Adapting to Recession Key to Continuing Success and Expansion in the 1990s

The onset of the recession of the early 1990s saw Flexsteel's revenues drop in 1991, to $145 million, and the company was forced to write off some $1.6 million in uncollectible accounts receivable, while downsizing reduced its employee rolls by more than 300 people. The following year, the company also took restructuring charges of approximately $2.6 million in connection with the closing of its Evansville plant, and the consolidation of its recliner and motion furniture production at its Dublin, Georgia plant. By 1992, however, Flexsteel was growing again, outpacing the furniture industry as a whole. Motion--or modular--furniture was helped by the company's newly designed latching mechanism. In 1992, Flexsteel rolled out its moderate-priced Grand Haven line of sofas, which hit the midrange price point of $599 to $699, compared with the typical Flexsteel sofa range of $799 to $999. Costs were trimmed for the new line not by skimping on scale, but rather by limiting the range; the Grand Haven line featured only two sofa styles available in 14 fabrics, compared with the 1,000 fabric choices available for the Flexsteel line.

Leather furniture was another growing part of Flexsteel's business, doubling in size through the early 1990s and accounting for more than 10 percent of its revenues. RV products were particularly strong, growing at 10 to 18 percent through 1994, and making up as much as 35 percent of total revenues. By 1993--the year the company celebrated its centennial--these had climbed again to $177 million, and reached $195 million in 1994. In addition, from a low of $1.2 million in 1991, net income rose to $6.8 million in 1994. International sales also began to play a stronger role for the company.

By 1995, Flexsteel had rebuilt its employee levels to nearly 2,400 workers. Revenues grew a modest 6.7 percent, however, to $208 million, as RV sales suffered from an economic slowdown. Flexsteel closed its Sweetwater, Tennessee plant and consolidated its Charisma contract line at the Starkville plant. Yet Flexsteel continued to invest in new technologies, including dealer-friendly video cataloguing and automated sales inquiry systems and computer-assisted design manufacturing techniques. The firm also spent $3.5 million for the expansion of its Starkville plant and a 20,000-square-foot addition to its Dubuque facility.

In 1996, Flexsteel launched its Comfort Seating program, a furniture display system based in a retail setting. These new showrooms displayed company furniture exclusively and allowed dealers an option to the traditional Flexsteel Gallery concept. The company also created the industry's first ready-to-assemble recliner and featured it at the year's North Carolina International Home Furnishings Market. Flexsteel ended 1996 with a 9 percent sales gain.

Flexsteel began aggressively pursuing its options in the recreational seating industry, specifically the marine segment, in the middle to late 1990s. In 1997, Flexsteel began supplying Carver Yachts with captain's chairs, sofas, and dinette chairs, for its motor yachts that were between 27 and 50 feet in length. As below-deck floorplans became more standardized in this segment, management felt that Flexsteel products would take hold in this industry as they had with RVs.

The company also was expanding with the continued growth of its showrooms. By February 1999, there were 14 Flexsteel Comfort Seating galleries in operation, primarily in the Midwest. Just seven months later, the largest store to date was opened in Scottsdale, Arizona. This move marked the firm's expansion into the Southwest; it also began marketing the Comfort Seating concept to dealers in the West Coast and Southeast areas. Flexsteel began expanding into the bedding industry as well. Restonic--the firm's long-time partner that produced mattresses for its sleeper sofa line--began to utilize the well-known Flexsteel steel support system in its box spring and marketed the line under the Legacy brand name.

Maintaining Stability in the New Millennium

The company entered the new millennium on steady ground. With no long-term debt and positive sales figures, Flexsteel remained ahead of many of its competitors with an average five-year growth rate of 7 percent. In the October 30, 2000 issue of Forbes magazine, the company was named one of the '200 Best Small Companies' for the first time in its history. The firm also remained on top of ever-changing consumer trends. For example, it shifted its merchandising techniques with its recliners to offer more fabrics, colors, and a variety of styles. John St. John, Flexsteel's merchandise manager for recliners, stated in a May 2000 HFN article that the company is 'growing the business to sell a more fashionable product because we're selling consumers who would not have ever bought a recliner before.'

By early 2001, however, a slowdown in spending due to faltering consumer confidence and a weakening economy began to slightly impact Flexsteel's revenue levels. Management believed the slowdown would be short-lived and planned to remain focused on growth opportunities in the retail furniture dealer market, recreational seating, and the hospitality and healthcare industries.

Principal Divisions: New Design; Flexsteel Commercial Seating; Flexsteel Home Furniture; Flexsteel Recreational Vehicle & Marine Seating.

Principal Competitors: Furniture Brands International Inc.; La-Z-Boy Inc.; LifeStyle Furnishings International Ltd.

Further Reading:

• 'Beating the Traffic; Attendance May Have Been Down, But Vendors Said High Point Had the Write Stuff,' HFN-The Weekly Newspaper for the Home Furnishings Network, October 30, 2000, p. 30.
• Brin, Geri, 'Flexible Flexsteel,' HFD-The Weekly Home Furnishings Newspaper, April 6, 1992, p. 28.
• Buchanan, Lee, 'Flexsteel Goes West with Retail Rollout,' HFN-The Weekly Newspaper for the Home Furnishings Network, September 13, 1999, p. 22.
  A Century of Seating Craftsmanship, Dubuque, Ia.: Flexsteel Industries, Inc., 1993.
• 'Corporate Profile for Flexsteel Industries Inc.,' Business Wire, December 15, 2000.
• 'Flexsteel Industries,' Hospitality Design, March 2000, p. 200.
• Flexsteel Industries Inc., 'America's Seating Specialist: Our History,' Dubuque, Ia.: Flexsteel Industries Inc., 2000.
• Kunkel, Karl, 'Flexsteel Gets into Bedding,' HFN-The Weekly Newspaper for the Home Furnishings Network, April 24, 2000, p. 28.
• ------, 'Flexsteel Rolls Out Comfort Seating Stores,' HFN-The Weekly Newspaper for the Home Furnishings Network, February 1, 1999, p. 31.
• Kurowski, Jeff, 'Flexsteel Looking for More Marine Industry Customers,' Boating Industry, February 1998, p. 13.
• Levine, Charlotte, 'Flexsteel Celebrates 100th Anniversary,' Central Penn Business Journal, May 5, 1993, p. 12.
• Schroeder, Angel, 'Designer Recliners; Fashionable Recliners Are Broadening the Category and Expanding Price Points,' HFN-The Weekly Newspaper for the Home Furnishings Network, May 22, 2000, p. 24.

Source: International Directory of Company Histories, Vol. 41. St. James Press, 2001.

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