Thomasville Furniture Industries, Inc. History

Address:

Box 339
401 E. Main Street
Thomasville, North Carolina 27360
U.S.A.

Telephone: (910) 472-4000
Fax: (910) 472-4071

Wholly Owned Subsidiary of Armstrong World Industries, Inc.
Incorporated: 1904 as Thomasville Chair Company
Employees: 7,000
Sales: $526 million
SICs: 2511 Wood Household Furniture; 2512 Upholstered Household Furniture

Company History:

Thomasville Furniture Industries, Inc. is a leading manufacturer of upper medium to higher-priced dining room, bedroom, upholstered, and occasional furniture. Into the 1990s, the company remained the economic keystone of Thomasville, North Carolina, operating 11 plants and employing more than half the population there. The landmark Big Chair--an 18-foot reproduction of a Duncan Phyfe design first erected in 1922 and rebuilt in 1951--remained in the town square as a symbol of the company's long-standing (and well-seated) success. The chair's size also remained a tribute to the company's growth: by the 1990s, Thomasville Furniture had become a subsidiary of a Fortune 500 parent, Armstrong World Industries, Inc., and displayed its wares in more than 550 Thomasville Galleries and 100 Thomasville stores nationwide. Through one of the furniture industry's most aggressive marketing campaigns, the company's brand name continued to work itself into the American mindset--in order to better position its products for the nation's living-room set of the future.

Founded in 1904 with $10,000 and a turnover of 180 chairs a day, Thomasville Chair Company was one of many small chair manufacturers in the region. By 1907, the fledgling enterprise owed $2,000 in lumber fees to T.J. Finch and his brother, D.F. Finch. The brothers had already distinguished themselves as prominent entrepreneurs by farming timber, producing and selling lumber, and helping found a telephone company and two banks. In addition, T.J. Finch was the sheriff of Randolph County. Within a year of reluctantly accepting payment in stock in the place of the young company's scarce cash, the brothers moved to "protect their investment" by buying out the remaining shares. By the end of that year, T.J. Finch occupied the company's presidential seat.

True to their nature, the Finch family didn't sit still for long. By 1908, the company reported profits on sales of $91,522. A year later, total assets were nearly doubled by the acquisition of Bard Lumber and Manufacturing Company. Moreover, T.J. Finch positioned the growing company for vertical integration, starting a machine shop, a three-story building for wrapping and upholstery operations and inventory, and one of the largest veneer plants in the South. The 1914 acquisition of Cramer Furniture Co. more than doubled the company's size once again, and by 1917 sales topped $1 million. Meanwhile, T.J. Finch had begun delegating key responsibilities to his son, T. Austin Finch, with an eye on the next generation of success.

Following World War I, new emphasis was placed on diversification of product line to accommodate customer demand. The first in-house designers were hired in 1925. Alliances were formed with other furniture manufacturers so that Thomasville chairs could be marketed as integral parts of furniture sets. Chairs were crafted by Thomasville, tables by St. Johns Table Co. of Michigan, and buffets by B.F. Huntley Furniture Co. of Winston-Salem. These wares, peddled by the first national sales force in the furniture industry, proved so successful that T. Austin Finch positioned the company to produce them on its own. By 1927, Thomasville offered a complete line of dining room furniture, distinguishing itself as the most diversified producer in the industry.

After T. Austin Finch ascended to the Thomasville presidency in 1927, he positioned the company for higher quality products and trendsetting innovation. Rather than cut wages, prices, and quality during the strain of the Depression years, the company stepped up to a higher grade of furniture--a move that involved immediate risks, but that set Thomasville apart from its competitors when the economic storm clouds cleared later that decade. Initiative in automation helped the company produce its higher-end products more efficiently, as well. In 1937, the company installed one of the first conveyor systems in the industry and retrofitted its equipment for automated processes. Meanwhile, T. Austin's brother, Doak Finch, played a growing role in the company's operations. For example, he contracted a manufacturer of automatic nail machines for shoemaking to design the first such machines for the furniture industry. Following T. Austin's death in 1943, the younger brother continued the lineage of Finch company presidents.

During the second world war, 65 percent of Thomasville's efforts were geared toward government orders. From army double deck bunk beds to wood plugs for bombs, tent stakes, and spatulas, the company's products had moved from domestic sitting rooms to overseas battle fields. Stores of consumer furniture were sold exclusively to customers who had bought from Thomasville before the war.

The postwar era was marked by strong economic recovery on all domestic fronts, with a prominent share of the furniture market moving to the South. Large, biannual exhibits--in April and October--served as forums for furniture makers to showcase their products. Thomasville launched marketing campaigns designed to get potential consumers right into the factory, and in 1958, the company opened a massive, four-story showroom that dwarfed those of virtually all its competitors.

The 1960s ushered in a period of unprecedented growth, spurred by a series of mergers that changed not only the scope of the company's client base, but its name. In 1961, Thomasville Chair Company merged with B.F. Huntley Co., continuing a 35-year alliance in marketing and developing complete furniture packages. The new entity, renamed Thomasville Furniture Industries, went public in April 1962 and began selling shares on the New York Stock Exchange in 1964. With greater resources at hand, the company broadened both its product line and its client base, moving decisively into contemporary styles and forging strong ties with business clients, such as hotels, in the contract furniture market.

Starting in the late 1960s, the company took great strides in quality control by pioneering the industry's first Environmental Simulation Package Testing Laboratory. Using climatized chambers and specialized machines to simulate variable conditions, these facilitates helped assure the durability of packaging and, ultimately, the condition of Thomasville's delivered goods.

In 1968, Thomasville Furniture became a subsidiary of Armstrong Cork Company, a leading industrial firm with a history dating back to 1860, when Thomas M. Armstrong and John D. Glass began producing cork bottle stoppers in a one-room shop. By the time Armstrong acquired Thomasville, it had become a major industrial manufacturer. Shortly thereafter, its name was changed to Armstrong World Industries to better reflect its diversified product line, which ultimately ranged from industrial floor coverings to carpets, wood products, furniture, adhesives and sealants, and gaskets by the 1990s.

Under Armstrong's parentage, Thomasville continued to pattern of growth through acquisitions that had started in the early 1960s. Indeed, the 1960s were fruitful years for mergers with a number of valuable companies: Phoenix Chair Company in 1964; Founders Furniture Company in 1965; Western Carolina Furniture Company in 1966; and Caldwell Furniture Company in 1968. During the 1970s, the company continued to expand its operations with the start up of the Armstrong furniture line, a lower priced line of bedroom furniture. Under the leadership of Frederick Starr, who became president and CEO in 1982, that growth continued. Key mergers and facility developments included Gilliam Furniture Inc. in May 1986; construction of a new plant at Carysbrook, Virginia, in June 1986; the Westchester Group of Companies in November 1987; Gordon's Inc. in August 1988; and construction of a 40,000 square-foot addition to one of its Thomasville dining room furniture plants in late 1988.

With recessionary trends in the early 1990s, Thomasville lost some of the growth momentum that it had enjoyed during the boom of the mid- to late 1980s. The furniture industry was particularly recession-prone for two key reasons: most consumers were quick to put off furniture purchases in bad times; and furniture sales were highly dependent on real estate, which was hit hard by recession. Moreover, as analyst Wallace Eppeson Jr. noted in a January 1994 Business-North Carolina article, furniture sales historically remained stalled long after recessions were over--reflecting in large part the deferrable nature of the product. Still, Starr took few draconian measures to curtail the ambitious plans he had begun on the crest of the 1980s. Drawing on the expertise of financial officers running complex computer programs in late 1990, Thomasville calculated its likely profits if the company were to suffer ten, 15, or 20 percent reductions in sales. Concluding that medium-term growth might be flat, but not detrimental, Starr and his team positioned the company for continued growth in the not-to-distant future. "We really do not want to close plants.... We've got great plants, great people. You can't get them back if you close them," Starr told John Burgess in a November 25, 1990 article for The Washington Post.

Rather than close plants or severely cut back on operations, therefore, Thomasville moved to lighten its financial burden with a series of effective cost reduction measures in the early 1990s. The company stepped up programs to reduce production and distribution time, to improve quality, and to restructure its salaried and hourly organizations. The company also shifted production toward lower-cost items that would perform better in hard times, such as upholstered and non-assembled furniture. In addition, in 1991 Thomasville moved into a key, new market that promised exceptional growth: furniture equipped with electronic components. In an October 25, 1993 article for Investor's Business Daily, Kathleen M. Berry reported that sales of such furniture designs were expected to reach $3 billion by 1995. To tap that potential, Thomasville struck an alliance with Holland's Philips Electronic NV, collaborating on new entertainment centers or home theater systems with price tags between $10,000 and $12,000. The company also made cross-merchandising arrangements in 1993 with Eastman House to sell mattresses and quilted bedsets with its beds and also began to develop its international business.

In an effort to maximize its share of a stagnant market, Thomasville redoubled marketing and advertising efforts that it had started aggressively pursuing in the 1980s. Such a strategy provided an appreciable advantage in an industry that tended to neglect consumer advertising. Although furniture makers shipped $18 billion in products each year, manufacturers spent only $170 million annually on consumer advertising, the Home Furnishing Council estimated in Advertising Age on January 10, 1994. (Furniture manufacturers traditionally spent their marketing money on trade ads, leaving the task of consumer advertising to retailers.) Thomasville was among a small minority of exceptions. As early as 1989, the company initiated a $10 million-plus television ad campaign. Moreover, Thomasville forged ahead in its "galleries" program, consisting of free-standing stores that displayed only the company's products, as well as fully furnished displays in retailing stores. By 1990, Thomasville had already established more than 500 such galleries, with many more on the drawing board. The push was a success: between 1982 and 1988, Thomasville saw its sales double to $360 million.

Along with their advantages, Thomasville's marketing efforts caused some troubles for the company. In April 1988, a group of North Carolina discount retailers filed two antitrust federal court challenges against Thomasville. In May, the retailers pressed for a bill in the General Assembly that would permit them to sell furniture by mail and toll-free telephone. They claimed that the furniture manufacturer was placing excessive restrictions on retailers by forbidding them from selling Thomasville goods over the phone to customers who had never set foot in the showroom or to solicit business outside the local area. Thomasville argued that it was merely protecting the rights of furniture manufacturers to draw customers into the showroom, where they could see a broad complement of furniture. The company also intended to stop "free riding" customers who shopped at their local galleries and then ordered goods from afar, often at lower prices. In June 1989, Thomasville amended its distribution policy by which retailers could sell to any client in the state and to any mail or telephone customers they had prior to June 8. By the end of November 1989, this compromise had prompted the retailers to drop the suit.

In mid-1994, Thomasville consolidated the lessons of all its past marketing efforts. The company combined direct mail, TV, and print advertising for a nationwide image campaign developed by Pascale & Associates, a Greensboro, North Carolina, agency. Promotion of a new product line, Country Inns & Back Roads, was directed at a target audience of upscale women interested in antiques, museum art, cooking, and gardening. Pascale started the campaign by issuing three separate direct mail postcards, taking out billboards, and placing three newspaper ads, all of which aroused consumer interest without showing the actual product line. Capitalizing on the anticipation from that first phase, the campaign depended on a second phase: a combination of mini-catalog mailers, retailer brochures, newspaper ads, and radio and TV spots that actually described the furniture products.

Such sophisticated marketing campaigns, in conjunction with general initiatives to improve performance, lead to record sales and earnings in 1994, and boded well for the company's ongoing success. Thomasville could boast an impressive ascent since its origins as a small-town manufacturer of chairs, and, despite the ongoing rigors of the furniture industry of the 1990s, it seemed unlikely that Thomasville would stand--or sit--still for a moment before going forward.

Thomasville Furniture Industries, Inc. History

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