Don a. hunziker; ladd furniture
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
MARCH 25, 1993
HIGH POINT, N.C.
LADD FURNITURE OFFICES
Roy Briggs, Interviewer
INTERVIEWER: Don, we will start with your personal background. When were you born?
HUNZIKER: September 16, 1927, in Sewanee, Tennessee. My family came to North Carolina around 1929. We lived here in High Point about three years. My father was superintendent of Tomlinson Furniture. He left there and became a salesman for Westinghouse selling high pressure laminates for ships and streetcars, and so forth, working out of High Point. When the recession hit, we all went back to Tennessee. My father went about trying to find a job. He found a job in Virginia as superintendent of the old David M. Lea Company in Richmond. Then he brought the family to Richmond.
When we came to Richmond we carried in our hands – the four kids, Mother and my uncle – everything we owned with us including furniture, cooking utensils, clothing and everything. Obviously, we didn’t have much. We stayed in Richmond, and I consider Richmond my home.
When I got older, I would work at the David M. Lea Company. Then when I went into the service and returned, I went to college in Richmond, and again I worked during the summers at the David M. Lea Company.
When I finished college in 1951, I went to work full time there for about two years, but felt we could make a lot more money doing other things. I went to try to sell insurance, which I couldn’t, and then I became director of personnel for First Merchants Bank, which was the largest bank, and that didn’t pay anything. So, I left there and came to Raleigh, North Carolina and became personnel director for The Farmers Cooperative and Exchange which covered North and South Carolina.
In the meantime, David M. Lea became unionized in my absence. So they came back to me as a trained human relations person and hired me to come back with them in order to help them deal with the union. That was in 1956. I have been with David M. Lea (or the predecessor companies of LADD) since November of 1956, until I retired in 1992, after 36 years of continuous employment with the company.
INTERVIEWER: Do you have any in-laws still in the business?
HUNZIKER: No, not now. My father was very much in the business for a long time. When I came back with the company in 1956, he left out of disagreement with Angus Powell who was running the company for his family at that time. He left in early 1957. So he was only with the company for six months and I was with the company during this period of his employment. He resigned – basically retired, and later died of a heart attack.
INTERVIEWER: Where did you go to college?
HUNZIKER: In Richmond – it was then called The Richmond Professional Institute, which was a division of William and Mary. Now it is called Virginia Commonwealth University.
INTERVIEWER: What was your major in college?
HUNZIKER: Business, with a minor in human resources.
INTERVIEWER: Were there significant happenings in college that affected your later life?
HUNZIKER: I began to grow up in college. When I was in high school, I was more for fun and carrying on, and then I went into the service. When I went into service as a Private and came out as a Corporal, I realized the kind of people I was going to have to be working with the rest of my life. It made me grow up, step back and say, “I can do better than this.” So when I came to college, I was a more serious student and achieved good grades, although I had terrible grades in high school. In fact, I finished high school in a private Episcopal school in New York. My father sent me there to be sure I got through high school before I was drafted into the Army, and it worked.
INTERVIEWER: You were in the Army?
HUNZIKER: I went into the Army during the period when they separated the Army from the Air Force. I was discharged from the Army Air Corps.
INTERVIEWER: Your first furniture job was with David M. Lea, you told us about that. Who was your boss there?
HUNZIKER: When I first went to work, it was a guy named Martin Leviner who was the plant manager, but I worked very closely with Angus Powell. The Powell family includes the Supreme Court Justice Lewis F. Powell, Jr. He was Angus Powell’s brother. My father worked with them for years, so there was a relationship with the Powells and myself from the beginning.
I went to David M. Lea in the position of human resources, and after a short period of time I was made plant manager. I stayed in manufacturing, first running the Richmond plant and then all the Lea plants.
Back then part of what the Powells owned was an industrial wood box plant. In fact, this is how David M. Lea got its start during 1938. They made export tobacco boxes for shipping overseas and plug tobacco boxes and so forth. Then in the ’30s, the reason the Powells hired my father was they came up with the idea to separate the high quality lumber from the log run material that they bought for the box business. They would siphon the good lumber into furniture. So they were able to make furniture using good grade lumber but they purchased it at a very reasonable price. They started out only producing a line of chest of drawers, for example, three-drawer chests and up to triple dressers, but not beds. It was kind of funny – Kemp, which was a competitor in North Carolina, made beds but no chests, so we kind of sold together. Although we were competitors, we often worked together. Back then everybody had a similar product line: maple, walnut or mahogany stained. So without difficulty we could sell with Kemp. Later in the mid ’50s, we began making our own beds for our furniture. David M. Lea had the reputation of manufacturing a good, clean product. After the war, up until about the mid ’50s, they sold products on an allocation basis. You don’t see that anymore, and probably never will.
INTERVIEWER: The company at that time had a reputation for a very inexpensive product, but with the best finishes in the business.
HUNZIKER: Every bit of our furniture was a very clean product. The quality was very good for the price and that continues today
INTERVIEWER: Let’s talk about how the industry has changed.
HUNZIKER: Products have more style today. It was previously a basic bread-and-butter line which you continued to make better. They would come up with a new finish now and then, but it was the same product. Today we develop a whole new collection that comes from a major effort. It’s just a different industry today.
INTERVIEWER: What was the first Market you attended?
HUNZIKER: I attended Market long before I came with the company. I would come down here with Angus or my father when I was not working for the company, or was working temporarily. I began coming to the Markets, responsible for selling, in 1970. I was made president of Lea Industries in the fall of 1974.
I guess it was about 1970 when I came on a regular basis in a selling capacity.
INTERVIEWER: What about the very first Market you attended?
HUNZIKER: I can’t remember the first Market I attended. I remember coming and the hassle we had in trying to find a place to stay and all the problems associated with getting new product ready. Since I was in manufacturing, I got whatever accommodations were left over. Also, I was only going to be at Market five days when others would be here for 10 days. They were not very good accommodations. I remember some of the places we stayed where the trucks were changing gears all night and rattling the walls of the motel. I also remember waiting in line to eat. It is a much more pleasant experience today by far.
INTERVIEWER: That was when Markets were in July and January?
HUNZIKER: July and January, and also April and October.
INTERVIEWER: Any other changes other than the accommodations?
HUNZIKER: One of the reasons the industry dropped the January and July Markets was because the dealer would come and see about half the buildings dark in between Markets. It would convey the impression that this Market was not a very important one – that it was dying. We wanted that Market cut out all together so the dealer would come in April and October and he would get the impression it was a very viable Market...a lot of people here and a lot of activity, which was true. And this is what has happened – the negatives have completely disappeared. It is without question the most viable Market for furniture in this country – I guess in the world.
INTERVIEWER: Tell me about the beginning of your company, and in your case, that would be LADD, but going back to David M. Lea too.
HUNZIKER: It started as a box manufacturer, making export boxes and plug tobacco boxes. That was in 1869. The person who started it was a British American Tobacco company purchasing agent who needed a reliable source for these boxes. The purchasing agent’s name was David M. Lea and the company told him to go out and start a plant and he named it after himself. Then around 1902, the Powell family, primarily through his wife’s side of the family, bought the company and struggled to pay for it over the years. They never really did get it paid for until after the 1940s. They struggled to make every dollar but didn’t always make a dollar – they never made much money. He was like most entrepreneurs in those days – he saw every expense as a dollar and nothing went on in that company that he didn’t approve.
The first engineer we hired back in the ’50s was going to build a garage to do maintenance on fork trucks. The engineer designed it and laid it all out as a good engineer would and Mr. Powell, Sr. came down and took his foot and made marks in the ground. He said, “That’s where you are going to build the building and that’s how big it’s going to be.” And the building was built just where he put his mark in the ground for the four corners of the building. That was typical of his appreciation for engineers.
His son, Angus, who was a Navy pilot during the war, was well educated and trained in the more compassionate side of managing companies. There was a world’s difference between him and his father. That created a little unrest in the company because, who did you listen to?
Angus did quite well. He expanded the company from a box company to a furniture plant. When my father came in 1930, they were having problems meeting the payroll. When Angus started running the company in 1946, he opened the lumber and plywood plant in Windsor, North Carolina. He opened a little veneer operation in Elizabeth City called Elizabeth City Veneer Company, which has since been sold.
Then in 1959, he built the Kenbridge plant as a new product line called Kenlea Crafts. It struggled even though it was a beautiful facility – straight line, one floor, something you didn’t see much of in this industry at that time. But Angus never purchased any new equipment. It was all used equipment with new people trying to run it – people inexperienced in the woodworking industry. It was a real struggle and it was a real drain on the company’s finances.
So in 1969, Angus and the Powells sold their interest to Sperry & Hutchinson, the green stamp company who had lots of cash because the stamp business generated a lot of cash. S & H had reached the conclusion that there was great growth and profit opportunity in the furniture industry which was the same conclusion that many other major companies reached at that time.
They were looking for furniture companies and Angus Powell was in the mood to sell, having struggled all his life in the company and not really accumulating a lot of wealth as a result of it. He sold David M. Lea to Sperry & Hutchinson, who at the same time was buying a lot of other furniture companies. Within the year of the David M. Lea sale, they had bought American Drew, Daystrom, Gunlocke Co. and others. They bought a number of furniture companies and were trying to manage them all out of New York, and not doing very well.
After Angus sold the business, they brought in a person to run the company from their ranks. His name was Al Kaiser. He was president from 1969 until 1974, when I took over the company. Kaiser then went to run Gunlocke and later came back to Sperry & Hutchinson. I don’t know where he is today. The company made more money the next year than it had made in its history at that time, and continued to do well. It is continuing to do well today as a profit contributor.
Lea began to expand. They bought the Gluck Company in Morristown, Tennessee; they bought Tennessee Furniture Industries Co. in Morristown; they bought the Unagusta plants, in Waynesville and in Nichols, South Carolina, which we didn’t have but for about a year. All were Sperry & Hutchinson companies, but they were bought to be run by the Lea organization.
Then in 1981, the Sperry & Hutchinson Company sold its business to Baldwin-United; they sold everything they owned. The reason was the Beinecke family, which had controlling interest in the company. One of the Beinecke cousins sold his interest to the Bass Brothers in Fort Worth, Texas. The other two Beinecke cousins then became concerned that the two of them couldn’t control the company if one of them were to pull out and go with the Bass Brothers. So they agreed that they would sell their interests. They began looking for a white knight – Baldwin-United. Baldwin began spinning off all of their furniture operations and other kinds of businesses they acquired from the Sperry & Hutchinson Company. Baldwin spun off these businesses that they didn’t want to manage, putting in some of their money to help the new management buy the companies, their thought being that if the new businesses succeeded, they would convert their convertible stock and get their company back. They would have a successful company. If it didn’t succeed, they wouldn’t have much money invested.
This was all in conjunction with the purchase of the Sperry & Hutchinson Company. Baldwin-United wanted the green stamp business but they didn’t want all of these other things with it, so they had a way of spinning them off. But in the meantime, United got into financial difficulty and they couldn’t convert their stock. Some of our people had reached an age where they could retire, and Baldwin couldn’t come up with the money so that gave LADD a chance. We agreed we would retire these people who were due to retire if Baldwin would sell us their convertible note, which they did.
So then we raised the required money by borrowing against the assets of the company and bought the convertible note. This gave management full ownership of the company and no connection with Baldwin whatsoever. So Baldwin had a good ploy and a good creative idea but it just didn’t have the funds to execute their plan. They had overextended themselves so badly on other deals that they couldn’t take advantage of the opportunity they created. That gave the management the opportunity to purchase the company without a lot of cash on our part, since none of us had any money to speak of. So it was a very clever deal and worked fine for us. Dick Allen and I were the two major shareholders. A year later, we hired Bill Fenn. Bill came in as a third major shareholder of the company. We worked as a team, working for the company and growing the company. We kept Daystrom, Lea and American Drew. That is where the initials LADD come from. Later, when we began to run the company successfully and started accumulating funds, we not only paid off the notes at the bank, but we acquired other companies. We acquired two upholstery companies: Barclay Furniture and Clayton-Marcus Company in reverse order. We acquired Pennsylvania House and American of Martinsville. Today LADD is about the fourth largest furniture manufacturer in the United States and maybe the world.
INTERVIEWER: What happened to Unagusta?
HUNZIKER: Unagusta just became part of Lea and it is today. The same thing is true of the old Gluck Company and TFI (Tennessee Furniture Industries), it is part of Lea. The others were dissolved.
INTERVIEWER: And you never had ownership of Gunlocke at all?
HUNZIKER: No. I was responsible for Gunlocke when I was vice president of manufacturing for Sperry & Hutchinson Company. I ran Gunlocke along with the others, but it was never part of the LADD team, except when we bought all of these companies out from Maytag. When we bought Maytag Corporation, that is how we acquired Pennsylvania House. We again acquired Gunlocke at the time we were acquiring the Maytag furniture group and we announced at that time that we were going to spin off Gunlocke because we didn’t see a good fit with LADD. We also announced that we were going to spin off McGuire Furniture Company and Kittinger, and keep Brown Jordan and Pennsylvania House. So that was what we did. So we did have ownership of Gunlocke for a short period of time until we could sell it, but we never took it over or changed anything because we didn’t intend to keep it.
INTERVIEWER: What changes have you seen over this period? You cover a very active and expanding situation. What have you seen in the labor side of that aspect of the business? What has changed?
HUNZIKER: Well, labor is still a vital role or component in the manufacturing of furniture. It used to be that we watched labor extremely close and we were very concerned about minimum wage law changes. We paid the minimum wage to many of our workers. Lately in the furniture industry, the equipment is becoming more sophisticated, requiring better-educated workers. The industry as a whole is paying better wages today than they used to. We are hiring a better caliber of workers today and will even more so in the future. There will still be a lot of manual tasks, but also there is a lot of high-tech equipment that will be operated by people who have graduated from these technical colleges. We are bringing in a lot of equipment now that is very sophisticated and very expensive. The key there is not so much what labor costs are, it is how you get those machines and run them 24 hours a day. When you pay a million dollars for a machine, you’ve got to run it three shifts or you are not going to get your money out of it.
INTERVIEWER: What is the situation with pay? You mentioned furniture companies normally pay about minimum wage, but I seem to see now a lot of increase in incentive pay of some kind or another. Not piecework probably, but some other kind of incentives. That seems to fit into this business with the sophisticated machinery in which you can use the employees’ minds in such a way that you can pay them more for thinking.
HUNZIKER: Incentives, including piecework, are an important part of payment in the upholstery category. The woodworkers have been using the standard hour incentive program. They set the standard time it takes to produce a given part and pay for the production (time) over that at the standard rate. That allows the employee to make more money and not have additional costs to the company. The company breaks even on these additional pieces of production and we share that with the employees. Those are part of the changes I see taking place with the labor in this industry.
Workers are becoming smarter and better educated. With more sophisticated equipment and better ways of paying them, we can motivate them to do things that we want and need to have done.
Control of materials is becoming much more important today than it was many years ago. The cost of lumber is sky high and has become a real commodity. It goes up and down like a yo-yo. You’ve got to be able to find ways of getting the same effect without having to depend entirely on solid lumber unless you get paid for it. Pennsylvania House uses solid lumber, but that is the only one of our companies that really specializes in solid lumber. Most of our companies use veneers, printing, and all kinds of material substitutes in the industry. They have the same look for less money and have a more stable-priced product.
INTERVIEWER: You mentioned a little bit about styles when you were talking about the early days of Lea which had a much more standardized product.
HUNZIKER: Yes. Colonial, Colonial, Colonial. Back when I came into the industry the designers weren’t all that important. More in-house designers were used because you didn’t make the major changes. Nowadays, a lot of people use contract designers and we do to a major extent. We use more designers paid on a royalty basis, which enables us to come up with a design of a very elaborate suite. We have the designer take the risk with us because he will not get any income unless the product sells. If it sells well, he will be paid well. Today not just historical designs are being used, but a lot of new designs are coming into this industry. The selling of the product hinges a great deal on design which allows the dealer to sell the product at his markup without having to compete against everybody and his brother. The retailers are constantly looking for something new, and it’s our job to give it to them.
INTERVIEWER: So style is much more important now?
HUNZIKER: More important and consequently, there are much broader offerings. Standardized products are more a thing of the past. Some people argue whether it’s good or not.
INTERVIEWER: How about advertising? I don’t think the early companies advertised hardly at all except maybe in the little industry magazines that nobody read except the retailers.
HUNZIKER: There does seem to be a movement in the industry for more and more people to spend money in advertising. LADD has not done a great deal of advertising. Pennsylvania House and Brown Jordan have a good consumer name and industry name from advertising. LADD has various divisions that are independent, in a sense, self-contained units. Some of them advertise a lot, some a little and some don’t advertise at all. We leave it up to each president because we are holding him accountable for his bottom line. If he thinks it helps him improve his bottom line, he can advertise. If it is costing the bottom line, he had better think it through twice.
But there is a movement to get closer to the consumer. I think you are going to see advertising get more and more important in this industry. I think it has been more important, although by most standards, minimum expenditures are being made on advertising.
Somewhere along the line I think this industry will be spending more of its efforts trying to reach the consumer, not the dealer. We have to go through the dealer, but we have to get to the consumer, to make sure the consumer is getting what they want, when they want it. I think this whole movement into galleries is a movement in that direction.
INTERVIEWER: Let’s talk about changes in production. You mentioned the more sophisticated machinery – numerical control. Is there anything else in that area that has changed over the years?
HUNZIKER: Basically, when you bought a new machine years ago, you got a few things: a new coat of paint, maybe a little more horsepower motors, and very few gadgets. Basically, it would be replacing machine “A” with machine “B” – just getting a new machine. Today we are spending practically no money on just a new machine. Everything we are buying today is designed to do something special. Specialized to get a big payback in productivity. Things that will give more accuracy, quality, and more detailed work. It is amazing what some of these new machines can do. Today, we are buying machines that save labor and that do operations which we previously couldn’t do. And above all, we have extreme accuracy in the control of the dimensions.
For instance, you can take a board panel and feed it into one of these new machines and it will do whatever it is programmed to do – rout and a whole series of operations. You can then take and change that setup and run something else through it. You can come back to the first setup and run that same piece that was originally run through it. It will go back through and change everything, and everything will go back. Each board, seats or whatever will fit right back into the original holes, and you can’t tell that it has been through there twice. You couldn’t do that before manually.
INTERVIEWER: Most setups are being done through numerical control of some sort. You would never be able to duplicate these pieces, setup to setup, with human beings. Am I saying that correctly?
HUNZIKER: That is correct. You don’t necessarily have to have really skilled people to do that. Some of these machines you set up the first time and insert an IBM card into it. It records everything on that card for the second time that you want that setup. You just put that same card back in there and it will duplicate that setup exactly.
INTERVIEWER: What about the process of purchasing? You touched a little bit on lumber but there are a lot of other materials involved.
HUNZIKER: The industry is using a lot more materials. If you go back to when I first came into the industry, you were primarily using veneers, upholstery, finishing materials and hardware. Now there are all kinds of substitute materials in areas that you can use, like felt pads in drawers for storing things. There is a whole raft of things that you have to buy today that are features in the product. Purchasing has become more important.
INTERVIEWER: We pretty much touched on merchandising earlier with styles and so forth, but is there anything else you want to add in that area? Any changes?
HUNZIKER: I think that probably covers it.
INTERVIEWER: What about financing?
HUNZIKER: Financing is a different industry today, particularly since the ’80s. The way we are financing companies with debt has its negatives, but it also gave LADD, for example, a major positive. LADD would not be here today if you could not borrow funds and operate on debt as LADD is doing today and has done. Financing created the opportunity for us and for a lot of companies in this industry, and elsewhere, to succeed and grow. But some of us abused it. I think the whole country abused it. Like anything new that we get, we carry it to the extreme. But I think we are now more where we need to be. I think finance is a tool that we will always be using in this industry, but not to extremes. That was particularly true in this industry because so many of the original leaders in this industry thought debt was the worst thing in the world. Any debt was so foreign to them that they couldn’t stand it. It’s the others, like a LADD company, that borrow heavily, and operate from a very heavily leveraged position. It was difficult for them to understand. In my opinion, there is balance. I think the industry never made a good return on the invested capital because they had too much capital in the business. LADD always made a good return on invested capital because it didn’t have much invested in the business. But LADD was more at risk at times than the conservative managers. So debt has pluses and minuses.
Financing certainly has changed and I think it has changed forever. Within a reasonable balance it has changed for the good, particularly as we have more public companies. If you are buying stock, you don’t necessarily look at the furniture industry – you look for a company that has a good return on invested capital, and a good growth rate in sales, and a good growth rate in profits. If it meets your standards, you may buy that stock. That is one reason why people didn’t buy a lot of stock in the old furniture companies because they had, depending on what time period you’re talking about, a very, very low rate of return on their invested capital, because they had way too much money invested in the business.
INTERVIEWER: Your statement about the Powell family spending 40 years paying for the company was fascinating. What about changes in management?
HUNZIKER: Originally industry management was characterized by being the son of the owner, or a cousin – a family type operation. I think that has pretty much gone by the wayside. There are still some examples of that, but it doesn’t dominate the industry like it once did. I think the industry has now attracted and brought in a lot professional people who are running this business like any other business. I think that is healthy for the industry. It gives opportunity. More people with no relationship to the furniture industry can come in here, just like they would in the shoe industry, chemical industry, or anything else. I think the industry will grow and prosper. We have to succeed on an international basis. You are not going to do that, in my opinion, with just hiring cousins to run the business. They are going to be too colloquial in their thinking. You have to get people with the same sort of initiative here that you would get in any other industry.
INTERVIEWER: So are we getting MBAs in a lot of businesses?
HUNZIKER: I don’t like to characterize so much by education as I do strengths. You are getting professional management people who are motivated to grow and succeed and I think that is healthy for the industry.
INTERVIEWER: You mentioned the situation where Angus Powell’s father was running the business, and Angus came in as a totally different kind of person. People in the company had a great deal of difficulty trying to determine which one to listen to.
HUNZIKER: It was a perfect example of the old entrepreneur who made every penny in the company by clawing it out with his bare hands. The son came along, who was well educated and from a different environment and a different society, and the two were just like oil and water in the business for a long time. Eventually the father was smart enough to get out and let Angus run it, even if he ran it poorly. He didn’t run it poorly, but his father was able to get away and get out of it. It takes a strong man to do that.
INTERVIEWER: You came in this industry as a professional manager with no family association and, as you said, you did this in the worst year in the company’s history. So, times changed in that case and apparently, the change was well suited to the situation that you found yourself in at that particular time.
Tell us about support that you personally received from other people in our industry. Most everyone has some instance of that.
HUNZIKER: The Sperry & Hutchinson people taught me finance. I have always had strength in finance but I think that was the real strength that they brought to the financial controls party. I think I learned a lot working with them in finance and cash management.
In the plants, old Martin Leviner was a big help. He spent his whole life running those plants. When I first went into managing a plant, I had to run it as a manager, because I didn’t have all of that technical knowledge. He gave me enough knowledge to be a big help to me.
Henry Foscue was always a good friend of mine. We had good relations, and he was very helpful. He was on the board of the Market Center (now the International Home Furnishings Center) and he did a lot of things to try to make me comfortable.
INTERVIEWER: It’s surprising how influential Henry has been. Mary Henkel credits him with a lot of their success.
HUNZIKER: I think he was one of the real leaders in this industry. This Hall of Fame honor they are giving certainly ought to go to Henry Foscue.
INTERVIEWER: His time will come. He needs a sponsor. It is a voting thing and someone has to secure votes. It will be done when the time is right for him. Are there any other people who have been prominent in your career?
HUNZIKER: Dick Allen has been helpful – particularly in the acquisition. He has had good experience in that area and was a real leader with LADD in acquiring.
INTERVIEWER: Tell us a little bit about his background.
HUNZIKER: Dick is a good example of the professional manager coming into the furniture industry. He is a graduate engineer, has an MBA, and he came to us from one of the feed companies out in the Midwest, where he was actively involved in finance and acquisition. The feed company acquired a lot of little companies, so he had a lot of experience. I hired Dick and brought him into the company because he is very intelligent, was a hard worker and he brought strengths in areas that we didn’t have. Dick was hired and started working here when we were owned by Sperry & Hutchinson. The S & H sale was in 1981 and he came in 1980. Dick had just moved to High Point and had gotten settled when the company was put up for sale.
INTERVIEWER: Have you received support from other companies? Have any of your companies been helped by other companies, as opposed to personal support?
HUNZIKER: I don’t know that I can say that. I’m friends with a lot of the management of the various companies and have been for years, but we are still a highly competitive industry. About the most cooperation you can expect is to be able to get into the other guys’ plants which is an accomplishment in itself. You still can’t do that in most plants.
I was very active through both the AFMA (American Furniture Manufacturers Association) and SFMA (Southern Furniture Manufacturers Association), and was president at one time. That was certainly very helpful to me and exposed me to a lot of industry people. I was fortunate enough to receive the Ryan Award which is now the Distinguished Service Award. It was a real honor and I appreciate my colleagues having done that. But I don’t know that I can say other companies have helped us particularly.
INTERVIEWER: You’ve talked about the various companies that are now involved in LADD but you’ve said very little about American of Martinsville. Of course, Martinsville, Bassett and Stanley are sort of a closed society up there. American was very much a part of that for a long, long time. Is there anything related to that?
HUNZIKER: I don’t think they are near as closed today as they once were. American of Martinsville has two product lines. One is contract products. The contract segment of the industry has really been suffering in recent years because the hotel/motel business has been dead due to the financial crunch. We have all of these hotels, and practically none of them are making any money. So none are spending very much to modernize or build new hotels. Furniture sales in the contract field, the motel/hotel segment, have really been suffering. Stanley was in this segment, and now they are out of it completely; Bassett was in it and now they are out; Drexel was a big factor in the industry and they are out of it; American of Martinsville and a few small manufacturers are about all that is left. For the last few years they have had difficulty because of the fact that the volume has not been adequate to carry the plant overhead. The residential part of the American of Martinsville product line seems to be doing better. It was never strong, but they did have a strong product offering occasionally. They’ve had some real winners along the way, but residential was always secondary to the main business of contract furniture. We have tried to separate the plants, the management and everything so that the residential could now stand on its own feet. They seem to be making some progress.
That relationship that once existed in Martinsville may still exist, but I don’t think it is nearly as strong today as it once was.
INTERVIEWER: Martinsville, to a certain degree, is family. The Hookers, Stanleys, and the Bassetts were all cousins.
HUNZIKER: They all had public stock but they each ran them as their own company.
INTERVIEWER: Morgan Simmons – I don’t know of any relationship with any of the rest of them, family or blood relations.
HUNZIKER: He was not tied in, but he knew them all and he was in the family environment.
INTERVIEWER: On the other hand, personal support, what kind of relationships have you had that you’ve been able to help in a somewhat similar way?
HUNZIKER: Not company people?
INTERVIEWER: Not in your company necessarily.
HUNZIKER: I don’t know if I have helped anybody. Through the AFMA, I formed a lot of good friendships. Alex Bernhardt and I are good friends; Buck Shuford is a good friend; Dick Udouj and contemporaries. We were very close, including Spilman. But I don’t know if I helped anybody and I never really went out of my way to help. I was lucky enough to run my own company without getting involved in somebody else’s.
INTERVIEWER: Describe your business strategies. Have you any kind of a pattern, or management technique?
HUNZIKER: All of our companies are a little different. We set them up so they could all have different independent strategies to accomplish various things. In all cases, we try to have good general management that understands the consequences of finances, so they know when they make a decision, they are going to eventually see the economical effect of their decision. We try to balance economics, along with good product development and good product manufacturing. We try to do things that make good (business) sense. Not to have a cookie-cutter (approach) so that everybody has to fit into a mold, but do what really makes economical sense for you and not worry about the other companies. Or if it means working with some of our other companies, if that makes sense, fine.
We want people who accept a challenge to get measured by financial success, and to do what is necessary to accomplish that objective. It takes a well-rounded general manager to do that. There are not a lot of those in the industry.
INTERVIEWER: My interpretation is that your philosophy or technique or strategy has been to find a person and give him the company and say, “It’s yours — you make it succeed.” Is it possible to give him the responsibility and authority to do what it takes?
HUNZIKER: You have to make sure he’s planned and is not going by the seat of his pants. We oversee his planning and we oversee his performance. But he runs the business. Even if we disagree with what he is trying to do, he runs the business as long as we keep him.
INTERVIEWER: You make him plan?
HUNZIKER: We sign off on a plan. If a plan has good rewards for the risks involved, we sign off on the plan and we expect him to execute it.
INTERVIEWER: And then you monitor his execution?
HUNZIKER: Yes, but he runs the company.
INTERVIEWER: What has been your personal goal in business? Your overall goal?
HUNZIKER: Well, two things. First of all to climb the ladder to success because when I got out of school, I really wasn’t sure what I was going to do. I was just really trying to be successful. Consequently, that has been a factor in everything I have done.
Along with that I hope that I’ve also been one that can lead, and get management working together as a team. Set some challenges and get everybody working to accomplish them. We’ve had good relations with our people. We have been able to get some good people, and keep good people and have had very good success from it.
INTERVIEWER: You said you kept some good people. Are there any you didn’t keep?
HUNZIKER: Oh, yes, we’ve made our mistakes. Fortunately, they have not been major.
INTERVIEWER: How well have you achieved this goal?
HUNZIKER: We certainly are not 100 percent. I don’t think we ever get there, but we have made some progress. We are probably above the industry average in that kind of environment. I certainly hope we are.
INTERVIEWER: Obviously, the figures stand for themselves.
HUNZIKER: When we bought the company in 1981, we had sales of $137 million. This year we will do a little over a half billion.
INTERVIEWER: Which is $500 million. That is a factor of 4. How do you translate this personal goal into an expression of a company goal? Corporate goal?
HUNZIKER: The company has always said we were going to be a billion-dollar company from the size point of view, and profitability. We got set back a little bit on that because of the economy the last couple of years, but if the economy holds reasonably good, we’ll make that goal before very long with the combination of internal growth and external growth.
INTERVIEWER: How well have your corporate goals been achieved?
HUNZIKER: Considering the economic environment, I think pretty well. But considering the pure numbers without any interpretation, we didn’t do as well as we had hoped during the past few years.
INTERVIEWER: But in terms of this billion dollars, that’s simply a matter of time. It may take a couple years longer than you forecasted.
HUNZIKER: We’ll get it.
INTERVIEWER: Looking at the whole corporation of LADD as a company, what has been the overriding business philosophy?
HUNZIKER: Our philosophy at LADD is getting the right people in the right job, giving them the tools and the proper incentives to do the job, and rewarding, encouraging, and letting them do it.
INTERVIEWER: I’m supposed to ask you the same questions in terms of you yourself, as opposed to the corporation. On the other hand, to a high degree, you are the corporation. Is there any difference between the business philosophy of LADD and the business philosophy of Don Hunziker?
HUNZIKER: Not a lot. It’s basically the same.
INTERVIEWER: As I think about it now, not a whole lot of people have had the opportunity to directly influence the whole company the way you have. Look at the scale of your company – we’ve mentioned Morgan Simmons. Well sure, he influenced his company, but his company was a peanut by comparison.
HUNZIKER: I guess that’s true, but it isn’t just me. It is the total management team here. The blending of all their goals and aspirations and so forth. The corporate goal and the commitment to achieve it.
INTERVIEWER: So, I’m hearing that basically the corporate goal is overseeing all these individual corporations.
HUNZIKER: It’s certainly the goal of the senior people. You know I’m retired now, however; I’m still on the board and on board committees. Part of my retirement is because I had a health problem that I was concerned about, and I didn’t want to continue working and create a problem. I wanted a planned transfer of power so we didn’t have disruption. We set about over the last few years working in that direction and it worked pretty smoothly.
INTERVIEWER: That’s interesting. It goes back to a basic philosophy, I think. How does that compare with the situation between Angus Powell and his father? Apparently, they didn’t have plans for the transfer of power. I’m not picking on them because this has happened thousands of times in this industry between a father and son.
HUNZIKER: We don’t really have that disagreement here so that is not a factor. Too, I’m not involved at all in the day to day operations now. I have no responsibility other than as a director. Lewis Powell gave the company to his son Angus. There was probably little planning which would naturally create confusion. I guess that is part of what is in my background – to make me want to avoid a similar mistake.
INTERVIEWER: Even with the philosophy of transition, how do you do it in the right way, so everybody emerges in the company?
HUNZIKER: Hopefully, that will devise to attract professional managers to a great degree. They know it is not family that will disrupt their career paths.
INTERVIEWER: Describe your relationships with your suppliers.
HUNZIKER: We’ve had good relations with our suppliers and still do. We have relationships that have been very professional. We have not had real close personal relations like some companies.
We try to back up what we say. If you have a better price, we’re going to seriously consider you and probably buy your product. Some companies get so involved with a supplier that it makes it difficult to be independent. One of the strengths that LADD has is that we run these companies independently, and each one buys its own supplies. We have a person who coordinates purchases. He pulls it together and feeds back the information to all of our companies so we can say, “We [LADD]]]]]]]] are buying from you $2 million worth of goods, and now this company may not be giving you but $500,000.” We maintain a good relationship with our suppliers.
INTERVIEWER: How far can you go? How far do you have to go? For instance, I know there are five people that supply practically all the woodworking finishes.
HUNZIKER: Yes, there are probably five. All of them are good and if you pay your bills properly and you are reasonable in your price negotiation, all of them will give you the service. The service is the only difference. We switch back and forth from companies when we don’t get the service. I think when you go and deal with these guys, you’ll never know whether you are paying the right price or not. With the many companies that we have, most of them deal with different supplier companies. So that gives us another crosscheck on price – we can see where lacquer is per gallon across the many suppliers.
Fabric is the one product that is more difficult. Fabric to me is worse than finish materials. A finishing guy mixes his snake oil and comes up with a pretty product at the end. The same thing with fabrics – the guy that picks fabrics has to have a real flair for it. Once he picks it, you can’t go and put it out for bid very well. You have to get superior relationships on an overall basis to try to control price. “We’ll give you $2 million worth of fabric business if you will give us some sort of discount.” We do it on a negotiating basis, a professional basis. We tell our people you can take small things from a supplier like a meal or something, but we want you to buy a meal for him also so there is no obligation.
INTERVIEWER: On the other hand, what about your relationships with your customers?
HUNZIKER: That is entirely different. We have a good relationship with our customers, but we will never have one that is good enough. We are constantly striving to improve this relationship. Particularly with big customers, we want them to have a good relationship not only with LADD’s individual companies, but with LADD’s senior management. We want the customer to feel that there’s always somebody with authority at LADD that they can go to, just like they would to the owner of a private business. He may be dealing with somebody at the operating level running that particular business, but has a personal relationship with senior management so, if he feels its important to come up the scale, he knows who to come to.
INTERVIEWER: I have not heard anybody else express that sort of philosophy.
HUNZIKER: I think that is part of the difference between a family-owned business and a public-owned business. You don’t necessarily have to use this relationship all the time, but if an issue comes up, you clearly know what to do. We try to create the same sort of situation here at LADD with our companies and the way we are decentralized. It’s easy to have problems, but we don’t want to lose a customer over it. We want to make sure that he is comfortable with various levels of management. So, our management spends a lot of time with our major customers, getting to know them.
INTERVIEWER: Now, that is an interesting throw back from the more or less distant professional management.
HUNZIKER: Yes it is.
INTERVIEWER: That, too, the personal relationship with the family ownership. So, you know, the effort there is sort of reverse history.
HUNZIKER: As I mentioned earlier in our dealings with our management people, we are trying to be logical, trying to do what makes sense, not get in a cookie-cutter mode that everything just has to be the same. We pick what’s good and drop what’s bad, no matter whether it fits or doesn’t with what another LADD company does.
INTERVIEWER: Over the years, what have you found to be your greatest problems with your suppliers?
HUNZIKER: Again, it depends on what kind of suppliers. Lumber is a commodity and when the housing industry gets strong they siphon a lot of lumber away from hardwood mills which runs the hardwood price up. That has always been a problem.
The suppliers, while small, we’ve had good relationships with them. With the finishing materials, you always have to deal with the snake oil part of the thing. What they do, you don’t fully understand, but that has never been a big problem for us.
Fabric is probably the biggest issue: delivery, commitment, and not getting caught with too much when a pattern goes out of style. That is probably the most difficult item to deal with, maybe because I don’t know much about fabric. I came up through the wood segment of the industry.
INTERVIEWER: We’ve mentioned finishing materials. We have five suppliers. With fabric you probably have 5,000, certainly 500 majors. Some of them have the world beat on styling and some are out in left field somewhere on quality.
HUNZIKER: Then they will come up with a material that is manufactured differently and half of the fabric people in the industry don’t have the equipment to make it. The lead time and delivery time is stretched way out. In the meantime, we are telling customers we are going to do this, and he is telling his customers that this is going to that, and it creates a real credibility problem.
INTERVIEWER: What problems have you had similarly with your customers? This close relationship of top management with your customers, has that ever led to problems?
HUNZIKER: There is a downside to it. The customer can feel that he has such a good relationship with senior management that he wants to bypass the general manager of the company – that we can handle the problem. But we send him back. Even if we disagree, we send it back and it’s handled through the division manager. So in time they really begin to look at the general manager as the guy who makes the decision. It is something we have to be aware of because we don’t want our customers coming to us to negotiate a problem. We try to help sell LADD and the business units to the customer.
INTERVIEWER: You are selling the company.
HUNZIKER: Yes, we are selling ourselves. The general manager, with his sales manager, sells the furniture.
INTERVIEWER: How does this fit into the gallery philosophy?
HUNZIKER: It fits fine because what we are selling is LADD’s ability to accomplish these things and back it up. You are talking about a close relationship between supplier and manufacturer.
INTERVIEWER: Part of the selling job is to get the customers comfortable with the fact that the company can supply them with the furniture, and have acceptable quantity and quality to back up the space they’ve allocated on their floor. What I’m getting from you, which I haven’t realized before, is that it’s more of a corporate function than it is direct management.
HUNZIKER: The major customers know what the general managers have the authority to do. The overall management of the company is who will really determine price, allocations and priorities.
So major dealers want that relationship the same as we do.
INTERVIEWER: Anything else about customers or suppliers that needs to be said?
HUNZIKER: No, we love them and would like to have more.
INTERVIEWER: Describe your involvement in industry trade associations. I know that you’ve had, through the Powells and so on, a very close association with the SFMA and now the AFMA.
HUNZIKER: I always felt, particularly for a person like myself that didn’t have a lot of industry knowledge having not grown up in the industry, that I needed information and knowledge which I could only get from the industry associations. I used SFMA and AFMA to fulfill my knowledge of the industry.
From having been up through the marketing segment, I worked through the chairs, becoming president and chairman around 1980. I guess more importantly, the thing that I was active in that we previously didn’t talk about was that I was on the committee that helped negotiate the merger of these two associations. Then I came on the International Woodworking Fair (IWF) board, and later became chairman of that association and helped coordinate between the domestic and international suppliers and the woodworking machinery people.
I was also on the committee that helped negotiate the merger between the two manufacturing associations – the national group, the National Association of Furniture Manufacturers (NAFM), and the southern group, Southern Furniture Manufacturers Association (SFMA). We met numerous times. I think it made a lot of sense for the industry to merge. It was a difficult thing to do – not only to negotiate with the national group, but also to negotiate with our own people. There were a lot of people, like Hamp Powell, who thought the world would come to an end if we merged the two associations. Looking back on it several years later, we may have lost a little bit of the friendships that we had under the SFMA; the association was more like a fraternity. But while we may have lost some of that, we certainly gained considerably in the areas of Washington lobbying and income to service our people with the testing of wood dust and bunk beds and many other things. As you know, I was chairman of the committee for the original bunks beds safety standards. In negotiating with the machinery people, we must have had two dozen meetings.
At one meeting, I remember Buck Shuford and I had been to the machinery association meeting at Marco Island and we flew in one of those little, old DC-3s. Coming back, we lost an engine just as we took off. That was the first time I had ever been on a plane that lost an engine.
INTERVIEWER: Now, your involvement in the merger of these two associations is quite important. A very major part of that was the machinery show, which was not owned, but participated in by NAFM, but not SFMA. That was quite a factor in the merger of those two associations.
HUNZIKER: We had an accounting firm develop forecasts of what the income would be from the show. I don’t remember the numbers now, but it was something like $900,000 profit from the next show. We said that was ridiculous, that it wouldn’t be half that amount. It turned out to be about twice that amount.
The machinery show was very lucrative and it gave AFMA the income to really become a viable association. They could then afford to do a lot of things for the industry, like invest money in the NC State Furniture Program.
I got IWF to give $100,000, AFMA put in $100,000 and the government put in $50,000 or $40,000, so we had about $250,000 to finance that machinery development at North Carolina State University. A lot of good things took place. They were very good things to invest in.
INTERVIEWER: What has been the greatest benefit from the trade associations? The benefit to the association as a result of your involvement, and the benefit to you personally.
HUNZIKER: I guess the biggest benefit to the association was the work I did with the IWF and the consequence of the influx of money that was generated for industry functions.
To me personally, I thank all of the industry for helping to train and develop me as chairman of the various functions. They exposed me to a lot of people that I needed to know, as well as gave me the experience of conducting various meetings and getting industry people to work together on various projects.
INTERVIEWER: You mentioned that your personal background was largely in manufacturing and through the association you were able to expand your horizons in sales, finance and marketing that you probably wouldn’t have been able to do otherwise.
HUNZIKER: That is true, and the IWF kept me current in woodworking equipment and so forth.
INTERVIEWER: Have you been involved in any other business enterprises or joint ventures aside from LADD?
HUNZIKER: Not of consequence. Some investment ventures, but nothing of magnitude.
INTERVIEWER: Now we are going to talk about changes in the furniture industry. Describe how the industry has changed over the years that you’ve been active in the manufacturing side.
HUNZIKER: As I mentioned, I think new sophisticated equipment will make major changes in the industry’s attitude toward labor. In manufacturing, the use of computers, more professional managers, and the sophisticated scheduling of products through the manufacturing operations will create change. There have been a lot of changes in the manufacturing segment and I think there are going to be a lot more. I think we are just starting.
INTERVIEWER: How much of that has been motivated by foreign competition?
HUNZIKER: A lot of it, but more important than that, I think the foreign-made machinery manufacturers have given us the tools to do a lot. I think the computerized scheduling is something America has generated.
But I think most of the equipment made to run smaller quantities and better control of inventories and so forth, are all a result of our computerized setups. They reduce your setup time substantially and increase your run time. It has changed production economics considerably. All of that comes primarily from foreign machinery, especially the heavy machinery.
INTERVIEWER: Then your involvement in the machinery show certainly helped you a great deal in that respect. How much of the woodworking machinery today is foreign as opposed to domestic compared with, let’s say, 20 years ago?
HUNZIKER: Forty years ago there was practically no foreign machinery, if any. Today it’s probably 60 percent foreign machinery. Maybe if you look at the really sophisticated machinery, it’s probably 90 percent.
INTERVIEWER: Yes. You have your basic machines, then you have these sophisticated numerical control things that are a totally different ball game.
HUNZIKER: They sure are.
And LADD has a lot of that equipment. For example, LADD has some of the point-to-point machines, maybe 20 of them.
INTERVIEWER: Now what do you mean by point-to-point?
HUNZIKER: It’s a device that when you feed a panel into a machine, the computer reads from the first edge and calculates everything behind that point. So it’s point-to-point. It manufactures sophisticated end panels and so forth.
INTERVIEWER: But that means that you don’t have to set up every time.
HUNZIKER: No, you don’t have to set it up. All you have to do is make sure the right tool is in the machine, and then you put the right program in and run it.
INTERVIEWER: Now, do the individual tools, the saw blades and stuff, have to be installed to fit the particular program for the piece you want to run?
HUNZIKER: Yeah, but a lot of machinery has a library of tools that the machine picks up automatically. We have machines that have 32 different tools that are available for the machine to pick.
INTERVIEWER: It selects itself. Sort of like a turret lathe.
HUNZIKER: But in any case, to bore the hole, you’ve got to have the right diameter bit, otherwise, you’re going to bore the hole incorrectly. But the machine can pick up the right tool, bore it and put it back.
INTERVIEWER: Fascinating. Now, let’s talk about changes in the marketplace.
HUNZIKER: The marketplace is changing for a lot of reasons. Galleries are a major change. And big dealers, as opposed to ma-and-pa. Ma-and-Pa stores are deteriorating rapidly.
There is now more advertising. Stores used to not advertise at all. Now, they do big advertising.
Marketing, too, is going through a phase of professional managers. They’re managing computer-controlled inventories to meet the demand for products when they need it without having to spend a lot of money in inventory. A lot of changes are taking place in the marketplace, and it will accelerate.
INTERVIEWER: One thing that I found interesting that you mentioned, I don’t remember what the dollar volume was at David M. Lea, but at that time, they were a real powerhouse in this business. What was their annual volume?
HUNZIKER: $5 million.
INTERVIEWER: $5 million. And now LADD’S talking about $500 million?
HUNZIKER: Yeah. Bigness is in. Small retailers can’t make any money. The land on which their store sits is worth more than the business is worth. The son of the dealer doesn’t want to work that many hours seven days a week. There are a lot of reasons. They’re going to go out, and work for the big companies. They have enough help that they can have a person work a 40- or 50-hour week as opposed to 70- or 80-hour weeks.
And then, of course, the whole product itself is changing. I think that creates opportunity on the retail floor for the dealer to show more price points and to show more style categories.
INTERVIEWER: Is design not a vastly more important factor in the marketplace?
HUNZIKER: Oh, yes, very. That’s what I was talking about. On the retail floor, the dealer has got to be able to present balance between price points and style categories from the consumer’s point of view.
I don’t know whether the galleries are going to be so much more important than they are today. Galleries are important today and I think they’ll stay important, but I don’t know if they’ll grow. I think you’ll see the growth begin to level off. Primarily because, in many cases, retailers aren’t having all that positive of an experience with galleries; some are, some aren’t. They’re not necessarily getting their first choice of manufacturers’ products, and they don’t have quite the same incentive to try to get a better product in there. He’ll try to get a better product somewhere different. So I think there’ll be a limit on growth, but galleries are important today. It’s probably a third of the marketplace.
INTERVIEWER: Yes, but then as galleries get less important, that means that the retailer’s got only a certain number of square feet in his store. And short of investing money in more square feet, the only way he can broaden his selection is to cut down on real estate assigned to any given line.
HUNZIKER: Or commit more real estate to less product so you have a bigger display, but have less displays. I think you’ll see the dealer continue to play with those options, which will bring more people into galleries. There’ll be the constant flow in and out, depending on stores. But I think it’s going to begin to level off now.
Do you remember when the warehouse showrooms first came out? They were going to dominate the industry, and they became important. They were up to around a third of the industry’s volume, but now they’re down to around 20 percent. They came in big and then they kind of leveled out. I think you’ll see them stay about where they are with their share of the market. The furniture retail warehouse showroom got confused. The reason they were successful was that they offered instant gratification. You carried the inventory in the store and they could give it to you today and at a low price because they didn’t have big displays. But then they became confused. It’s not a clear picture like it once was.
INTERVIEWER: Well, and then you said awhile ago, the manufacturer has got to be able to make smaller cuttings so that he can make more prompt shipments. Even when the retailer is selling from galleries – and I may be putting words in your mouth – but when he’s selling from a gallery, the customer still expects to have their furniture.
HUNZIKER: Oh, yes, he sure does.
INTERVIEWER: Right now.
HUNZIKER: And literally a lot of them want to put it on a pickup truck, and take it today.
INTERVIEWER: So that side of the business, it seems to me, has become vastly more complicated.
HUNZIKER: And quality is more and more important
INTERVIEWER: What do you see as the most serious single problem facing this industry at this time?
HUNZIKER: I think probably the ability to satisfy the customer’s needs promptly and quickly. We have too much money invested in inventory, and not enough satisfaction to the consumer. What I mean by that is the industry still works too hard to satisfy the retailer. What we need to do is go beyond that to the consumer.
Also I think the big change you’ll see in retailing is going to be the ability of the retailer to satisfy the consumer’s needs quickly and economically. And to probably have more input on the product itself. A lot of companies, including us, are spending more and more money on consumer panels to look at the product and receive input on what’s good and what’s not. We used to do that with the retailer, and we still get some retailers in there, but it’s getting more and more to the consumer.
INTERVIEWER: Over the years, Thomasville has had the image of having these consumer panels. Dick Burrow at Kroehler had them a long, long time ago, when I don’t believe anybody else was doing it.
HUNZIKER: They’ve become more and more important.
INTERVIEWER: Right. Now you say satisfying the consumer. Do you mean in terms of quicker delivery?
HUNZIKER: I mean the product that they want; the colors that they want; and the styles that they want. And availability of the product at a reasonable price. Pricing is a problem – products are becoming very expensive.
INTERVIEWER: You mentioned that advertising is reaching out to create a relationship with the consumer. It seems to me that what you’re saying is advertising creates the consumer’s knowledge of what she wants, and then the manufacturer has to be able to back it up.
HUNZIKER: That’s right.
INTERVIEWER: It’s a chain, which to me, looks like it’s getting shorter.
HUNZIKER: The cycle is getting shorter. Apparently the most important concern facing the industry is our ability to compete for other consumer dollars. All of these things we’re talking about really would fall into that category. We were talking about Maytag earlier. If you take one of their washing machines, it would probably cost less money today than it did 10 years ago. The price of furniture has probably doubled over the last 10 years.
That’s a problem for the industry. And I don’t know all the reasons why. Consumers look at furniture as being expensive, and to them it is. And we say, “Well, we’ve got all of this into it.” All of that’s true, but it’s still too high. We’ve got to be smart enough to figure out how to get the price down.
INTERVIEWER: Do we have to reduce the price of the product?
HUNZIKER: Well, you can’t go out of business, but we’ve got to figure out how to manufacture it cheaper, deliver it cheaper and package it cheaper. I’m certain you could buy a refrigerator cheaper today than you could 10 years ago.
INTERVIEWER: Certainly for no more.
HUNZIKER: Yeah. You can probably get a television for about the same price or less.
INTERVIEWER: Yes. Or less.
HUNZIKER: But everything is competing for the consumer dollar.
INTERVIEWER: And there are so many things that weren’t even in the picture for people to spend money on.
HUNZIKER: Yeah, like video.
INTERVIEWER: There was a full-page ad in the Greensboro paper today on computers, one of which has a CD-ROM. And instead of buying an Encyclopedia Britannica for $700, you can buy a CD-ROM for $200 that has it all on it.
HUNZIKER: That’s what’s hurting us. People are spending too much money on those things, and we’re not competing well against them.
INTERVIEWER: You’re right. I totally agree. If we’re going to have any market at all, we’ve got to stop those people from taking dollars away from us.
What has been your own greatest contribution to this industry?
HUNZIKER: I think the successful growth of LADD. It was not only that the industry could grow rapidly, but we could grow rapidly in this industry. Also to do it positively and to start with basically nothing and grow the thing to be one of the major producers. That, plus the contribution I made in the merging of the associations, IWF and so forth.
INTERVIEWER: How much of the success of LADD came from new techniques which you either originated or put into use before most other people did?
HUNZIKER: Well, the principal thing affecting LADD would be the use of credit for financing. That would be it. As I said earlier, the industry was almost exclusively on a very conservative cash basis. If you didn’t have the cash to do it, you didn’t do it. Any other major company would not have built a warehouse if they didn’t have the money in the bank – if they had to borrow the money.
INTERVIEWER: Right. Now onto civic and social involvement. What social, civic and business activities have you been involved in outside the furniture industry?
HUNZIKER: Well, I’m chairman of the High Point Regional Hospital, and have been for two years. I’ve really been active there.
I’ve been active in the United Way, particularly getting started with our Tocqueville. Anyway, it’s a group of individuals that gives $10,000 or more per year. That didn’t exist here until a couple of years ago. Now we get about $100,000 out of this support.
Years ago I was very active in the Jaycees. That was a long time ago. I was president of the Jaycees in Richmond
INTERVIEWER: What’s your favorite charity?
HUNZIKER: United Way. The reason being is that a gift there allows the community to divide it up to do the most good, as is viewed by the community, rather than accepting my judgment over theirs.
INTERVIEWER: What is your thinking on being able to designate your gift for a specific charity?
HUNZIKER: I know why the United Way did that, and I don’t fault them for it. They are trying to keep from losing money. But personally, I think that it shouldn’t happen. You ought to give to the United Way, and they, through their volunteer membership, should decide how that money is best spent to serve the community. I think they can do a better job than I can.
If you carry that to the extreme, as they’re talking about doing, you’ll have the favorite organizations getting all the money. Some of those that really need the money more than others might not be getting any.
INTERVIEWER: What’s your principal leisure time activity?
HUNZIKER: Smith Mountain Lake, where we have a boat and a house.
INTERVIEWER: Oh. I know you’re a longtime jogger.
HUNZIKER: I used to be.
INTERVIEWER: Are you still doing that?
HUNZIKER: I haven’t been running any to speak of lately. But we have a nice boat up at the lake, and a nice condominium. I intended this summer to spend a lot of time up there.
INTERVIEWER: What’s been your greatest pleasure on your boat at Smith Mountain Lake?
HUNZIKER: Just enjoying the fresh air, and the fact that my kids come down. They love to water ski and they do a lot of water skiing and so forth. So when the weather breaks, they’ll spend a lot of time up there. I wouldn’t see them at all if it wasn’t for that.
INTERVIEWER: Where do they live now?
HUNZIKER: Well, one lives in northern Virginia. The other one lives in Richmond today, but she’s moving up to Washington. So they’ll both be close by.
INTERVIEWER: Smith Mountain Lake is not far from Washington.
HUNZIKER: That’s right.
INTERVIEWER: What was the date of your retirement?
HUNZIKER: It was my 65th birthday. It was the 30th of September, 1992.
INTERVIEWER: Well, that’s only last year then. It hasn’t been long at all.
HUNZIKER: That’s right.
INTERVIEWER: You’re still active in the company as a board member.
HUNZIKER: Yes, I’m still a LADD board member.
INTERVIEWER: Do you have any other industry involvement?
HUNZIKER: I’m on the compensation committee for the board. And I’ll do various things from time to time, but basically that’s it.
INTERVIEWER: Are you still going to do work with the United Way in High Point or at the hospital?
HUNZIKER: Yes. I’ll be on the hospital board for another year or so. I’m also on the board at the Presbyterian Home. That takes a lot of time, and I’ll continue to work there. I’ll continue to be on the Endowment Board of the hospital. I’m not going to do anything with United Way this year. I’m going to take a year off and see what happens.
INTERVIEWER: Thank you for taking so much time today for this important contribution to our furniture industry. I’ve enjoyed it thoroughly. What would you like to add in summary?
HUNZIKER: Well, only this: I really didn’t have intentions of coming into the furniture industry. My goal was to find a job and make some money, and that was about it. The industry, though, has been very good to me. It’s given me a chance to earn a good living and meet nice people, and I’ve made a lot of friends. I’ve enjoyed it. I think it’s a good industry. It’s got its problems, but every industry today has those problems.
Furniture offers a good opportunity for smart, well-educated people to come into this industry and still make a lot of money. Not just salary, but incentives and opportunities like I had, where you could get a major ownership position in a company. So I’ve been really pleased and thankful that I’ve stayed in the industry. I’d highly recommend it to anyone else.
INTERVIEWER: Thank you very much.