George Alexander Bernhardt; Bernhardt Furniture Company
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
June 12, 2014
LENOIR, NORTH CAROLINA
BERNHARDT CORPORATE OFFICES
Tony Bengel, Interviewer
INTERVIEWER: This is Tony Bengel. I'm in the Bernhardt corporate offices in Lenoir, North Carolina, on June 12, 2014, interviewing Alex Bernhardt, Sr., chairman of Bernhardt. Let's start at the beginning. When and where were you born?
BERNHARDT: I was born on March 24, 1943, here in Lenoir, North Carolina. I sometimes say I haven't made it far in life. I'm still right here where I was born and raised and went to school.
INTERVIEWER: We know that your family was in furniture manufacturing, that you're the third generation of Bernhardts to run the company, and that the company is celebrating its 125th anniversary this year. Would you give us a synopsis of the company's history before you came on board?
BERNHARDT: My grandfather, John Mathias Bernhardt, started the business in 1889. He ran it for a number of years, then both my uncle — John Mathias' son George — and my father, John Christian Bernhardt, took a turn at being in charge. I came to work full time at Bernhardt in 1965. I had worked part-time at the factory in the summers prior to that. At that point, we had just built our second plant. It had basically been a one-plant organization focused on one line of business, residential, and promotionally-priced dining room furniture. Just before I came to work at Bernhardt, my dad had ventured into the upholstered furniture business and had opened a plant to make upholstered furniture.
My grandfather was a lumber entrepreneur in the North Carolina mountains and had been a surveyor in the Washington and Oregon territories, before they became states. He returned to Lenoir, North Carolina where he was born and raised, and went into the timber business. He had easy access to good raw materials — oak, some poplar and other species, but primarily oak that he could harvest in the local area.
It was the beginning of the industrial revolution in this part of the South. The railroad had come to Lenoir, North Carolina in 1885, I believe. When my grandfather founded our company in 1889, it was a time of increased American interest in forming corporations. People in small towns such as Lenoir were passing the hat for subscriptions to underwrite various business ventures.
My grandfather had married a local woman from the Harper family, and was blessed not only to have her as a wonderful wife, but also blessed by his father-in-law, who was a successful businessman in his own right. He was known as Major Harper because he had been a major in the Confederate Army, then came back to his native Lenoir. His daughter eventually married my grandfather. The two men were the bedrock of a number of efforts in the early days of Lenoir, helping to bring the railroad here, building the first public library in town, and engaging in business ventures like the sawmill and timber businesses.
In 1889, when they decided to launch the furniture company, they raised some money from other locals and opened a small factory to make oak chairs. They supplied some of those chairs to other companies that needed chairs. The first products were shipped on railroad cars wrapped in burlap sacks, since this was before they had cardboard cartons. From there, the company evolved into making dining room tables, and later on they made sideboards, or what we now call china cabinets. By the 1920s, Bernhardt was making full sets of dining room furniture. The company continued to do that up until the Great Depression in the 1930s. My father was then deeply involved in the furniture company, and one of his responsibilities was to try to find timber, because it became increasingly hard to find solvent companies that could provide the raw materials that our company needed. Both he and my grandfather were graduates of Davidson College. That's also where I went to school, as did my daughter, so there are four generations of our family that have graduated from Davidson College.
When my dad came out of Davidson College in 1927, the family asked him to tend to our family’s sawmill business, which at that time was in the western end of the state, near Murphy, on the Little Tennessee River. Later, Fontana Dam was built, and now Fontana Lake covers the area where our family’s sawmill used to be located and where my dad worked for several years before returning to Lenoir.
INTERVIEWER: Do you know what motivated your grandfather to go into furniture?
BERNHARDT: I think it was a combination of knowing the raw materials were here, and knowing the industrial revolution was bringing people off the farms and into little towns like Lenoir, where they were looking for jobs with steady pay. The same change from an agrarian to a manufacturing environment was going on in textiles in the South. People who had grown cotton on their farms were coming to work in cotton mills. In a similar fashion, people who had originally harvested timber and hauled lumber were coming into towns to work in furniture factories.
INTERVIEWER: Was the company called Bernhardt Furniture from the very beginning?
BERNHARDT: For a while, it was called the Bernhardt Chair Company. There were a few other name changes along the way, but the Bernhardt name was always associated with the company, and my grandfather and Major Harper were the controlling owners. The few other original underwriters were later bought out.
I mentioned they also were active in a number of other ventures in the area. For example, they both underwrote financially, supplied lumber for and helped in the construction of the Green Park Inn, a large, multi-story, white-painted wooden-framed hotel in Blowing Rock, which is 18 miles up the mountain from Lenoir at an elevation of almost 4,000 feet. Blowing Rock became a tourist resort in the early 20th century. The inn still exists and is celebrating more than 100 years of operation. My grandfather used to go back and forth to Blowing Rock by horse.
My grandfather and Major Harper were very entrepreneurial, and furniture was only one of the things they were involved with, but it quickly became their primary focus.
INTERVIEWER: How did they go about selling what they made? Did they have sales reps?
BERNHARDT: Our company’s history is not clear about when we first hired sales reps, but my grandfather did travel extensively. As I said, he'd gone out West and back, and he had made contacts with people who owned hardware stores. My great uncle actually ran a hardware store in Lenoir, which really was a general store where you could buy almost anything. When my grandfather traveled, it would be primarily by train going east from Lenoir. He would go to hardware stores to sell furniture, and also to funeral homes, some of which sold furniture because several manufacturers that made caskets and coffins also made furniture. To my knowledge, we never got involved with caskets.
INTERVIEWER: So he didn't have any sales reps to market what he was making?
BERNHARDT: We think that he did not. We don't know exactly when the first reps were hired. We know reps were active in the 1920s and later, because the growth of the sales force paralleled the growth of various furniture markets. The first furniture market that we are aware of was held in Jamestown, New York. The company shipped some chairs and furniture up to New York by train, and my grandfather participated in that market. Later, the markets migrated to Chicago, and for many, many years, my grandfather, my great uncle and my father went to markets in Chicago.
INTERVIEWER: Would you describe your grandfather as more of a manufacturing man or a marketing man?
BERNHARDT: I would describe him primarily as an entrepreneur. I mentioned some businesses he was in but wanted to share details about another venture allied with timber harvesting. My grandfather brainstormed and financed the construction and operation of a flume, essentially a wooden-framed waterway, to transport either logs or sawed lumber down from the mountains to the Lenoir area. The flume was more than 20 miles long.
He was involved in quite a few businesses, which is why I would describe him first as an entrepreneur. Secondly, I would consider him to be a manufacturer, because he built a factory and ran it here in Lenoir. Initially, he had to do everything, so he was the salesman as well as the manufacturer. I believe they called him the president, but today we would call him CEO/president/chairman. He did everything.
INTERVIEWER: What family lore about your grandfather do you remember hearing from your father or others?
BERNHARDT: Essentially the best stories center around his time learning to be a surveyor in the Washington and Oregon territories. We were told that one reason he came back was that he became very ill. We don't know what kind of illness that would have been, but we were told that a Native American, an Indian, befriended him, nursed him back to health and helped him get back to North Carolina. Sadly, we don't have a lot of history about his personality other than what I've related already. I know he was a handsome gentleman from his portraits. I know he was entrepreneurial. I know he was very hardworking.
The only other piece of anecdotal information we have about him and his brother is that they were both born and raised here in Lenoir in a house that still exists and stands about five miles from where we are currently seated. Very sadly, their mother and father both passed away from natural causes and diseases within 30 days of each other over a Christmas season when one boy was 13 and the other was 11. They were taken in by a relative who helped raise them as teenagers.
We know they were both entrepreneurial. I mentioned that my great uncle went into the hardware business. My grandfather and his brother were both very admirable, hardworking people and devoutly religious. They were founders of the First Presbyterian Church in Lenoir. They were involved in finding, recruiting and hiring the first full-time minister to come to Lenoir, the Reverend Jessie Rankin.
The brothers led very active lives in business, civic and community affairs. This includes everything from the railroad to the public library to the church as well as land, timber, flume operations and furniture and hardware stores.
INTERVIEWER: What do you know about the first furniture plant? How many workers were there initially?
BERNHARDT: We don't know for sure, but we think there were about 25 employees. We know the location of that first factory, but it was later destroyed and a larger plant was built at that location. Later, the factory was relocated to another part of Lenoir, a mile from where we're sitting right now. We have some photographs of that plant, and of some of the nearby houses that the company built for employees.
An interesting bit of our history is that while my father was a student at Davidson College, he got the sad news that the factory had burned to the ground. That was in 1926. I'm told they held a family conference to decide what to do. They did have fire insurance, so they were able to collect some proceeds. Fortunately for me and many others, they decided to rebuild the factory.
We also have pictures of the plant that was rebuilt in 1927. My dad, after graduating from Davidson and doing his tour of duty in the family sawmill, came back to help run that small factory.
INTERVIEWER: Tell us about your youth. What do you remember as significant events in your early life, particularly in regards to the furniture company?
BERNHARDT: I have one older sister and an older brother. They are eight and nine years older than I am, so they were frequently away or gone off to school. My clearest memories are of the times I spent with my mother and father, and what a huge influence they had on my life, how very inspirational they were. Both of them were people of extreme integrity, with a strong work ethic and a determination to succeed. They truly believed that to those who much is given, much is required. So we were raised to believe in giving back to our community, and to do all we could to help people less fortunate than we were.
My first recollection of furniture was going to the plant with my dad when I was probably 10 years old, which would've been in the mid- 1950s. One of the things that I enjoyed doing, and that he let me do, was to hang on to the conveyor. He was very proud by the time we had installed at least two different types of conveyors in our plant. One was to move the finished products to where the railroad would come to pick them up, and the second was in the finishing department, to move furniture from one finishing booth to next. Those were innovations and probably installed in the early 1950s. Prior to that, everything in the plant was moved by hand.
He would let me go with him on Saturdays or after school, walk through the factory, and see the furniture being made. Occasionally, he would turn on the motor and let me ride a bit on the conveyor if no shift was working. My dad typically would work seven days a week. He would frequently go to the plant or office after church on Sunday — church was obligatory for us, by the way. I'd maybe go with him then, or I'd go with him on Saturdays in the afternoon, because he always worked then. A standard workweek was five nine-hour days and then a half day on Saturday. So for me to go and not be in the way, it would have been on a Saturday afternoon or Sunday.
One of my first paying jobs was to sharpen pencils. My dad allowed me to go from desk to desk in the office, pick up pencils, sharpen them, and return them to the workers. I got paid one penny each for the pencils that I sharpened. Later on, I got involved with helping to sweep out the area that we used as a showroom. By the 1960s, we were still showing at the Chicago market but also at our factory, as the market gradually migrated to the South and to High Point. Buyers increasingly wanted to come to the factory as well as to come see us in Chicago. So we had an area in the warehouse that we would clean out twice a year, and I got to help get it ready to show our samples. There was no accessorizing, no good lighting. It literally was a warehouse where furniture was parked so buyers could come and look at it. Those were my early introductions to furniture.
When I turned 16, I was able to get a work permit and work around most of the factory machinery in the summers. I enjoyed that very much. I liked manufacturing, and built an affinity for it and for the people that knew how to make furniture. That was probably the first job I had that truly could be called a job in furniture. It exposed me to every department, which was good. I did that in the summers. After graduating from college in 1965, I came to work full time for my dad, and once again worked in every single department of the Bernhardt case goods manufacturing plant.
At that stage, I can't recall many women working in our factories. There were some, but it was male dominated. It was completely integrated racially, with blacks and whites working side by side. I think the workers in the various departments enjoyed having me around and teasing me. Some of them enjoyed making life a little bit difficult for me so that they could see whether or not I could handle it. Thankfully, I could stand up to some pretty hard physical work. I survived that and gained, I hope, some respect from those people with whom I worked.
INTERVIEWER: Was your mother or grandmother ever directly involved in the business?
BERNHARDT: I didn't know my grandmother, so I don't know what her role might have been. But my mother was very actively involved in supporting my father in befriending all of our employees. As I was growing up, I think there were 300 or 400 employees who worked in the plant. Later, we called it Plant One as we added other plants, but at that time they just called it the plant or the factory. My mother and father knew everyone in the factory by name, they were aware of each employee’s family situation, and they knew a number of the spouses and children.
My mother also was very much involved with the entertaining of both sales reps and retail customers with the advent of the North Carolina markets, which as I mentioned began in the 1950s. The reps and buyers would come to High Point in those early days, but they would also travel what they called the furniture highway. It’s also sometimes referred to as the figure-eight highway. If you look on a map and trace the roads from High Point through Thomasville, and up to Henry County and Martinsville in Virginia, then back through Statesville and up through Hickory, Morganton and Lenoir, it almost looks like a figure eight. Customers would come and stay overnight in this area during markets. In some instances, my mother and father would put people up in their home, but primarily they would entertain in their home and the reps and customers stayed elsewhere.
In 1950, my father built a small summer home about five miles out of town on a high ridge. It doesn't look like a mountain to me, but many of the market people who came to visit us said that home was up on the mountain because they were from parts of the country where they had no mountains. My parents had a party during the markets at their summer home on the mountain, which became something of an institution. Many buyers would plan their trips so they could be there for the Bernhardt party at the summer home.
As I grew up, I was allowed to go to that party more often. I would help clean dishes or refill cups and glasses, whatever job was handy for me to do. I watched my mother and saw her charm as a Southern lady, but she was also a very smart, intuitive business-oriented woman who knew exactly the right things to say and do to help my father and the sales reps entertain our clients.
INTERVIEWER: You mentioned an older brother and a sister.
BERNHARDT: This is correct. My siblings remain important stockholders and supporters of our company, but neither expressed any interest in entering the furniture industry. Both of them are exceedingly bright; much brighter than I am. Both were Phi Beta Kappa at their respective colleges, and my sister and my brother both earned advanced degrees. My brother became a college professor, teaching biology at the University of North Carolina at Asheville. My sister elected to come home and marry a doctor in Morganton, Dr. James Collett. The Collett family was one of the founding families of Henredon Furniture after World War II. So my sister, although not involved in our business directly, stayed involved as a supportive member of the family, and through marriage became a part of another family involved with a nearby furniture company.
INTERVIEWER: Was it pretty much assumed that you would go into the business?
BERNHARDT: I think I assumed that I would like it and I would be very happy in it, because I was so devoted to my mother and father and everything they did. I saw them as such huge role models for me as I grew up. I had such admiration for everything they did in business, the church and the community. Truthfully, I aspired to be as much like the two of them as I could. They had taken great care to raise me appropriately.
Here's one example: My mother, after I decided I wanted to be in scouting, became a den mother for the Cub Scout pack that I attended. When I went into the Boy Scouts, my mother encouraged me in the nicest way possible to become an Eagle Scout, which I finally did. I say that she encouraged me because she was very achievement-oriented, and in her polite and nice but very firm way, she was determined that I was going to be an Eagle Scout. Without her support and gentle pushing, I doubt that I would have attempted that achievement. My father also was very encouraging and supportive.
I grew up admiring my parents very much, and wanting to emulate them. They never pressured me in any way to come into the furniture business. But, it was made available to me, and I expressed an interest early on. As time went on, it became an assumption on both their part and mine that I would come into the business.
INTERVIEWER: How did your mother and father meet?
BERNHARDT: My mother graduated from Agnes Scott College in Atlanta, Georgia, but she grew up in Morganton, North Carolina, which is about 13 miles from Lenoir. My father, as I've said, graduated from Davidson College. There were social mixers between those two schools, but their respective families already knew each other since they were located in nearby communities and had met each other socially. Both of them grew up in Presbyterian churches, one in Morganton and one in Lenoir, so they also had met through the church.
INTERVIEWER: Tell us a bit more about your father, John Christian Bernhardt. What are some of your early memories? How would you describe him?
BERNHARDT: My dad was a man of utmost integrity, but a man who also had a great sense of humor. He was very outgoing and very extroverted. He absolutely loved all people of any socioeconomic or racial background. He never met a stranger. He never acted as if he were of a higher social or economic standing than anyone who worked for him or with him. Everyone called him John Christian; rarely did anyone call him Mr. Bernhardt.
He was approachable, pleasant, and generous to a fault with everyone, but a humble man in that he never sought recognition. Much of his philanthropy he did anonymously, which made an impression on me. He would frequently make a contribution to a charity and simply say it was from a friend, without identifying himself.
I grew up to have great respect for him as a warm, caring, people-loving person, but he was also a man of humility. He was an admirable gentleman in every way. He was much loved not only by me, but by everyone who worked with him, for him, or became acquainted with him.
INTERVIEWER: I assume your father would visit some of his major retailers, and also seek out new accounts.
BERNHARDT: Yes, of course he did. Not all of them would come to the markets, so he had to go and seek them out. The Southern Railroad came through Hickory and down to Morganton, but passenger service never came to Lenoir. Some of my early memories are riding in the car with my mother and father — I'm not sure why I wasn't in school; I'll have to think about that — going to the train station to put my dad on the train so that he could go call on his clients and prospective customers. It was not unusual for me to see him with a suitcase and a briefcase and an overcoat and a top hat, heading off to New York or Chicago. Most of our dealers were along the East Coast. To my knowledge, we didn't do significant business west of St. Louis.
My father definitely was involved in travel and calling on clients and prospects. Since he was an extrovert, and he was warm, outgoing and easy to be with, that led to him being an excellent salesman, and people loved being with him.
He set a high bar for me to follow. He was inducted into the American Furniture Hall of Fame, which makes my induction even more meaningful and important to me.
INTERVIEWER: Did you go with him on any of his trips to visit customers?
BERNHARDT: Yes, I did. When I graduated from high school — I went away to a boarding school in Virginia for the last few years of high school — they asked what I would like for a graduation present. I said, I'd like to go with my father to a furniture market and see what that was all about. So, I was allowed to go with my dad to the Chicago furniture market. That would have been in June 1958.
All the local manufacturers went to the market, so I saw our neighbors who were involved in the furniture business. The Lenoir area was blessed to have so many private furniture manufacturing companies — Broyhill, Blowing Rock, Kent-Coffey, Fairfield, Hammary, Kincaid, Caldwell Furniture and many others. Many of the owners, principals and managers of those companies I knew growing up because they were social friends of my parents. They went to the same church or the same social events, and worked with our family in regards to the welfare of our local hospital and other civic endeavors.
On that first trip to the Chicago market, I recall seeing Roger Triplett, the owner and manager of Blowing Rock Furniture, and Harold Coffey, the owner of Kent-Coffey Manufacturing. We all got on the train together and made the overnight trip on the Southern Railroad. At that time, travelers changed cars in Cincinnati and got into Chicago the next day.
In 1958, the show was held at a building called the American Furniture Mart on Lakeshore Drive. Later, The Merchandise Mart in downtown Chicago became more important, but in the early days, the American Furniture Mart was where the action really took place. It was not that dissimilar from a furniture market today in that the manufacturers arrived a day or two before the market's opening to set up the show space. The customers arrived, saw the new furniture lines, and the manufacturers and sales reps entertained them at night in restaurants or clubs, then went back to work in the showroom the following day.
In some ways it was different, but in other ways, it was very similar to the markets we would experience today in High Point or Las Vegas.
INTERVIEWER: What did you do at that market?
BERNHARDT: I really just shadowed my dad and watched. He introduced me to a lot of people. I tried to be on my best behavior and keep a low profile. There were some eye-opening things about the nighttime entertaining, with the performers and the consumption of alcohol, which I hadn't been exposed to prior to that time. Drinking also took place on the train to Chicago. Nothing inappropriate, but it was boisterous and fun; everyone just enjoyed visiting with one another. So it was a positive, upbeat, happy experience. I got to see the Drake Hotel and other places in Chicago that were an integral part of going to markets there.
Of course, the furniture was very different then, as were the individuals involved, and the list of furniture retailers was totally different than today. Now, there are very few remaining furniture manufacturing companies. Most of them have evolved over time and been purchased or gone out of business. The same holds true with the retailers. Practically none of the retailers who were important customers of Bernhardt back in the 1950s and '60s even exist today.
Market venues also have changed, moving from Jamestown, New York to Chicago. And then on to High Point and the furniture highway. But there's also much similarity in the things that work, such as good products sold by people who have some charisma, charm and the ability to make friends and maintain relationships. Selling furniture today does have that in common with when I started 50 years ago. A lot of it is built on personal relationships and trust.
INTERVIEWER: Do you remember how long you spent at that Chicago market?
BERNHARDT: At that time, the markets lasted for about a week. I came home after about five or six days with our office manager and plant manager on the train and my mother picked me up. I think my dad and the sales reps stayed around a day or two longer. They would go around the market to see what the competition was doing.
INTERVIEWER: Tell us about your high school education and any significant experiences you may have had then.
BERNHARDT: Our home was almost in the center of Lenoir, so I could walk to my grade school — which still exists in the same location — my middle school and my high school. I made friends, some of whom I still see today around Lenoir in the grocery store, church or health club. I have fond memories of school, and I had some great teachers. I recall specifically my Latin teacher. We had to take Latin, and at the time I remember thinking that was such a waste. I now realize how important Latin is as a foundation for the English language and for the ability to speak and write appropriately.
I went away to boarding school, Woodberry Forest School in Virginia, for the last few years of high school. My older brother had preceded me at Woodberry Forest, and my parents felt that it would be a better preparation for college. I believe the school system here in Lenoir was, and remains, very good, but I probably did get a slightly better, more personal education at boarding school, and also I had the experience of living away from home at a younger age. I had mixed emotions about that, but I think Woodberry Forest did prepare me well for Davidson College. I was blessed to have such a good education.
INTERVIEWER: Tell us about your college career.
BERNHARDT: I went to Davidson College in the fall of 1961 and graduated in the spring of 1965. Davidson at that time was all male. It was a church-related school with an emphasis on communal gatherings. There were probably only about 400 young men there, so I got to know many, many people. They had a fraternity system, and I became a member of the Kappa Sigma fraternity. My father had been a member of the same fraternity. Once again, I was emulating him, or trying to follow in his footsteps. I enjoyed my time in the fraternity, and became president of Kappa Sigma in my last year there.
As far as academics, I was blessed at Davidson to have great professors who took a personal interest in every student, since the class sizes were small. I had majors in business and English literature, both of which have served me well.
After graduation, I continued to take an interest in Davidson College, and in later years served on the board of trustees. As I mentioned, my youngest daughter graduated from Davidson, so Davidson has a fond place in our hearts and think very well of the school. I had a very good experience and made some lifelong friends there.
One of those lifelong friends is a gentleman named Lewis Norman. I first met him at Woodberry Forest, and later we became classmates at Davidson. He came to work here at Bernhardt Furniture the same month that I did, right out of Davidson. He put in almost 50 years of service for Bernhardt, and he was my dearest friend, my soulmate, and my good helper through everything we did here at Bernhardt. He also served as president of Bernhardt at one time.
My school years provided me not only with an education but also with friendships, some of which, such as Lewis and others, have been friends and business supporters through five decades.
INTERVIEWER: Was there anything you learned at Davidson that was particularly important and useful to you later in business, perhaps in accounting or marketing?
BERNHARDT: No, nothing comes to mind in that area. I did take accounting, of course, but I learned more of that on the job, and later through some of the exposure I had as a member on the boards of directors for other companies.
Davidson was basically a liberal arts college, with more emphasis on the liberal arts than on accounting or business per se. I think it served me well in preparing me for an appreciation of art, literature, music, and hopefully the ability to write and speak articulately, things which frankly seem to be all too rare today.
INTERVIEWER: So you graduated from Davidson and came immediately to work at Bernhardt.
BERNHARDT: Yes I did. The other thing that was going on in my personal life after college was that when I came back to Bernhardt from Davidson, I immediately got married. In the South, family inter-marriage has almost become a joke. My wife, Anne Harper, is my third cousin. She grew up 15 miles away in Hickory, and she also grew up in the Presbyterian Church. Her family and my family were acquainted. We first met when we were about 15 years old at a summer church camp. That began a romance which has endured for more than 55 years. I'll speak more about Anne later when we talk about the growth of Bernhardt and how she's made major contributions to the development of the company.
In 1965, we moved to Lenoir as newlyweds and new graduates, me from Davidson, and Anne from Duke University. We moved into a small house on the edge of town, and I started to work full time in the furniture factory. I made $100 a week. I went to work at 7 a.m. in the factory and worked until 4:30 usually, although sometimes I would stay later. I also worked on Saturday morning for five hours.
I was working hard, learning the ropes, and trying to get involved in the community. Unlike our three children, who married later in life and so had their children later in life, Anne and I had our children in the span of four years, by the time we were 25 years old. We had our small house in Lenoir, a swing set from Sears & Roebuck, and an Oldsmobile station wagon. We taught Sunday school. I was trying to get involved in the Jaycees and some other civic clubs, and she was involved with the Lenoir Woman's Club.
I was learning the furniture business by working through every single department in the company, and entertaining when the furniture markets came around twice a year. It was a busy time for a young family, but it was fascinating. We were blessed in so many ways with good health, good role models, and good supporters in both my family and Anne's family.
INTERVIEWER: Was her family involved in furniture?
BERNHARDT: Anne’s family wasn’t directly involved in furniture. My father-in-law was a very fine attorney. He served in World War II, graduated from Harvard and founded the premiere law firm in Hickory, which represented a number of furniture manufacturers. So, he was knowledgeable about furniture in that way.
INTERVIEWER: What was your first factory job as a full-time employee?
BERNHARDT: The plant was called No. 1, the original plant, and I started in the rough-end area, where workers rough planed and rough cut the lumber. We were dealing with heavy, large pieces of timber, so it was physically demanding work at that time. Since then, many innovations have been made in the handling of materials in our factories, but at that time it was real manual labor. Tailing the rough planer and the ripsaws, which meant we were taking the cut pieces off the machines, was the most physically demanding job in the plant.
I successfully survived that experience and learned how to set up a planer and a ripsaw and the other equipment in that department. From there, I moved into what we called the finishing machine department, then to the sanding department, and then to the cabinet or assembly area, and finally to the finishing, rub and pack sections.
All that training took more than two years, and by that time, the company had more than one plant. We had two Bernhardt case goods plants, one making dining room furniture and the other making bedroom furniture. We had one upholstery plant that was making a line we called Flair, and I also worked in that plant. My father also had purchased Hibriten Furniture Company, which was adjacent to our No. 1 plant. It had a great workforce, and made somewhat higher quality, more complex products than we made in our plant. He bought that company in 1964, just before I came to work full time. So, during my two-year factory stint, I also worked in various departments at Hibriten. My early indoctrination in manufacturing stood me in good stead throughout my career.
INTERVIEWER: When you were talking about the company's early history, you described Bernhardt as a promotional producer.
BERNHARDT: Yes, that's true.
INTERVIEWER: By the time you joined, was the company making furniture at higher price points?
BERNHARDT: No, it was not. When I joined the company in 1965, the biggest part of our output was still promotional dining room furniture. Promotional is a euphemism for inexpensive or low-end furniture. We had some strong competitors in Blowing Rock Furniture and Broyhill Furniture, both headquartered here in Lenoir, and Bassett Furniture headquartered in Bassett, Virginia, in Henry County. So there were four companies that made virtually identical products. At least it seemed to me they were very, very similar. Price was a big factor and a big driver, and these products were very inexpensive.
I remember one market when Bernhardt brought out three different styles of dining room sets, relatively small in scale and proportion. The merchandising approach was that for $75, the retailer could have a choice: they could buy either a china cabinet, a dining room table or a set of chairs. That was a huge hit the first day of the market, which at that time was at our factory showroom in Lenoir. Word traveled quickly at markets. The buyers came in and told us what was going on at Broyhill on one side of town, and Blowing Rock Furniture on the other side of town, with us sort of in the middle.
They said we all had similar products, so by the second day my father had lowered the price from $74.95 to $69.95. As that word traveled back across town, both Broyhill and Blowing Rock met the price. It was almost like trading in commodities or securities, to see what price the market would bear. Some of the older gentleman who remember those days still like to reminisce about that your-choice program and how the price dropped on the second day of market.
The Chicago Market was much less important, and had almost disappeared, by the time I was actively involved in the business. The North Carolina markets were the pre-eminent shows, twice a year in April and October. They weren't usually referred to then as High Point markets because, as I described earlier, there was the figure-eight highway in North Carolina and southern Virginia, with companies exhibiting throughout the area.
From about the time I joined Bernhardt in the mid '60s until the early '80s, the buyers would come here to Lenoir. They would stay overnight in whatever limited accommodations were available. That was usually in Hickory, which was a larger town near Lenoir, and it had a few motels, something pretty new in the '60s. Lenoir had a hotel called the Carlheim Hotel, which was very old and pretty decrepit, but tolerable. Some buyers stayed there.
By that time, the Broyhill family and Broyhill Furniture had purchased the hotel in Blowing Rock that I've already described, the Green Park Inn, which my grandfather had helped to build. It had changed hands several times, but Broyhill owned it for several years, and both their customers and some of their sales reps often stayed there.
The buyers would come to Lenoir, Hickory, Morganton and Blowing Rock and spend a night or two, and then move down to High Point and Thomasville or go to Henry County in Virginia to continue their shopping. In Lenoir, the markets in those days lasted for three, four or five days. The buyers would always try to get a head start on each other, so they would go to whichever showroom opened first. The showrooms in Hickory and Lenoir started opening earlier and earlier. We were forced to participate in early openings, but didn't like it or approve of it. As my father and I had both anticipated, it accelerated the attendance here into a very early opening in a very compact market.
By the early '80s, the market in Hickory, Lenoir and Morganton had turned into basically a two-day or at most a three-day market before the official opening day occurred in High Point. Buyers would come here and stay one or two days, then move to High Point. At that point, it put too much pressure on us to make all our distribution and selling decisions in a very short period of time.
I had become president of Bernhardt in 1976, and by the early '80s it became apparent to me that this was not a good way to sell and market our furniture. It was not popular with our buyers and customers, who were having to stay in two or three different hotels during the market, and there weren't many nice hotels where they could stay during the western end of the market. So in 1983, I decided to move our showroom to High Point. I was not very popular because of this decision in Lenoir and Hickory, because some companies wanted to keep their showrooms here, and our move put pressure on them to follow suit. In fact, that's what happened. Within about two years, virtually all the companies had moved their showrooms to High Point.
Our philosophy was that we wanted to be easy to do business with. We wanted to go where the customers were, and more customers and potential customers were in High Point than in Lenoir. That was a difficult decision for me to make as a young executive. It had negative repercussions on our community, which I felt badly about because people in Lenoir had benefited economically from the market, particularly the restaurants and the few hotels that were located here. People selling gasoline or anything else needed by our customers and salesmen lost market business when we moved our showroom to High Point. But, it was the right thing to do to keep the company strong and to be where our clients wanted us to be.
When we moved our showroom to High Point, we were still primarily a promotional dining room manufacturer. I mentioned that Flair, our upholstery line, was a higher-priced, better-quality line. Hibriten also was a higher-priced, better-quality case goods line, competing with Thomasville, Drexel and Henredon, whereas Bernhardt was competing more with Bassett and Broyhill.
When I became president in 1976, we had just started construction on a factory to make promotional dining room furniture, our strongest furniture category for the preceding 50 years. It made sense to open a new, highly automated factory to make dining room furniture as inexpensively as we could.
When I was handed the reins in 1976, business was all right for a couple of years, but then we hit the 1980-81 recession, which was severe. The interest rates went to 20 percent; the inflation rate went to 20 percent. It was a very sudden, very deep recession, and very painful for Bernhardt. I was a young executive in my late 30s trying to decide what to do with the company, and I had inherited this new factory. We had located it in Troutman, which is about an hour away from Lenoir. We did this because the labor market in Lenoir was very tight.
Simultaneously with the recession, I had my first experience with furniture made in Asia. At that time, hardly anyone was aware that making furniture in Asia was even a possibility. But Larry Moh, a Chinese native, a great innovator and a brilliant furniture man, had created a company called Universal, and figured out how to make furniture in Asia and ship it — and often assemble it — here. His first target was promotional dining room furniture. Candidly, his products were nicer, and cheaper, than the products we were able to make in our new, expensive, up-to-date factory in Troutman.
I was young, I had multiple plants, we had a recession, and I was having to deal with globalization, all at the same time. I also had a young family and I was trying to be a good father and husband to my kids and wife, plus I was trying to be active in my community. It was a very taxing time for me.
What I'm leading up to is the time when Bernhardt ceased being a promotional furniture manufacturer. I realized in about 1982 that globalization was inevitable. I realized that our company was very fragmented, with different names, different images and different sales forces selling different products.
So I took a deep breath, took a huge risk and made several decisions that were exceedingly difficult and painful. I had people who second-guessed those decisions. The first one was to close the Troutman factory, because it was engineered to make cheap dining room furniture. I was painfully aware that Larry Moh could do that better in Asia than I could ever do it here in the U.S. I elected to close that factory and exit that price category.
I also elected to drop the Flair and Hibriten names and market everything under the Bernhardt name. At about the same time, I decided to move our showroom from Lenoir to High Point, as I've already discussed. It took until 1983 to get it open, and it showcased our move into higher-quality, higher-priced products. I elected to begin nationally advertising the Bernhardt brand name, which we had never done previously. Finally, I elected to diversify our company by entering the office furniture business, which is usually referred to as the contract furniture business.
I had visited a contract furniture trade show in Chicago called NeoCon, and saw people selling chairs that were similar to the chairs that we could make here. They were much more expensive than the products we were making, and I decided that presented an opportunity for us to diversify.
So from approximately 1981, when the recession was at its worst, to 1983, I had at least made a beginning on all the things that I've enumerated, the last one being the entry into the office furniture business in a very small way.
Meanwhile, my wife Anne had gone back to school to complete her Master's Degree. While raising our three children, she had stepped away from her education, but she went back to school at Appalachian State University in Boone, North Carolina, and completed her Master's Degree with a 4.0 average. She asked me what jobs she could apply for here in Lenoir. We laughingly agreed that with the Bernhardt name, people would be very suspicious if she applied at Broyhill or another furniture company.
INTERVIEWER: What did she get a degree in?
BERNHARDT: It was a Master of Arts in teaching and administration, which had both education and business overtones. She had a well-rounded education at Duke University as an undergraduate. She later did graduate work at the University of North Carolina at Chapel Hill, then finished her masters at Appalachian State University. She had a broad background.
So, we made a deal. Anne would come to work here at Bernhardt for a year. If it proved bad for our marriage or for our children or for the business, she would be out of work a year down the road. I mentioned earlier my dear friend and business colleague Lewis Norman. I said to Anne, “Why don't you report to him rather than to me? We've got a better chance of this working out if you're not directly reporting to me.”
So Lewis, who reported to me, became Anne's boss. While he and I were working to develop all the new residential initiatives I've talked about, Anne was pioneering our office furniture division. It's taken a number of years for the office business to mature and grow, but thanks to the contributions that Anne made, we're now a significant player in the office furniture business in better, high-quality furniture products.
Anne has been a meaningful part of my life for more than 55 years, and a meaningful part of our company since joining it. She's basically the founder of our office furniture business, which is now called Bernhardt Design. That business has its own showroom, its own product lines, its own sales force and its own marketing teams. While she was focusing on that, I was focusing primarily on the residential business, trying to convince my sales reps and the buyers that Bernhardt, in fact, was no longer a promotional company, that it was a better quality company and could compete with the likes of Thomasville, Drexel, Century and Henredon.
Those were busy times in the 1980s, but good times for my family, for my marriage and for the company. All those changes weren't easy, and not without pain and financial risk, but they all turned out to be contributors to our company’s current strength and success.
INTERVIEWER: You joined Bernhardt full time after college in '65, spent the first two years working in the factories, as you described, and became president in '76. Tell us about the period leading up to your presidency, particularly your relationship with your father, as the torch was passed from him to you.
BERNHARDT: My father and I had a great relationship. There was never a hard word, never a disagreement, ever.
INTERVIEWER: What kind of mentor was he for you?
BERNHARDT: He was permissive, is the main adjective I would use. He allowed me to take risks and he respected my opinions. I had watched him closely since my childhood, and I tried to learn from everyone I came in contact with in the company. He was in no way dictatorial. He let me try different things, and express my opinions and points of view.
After I finished working in the factories, one of my early jobs was scheduling production. That was interesting because we had to interact with both the sales reps and some of the larger customers to know what their anticipated needs would be. We tried to match supply with demand, keeping the various departments running efficiently. I did that for probably four or five years because I was able to be involved in everything — the customers, the sales reps, the factory and the suppliers of raw materials. All of that had to come together at the right time in the right way to make the right things that the marketplace needed and wanted. It was very educational for me. I also spent some time at Flair, trying to be helpful in the upholstery business and learning that end of the business.
My father had hired Wes Collins in the late 1950s to run our Flair line. To this day, Wes remains an inspiration. He's in his early 90s, fit and strong physically, mentally and morally, a ramrod straight man of great integrity. After Wes ran Flair for a time, he became president of Bernhardt Furniture, working directly under my dad. I was working directly under Wes, and he couldn't have been a better mentor. I learned a great deal from watching him.
One of the important jobs I had during this time was as product manager for the case goods line. We called it being a merchandise manager back then. I worked with the designers and sales reps to develop new products. Most of our designers were freelance, independent designers. As I was coming along in the company, most of what I did was lead various teams of people.
We began some importing during this time, so I was traveling to Asia fairly often to develop the parts and components that would be integrated into the products that we were making back here in Lenoir. I think I was one of the first American-based furniture manufacturers to go to Asia and develop relationships with suppliers of parts and components there. The parts initially were in what we called whitewood, which means unfinished. That led to the importation of occasional tables that were fully made and packed in a box, and subsequently to dining room chairs. We sent technicians to various Asian factories to help teach them how to manufacture the chairs to the quality standards that were necessary here in the U.S.
That process evolved to dining room tables, and ultimately the importation of complete, fully-made sets of furniture. This was, as I've said, a painful strategic decision on my part to participate in globalization after I'd become president of Bernhardt. The old adage, “If you can't lick 'em, join 'em”, was emblazoned in my thoughts because I had closed the factory in Troutman, realizing we just could not compete financially with what could be done in Asia.
I believe I turned an adverse situation into a positive one for us. It became a great asset for us for a number of years. We had a first-mover advantage in that we were the first important manufacturer in this country to utilize parts and components made in Asia. We were providing products such as dining room chairs that were priced 20 to 30 percent under the market, but looked to be of the same quality because we had our inspectors and our manufacturing people in Asia monitoring what was going on there.
We then opened Bernhardt offices in China. Today, we have five Asian offices, but initially we only had one. The employees were a combination of expats from America and indigenous people from China or whichever country we were working in. All that was going on while I was doing the case goods merchandising or product development. An integral part of how we merchandised case goods was to be in Asia where our suppliers were located.
I later moved to do a similar job for upholstery as product manager and merchandise manager for the Flair line, which was our upper-end, finest product category. We then opened a plant in Shelby, North Carolina, to introduce a line of more popular-priced sofas and chairs. I had probably five years’ experience overall doing upholstery product development.
So by 1976, I had been exposed to manufacturing, globalization, imports, case goods merchandising, upholstery merchandising and involvement with customers and sales reps. I had seen pretty much the full gamut of the business. I was in my late 30s. Wes Collins, my mentor who I admired so much, met with my father and me. He said, “I think Alex is ready to run this company.” I said, “I don't think so, Wes. I like working for you.” He said, “Well, I think you're ready. Also, I've been offered a chance to become president of Broyhill.”
With mixed feelings, we wished him well. To this day, Wes remains a close, dear personal friend and participant in our community and church life. So, at that time, I was thrust at a fairly early age into being the president of the company. My dad was still here at that time.
INTERVIEWER: He was chairman, I assume?
BERNHARDT: Yes, I guess we called him chairman. We weren't much on titles at that time, but that would be appropriate. He was chairman and I was president.
INTERVIEWER: When you were made president, was he still coming to work?
BERNHARDT: Yes, he still came to work, but he was backing out of the business. My dad lived to age 96. He had a full, rich life until he was 91, when he suffered a stroke. He was no longer able to drive or take care of himself after that point.
INTERVIEWER: Did you have a board of directors, perhaps consisting of family members, that you reported to when you became president?
BERNHARDT: Yes, I had helped to create a board that had outside directors as well as family members on it. That was a good move and an important part of the governance of the company. To this day, we still have a combination of outside business people and internal people on our board. As long as the results were satisfactory, I didn't have any trouble with the board of directors at Bernhardt.
INTERVIEWER: You never had any major disagreements?
BERNHARDT: No, nothing of any significance.
INTERVIEWER: Even when you decided to abandon the promotional arena?
BERNHARDT: No, there was no dissent about that decision. It was to some degree out of necessity, because globalization was a reality. We couldn't look at Universal Furniture, or spend a week or 10 days in Taiwan and China, without realizing that we just couldn't make promotional furniture and compete in North America against that sort of juggernaut. My father, who was still semi-active in the business, agreed with the strategic re-orientation of the company, as did my friend Lewis Norman and my wife Anne, along with many of the other people who were helping me run the business.
INTERVIEWER: How did you go about finding reliable suppliers in Asia? It's a completely different business culture, is it not?
BERNHARDT: Yes, it is a very different culture. We initially got involved with Asia through the companies that supplied our finishing materials. Those companies also were beginning to sell finishing materials to case goods plants in Taiwan and some other Asian countries. I was able to take tours through Asia with some of our finishing suppliers. I soon learned about Larry Moh and Universal Furniture. The furniture and parts coming to America from Asia initially were almost exclusively for Universal Furniture. There were a few other companies making some parts and components, but Larry Moh dominated the supply chain in Asia. So, my first call was to him. I asked to meet with him and his business partners, two of his brothers-in-laws and another man from Honolulu. They received me warmly.
I told them I would like to build a relationship with them, that I'd like them to be a supplier for me and that I would help them improve the quality of the products they were making. They needed to learn how to make better products, and I needed a source of supply.
At that point, we reached a gentleman's agreement, and it worked very well for many years. I attribute a good bit of our success in the '80s to moving the company away from producing promotional product into creating better goods through my affiliation with Larry Moh and our importation of various products from Asia.
INTERVIEWER: It was a rather unusual gentleman's agreement, wasn't it? Because you were also competitors.
BERNHARDT: We were indeed competitors, although Universal Furniture was much more promotionally oriented, with long runs of simpler, inexpensive products, and the retailers to whom Larry Moh was selling were different from the retailers that Bernhardt was selling. The furniture that we were designing and selling was much more upscale and higher end than what Universal was attempting to do. Initially, it was a great match. Later, as things developed further, we ended up competing more in the same market niches. With no hard feelings, we drifted away from each other and pursued other avenues of business. I found other suppliers to do business with in addition to Universal Furniture.
INTERVIEWER: Did you have any key assistants that helped with your Asian connections?
BERNHARDT: There were some key assistants who we relied on. We particularly used the expertise of an executive here named Buck Deal, who grew up locally. Buck's father worked at Bernhardt with my dad. Buck went to N.C. State, took a furniture course and came back. He then went to Harvard Business School, got an MBA and came back again to Lenoir to work alongside me and then later he worked for me. Fortunately for me, he totally bought into the concept of globalization. Buck spent a lot of time with me in Asia, and a lot of time on his own, cultivating sources of supply, monitoring the supply chain from there. We clearly had to have a lot of good help as we tried to transform the business in many ways, including going global.
INTERVIEWER: I take it you realized early on that you had to have your own people in Asia to work with suppliers.
BERNHARDT: Yes, it soon became evident that someone internal had to do that. Today, there are companies that subcontract for those services.
INTERVIEWER: Does Bernhardt do that now?
BERNHARDT: We do not subcontract for those services. Our own employees still do that. I mentioned we now have five offices in Asia. We don't have a huge number of employees there, probably 50 or 75 total, in those offices. They are involved in quality control, monitoring the progress of products made for us and assuring that we get the products that we need for our clients.
INTERVIEWER: When you took the path towards creating a higher-quality product, that must have presented some real management and distribution challenges. How did you work that out with your reps and customers?
BERNHARDT: It did present challenges, and our distribution changed significantly. The Bernhardt case goods line was promotional at that time, and it was by far our largest division, so that was the image many people had of the company. On the other hand, we had Flair as an upper-end upholstery company, and Hibriten as a better case goods brand. I haven't mentioned that in 1972 we also purchased the Hibriten Chair Company. Although it shared the Hibriten name, it was a different company with different management. And it also made nicer, higher-end products.
We had, at that time, many different names, lines and categories. Fortunately, I already had the better upholstery and case goods to learn from while working with Hibriten and Flair. That made it easier to convince people we did in fact know how to design and make better home furnishings products.
INTERVIEWER: At that time, your competitors no longer were the Bassetts and Broyhills, but the Thomasvilles and the Drexel Heritages, but not the really high-end companies like Henredon or Baker, right?
BERNHARDT: That's exactly right.
INTERVIEWER: How many years did it take for you to feel comfortable with your new niche?
BERNHARDT: In hindsight, it doesn't seem like it took that long, but when we were in the midst of it, it was painful and agonizing, and it took a considerable period of time, I'd say at least five years, for the transition to play out. Then, unfortunately, in 1991, we had another recession and slowdown in business that we had to contend with. Also, later in the 1990s, globalization had really matured and Bernhardt no longer enjoyed the first-mover advantage that I've described previously. We now had a number of competitors who were fully Asian in their ownership and management, and we also had companies like Thomasville with a hybrid model like ours, importing some case goods and manufacturing some here.
When the recession in 1990-91 came along, I made another set of decisions which were exceedingly painful, maybe some of the hardest decisions that I’ve ever had to make. I elected, methodically over about two years, to exit all domestic case goods manufacturing for residential furniture. That category would be fully imported, using the offices and employees we had in China and the expertise we had gained since 1983. That meant closing two of our factories here in Lenoir.
That was very painful, but again, we were the first mover in our niche to fully commit to bedroom, dining room and occasional case goods production in Asia, and to back it up with the infrastructure in Asia to make sure that it happened correctly.
Despite the disappointment of moving residential case goods manufacturing offshore, that pain was offset to some degree by the emergence and growth of the Bernhardt Design division for office furniture. We were able to take one of the factories — later two factories and today three factories — that had previously made residential furniture and use them to make office furniture — desks, conference tables and other wood products. It's not the same as making bedroom or dining room, but it's still wood furniture and some of the same skills apply. Therefore, we didn't have to close all of our manufacturing facilities in Lenoir because of globalization.
Meanwhile, we had grown our upholstery business, and even though we were beginning to import some leather sofas, we were still manufacturing the majority of the upholstery here in Lenoir.
The early '90s were another period of transition for the company, and it created the business model we carry forward today. Approximately half of our total corporate output is made in Asia, and approximately half of our total corporate output is made here in Lenoir. The office furniture is made here in the Bernhardt Design division, which depends on customized sizes, customized raw materials, and frequently small lots and short windows for manufacturing. That lends itself well to local manufacturing and doesn't apply well to Asian production.
In similar fashion, our upholstered business has a lot of customization with many fabrics on many frames. From the 1990s until today, that business model has stayed the same in that we have a balanced business that's roughly half domestic and half international.
INTERVIEWER: Obviously, you saw no way to run a U.S. residential case goods plant profitably back in the early '90s.
BERNHARDT: For residential case goods, that became true. For office furniture, we found that we could do that in one of those factories transitioned to make office case goods, which is very different in some ways, but similar in other ways, to bedroom or dining room furniture. But to your point, we saw no way to be competitive in residential case goods by manufacturing in the United States. To this day, I still see that as the situation.
INTERVIEWER: I suppose the markups and margins are better in contract. Are you making all your contract furniture in this country?
BERNHARDT: We are making all the office/contract furniture in the U.S., although we source some parts and components for desks and conference tables from Asia. You are correct, the price points are higher, the margins are somewhat better, and the client base encompasses mainly corporations. They can depreciate office furniture and they are more inclined to buy new office furniture more frequently than a homeowner is likely to replace a bedroom or a dining room set. Structurally, contract and residential are different industries, and it's been good to have that diversification.
Jumping all the way up to 2005, we opened a third division, which is hospitality, targeting hotels and restaurants. Today, Bernhardt has three legs on our stool. Residential is the oldest one, the one that my grandfather started in 1889. Bernhardt Design is the office furniture leg that my wife and I started in 1983. Finally, there's the Bernhardt hospitality division, started by my son, Alex Jr., and I along with my nephew, Rountree Collett, in 2005. Again, in the aggregate, about half our output comes from Asia, and about half is made in North Carolina.
INTERVIEWER: When you were in production management in the early '70s, were you using computers?
BERNHARDT: No, we were not at that time. We had card readers that could process and print payroll checks. Later in the '70s, we did get mainframe computers in the office, which also had card readers. We had no PCs at that time. It was well into the late '70s before we had any computer-controlled equipment in the factories.
That was certainly an evolution in my career, going from a time of no computers in either the office or the factories to today, where we are highly automated in both the offices we have here in the U.S. and in our offices in Asia. We rely heavily on computers in the factories. We also use them for sales, marketing and communications with our dealers, suppliers and so forth. Today, we couldn't operate without computers. When I started in 1965, we didn't know what they were.
INTERVIEWER: Did you have any bad experiences computerizing the company?
BERNHARDT: I've heard horror tales from other companies. I think we had fewer problems, perhaps because we've never put in a sophisticated, company-wide data processing platform, as I believe some of our competitors have attempted to do.
We have had our ups and downs with various software packages we've purchased. Much of the computer code we've written ourselves. The three segments of the furniture industry that we're involved with bring a lot of unique challenges for our accounting and data processing, since each has different needs. Most of our code has been written internally and maintained by us. We've hired our own data processing experts.
INTERVIEWER: Globalization would have been pretty much impossible without computers, and now the Internet, right?
BERNHARDT: That is correct. I would add cell phones to that list. China was the first place I saw cell phone use as ubiquitous. There were lots of cell phones there at one time and almost none of them here. We were still using fax machines to send drawings. In the early days of globalization, there wasn't a lot of information technology. That has evolved as part of the globalization process.
INTERVIEWER: Was Bernhardt a member of the Southern Furniture Manufacturers Association when you joined the company?
BERNHARDT: Yes, Bernhardt was a member of the SFMA. My dad had been instrumental in the founding of the Southern Furniture Manufacturers Association. There was also another group that I believe was called the Furniture Factories Marketing Association of the South. It was really a smaller subset of the SFMA, that set market dates, and he was chairman of that group. I inherited an interest in both the trade association and in the marketing group, and proceeded to be active in both of those groups.
INTERVIEWER: Did your father tell you how the SFMA came about?
BERNHARDT: I can’t remember him sharing that story with me. I do remember that he talked more about the marketing group. A gentleman named Rick Barentine was the full-time executive of that group for many years. My father spent more time with the marketing group because he felt it was important to try to get some uniformity to the dates of when the High Point markets would be held. He had high hopes of establishing uniform opening dates so all showrooms would open simultaneously and no company would have a head start. That didn't work out. It's never happened and may never happen. It probably reflects the fact that the furniture industry is full of entrepreneurs who want to do what they think is best for their own company. As I've mentioned, when a retailer appears at your door, you're not likely to turn him away.
INTERVIEWER: You rose through the offices to become president of the SFMA. At that point, there was a southern and a separate northern manufacturing association, the National Association of Furniture Manufacturers. You were a key person in finally getting the two groups together.
BERNHARDT: I think that's a fair statement. The SFMA was the larger of the two associations, in terms of both the total number of companies involved and in the revenues produced by those companies. The National Association of Furniture Manufacturers, the northern group, had some smaller, high-end, very fine companies. They also had a very valuable asset, a financial interest in the big woodworking machinery show.
That show, known as IWF, for the International Woodworking Fair, was held every two years, first in Louisville, Kentucky, and later in Atlanta, after it had grown into a major trade show. Furniture manufacturers, kitchen cabinet manufacturers, really anyone who was involved in woodworking, would spend three or four days looking at, and perhaps buying, woodworking machinery and equipment. The NAFM was a part owner of the show, which turned out to be very lucrative.
What tended to bring the two groups together was a mutual interest in regulatory affairs in Washington, D.C. We both were interested in lobbying for and against various regulations coming from the federal government.
I had become a member of the board of directors of the SFMA and had gotten in the leadership line to become president. The year before I was to become president, I began conversations with people at the NAFM to see if we couldn't work together to advance our common interests in Washington D.C. They agreed that it would be a good idea to work together. We clearly knew each other because we were friendly competitors in furniture.
That led to more conversations, and the realization that we had more in common than we had differences. It frankly just made financial sense to merge the offices and the staffs of the two groups. Over about a 12-month period, I was able to broker an arrangement whereby the two groups could merge.
INTERVIEWER: What were the big obstacles?
BERNHARDT: Probably the largest obstacle was that some of the older, larger Southern manufacturers, who tended to be fiercely independent, didn't see any particular merit in a deeper association with competitors from the North. This was in the early 1980s when I was in my early 40s. People running large companies like Bassett, Lexington, Dixie and others were legends in the industry. They were much older than I and looked at me as brash and unconventional. They weren't at all sure what I was proposing was good for their companies. Of course, we no longer would be the Southern Furniture Manufacturers Association. We would have to change the board of directors' composition and a variety of other things.
I did meet with some resistance along those lines, but it was not too difficult to overcome. Another influential board member for the SFMA was a man named John Boardman, who owned Sam Moore Chair Company. John helped me close the deal, and he became the first president of the newly integrated trade association, with me serving as the first chairman of the newly-formed American Furniture Manufacturers Association.
It was an interesting time, and a very, very busy time for me with everything else that I had going on in my career. I look back on it with some humility, but also with satisfaction and pride in having taken a leadership role in bringing the two groups together.
INTERVIEWER: What were the reasons for having two associations in the first place?
BERNHARDT: I'm really not sure why there were initially two associations. I think it went back to the Chicago market era, with most of the northern manufacturers clustered in Michigan, in the Grand Rapids area. Of course, the southerners were primarily in North Carolina and Virginia. They probably felt they had different interests because of the market locations, in Chicago and High Point. I would say that probably was the only real difference between the two groups — where and when the markets should be held.
The Chicago markets, as I've said, were in June and January. January in Chicago is bitterly cold, and not a great place to visit. The leaders of the Southern marketing group, including my father, decided not to compete head on with those dates, but to find times in advance of those dates, meaning April and October. Those are beautiful times in the Carolinas, and those dates became a kind of premarket to Chicago, and the southerners would show new product at their factories roughly 90 days before the Chicago shows. Those premarket events gradually became the main markets, and many southerners took their showrooms to High Point.
There was no animosity between the two groups. We were friendly competitors who finally realized the wisdom of pooling our interests, assets and influence.
INTERVIEWER: Tell us about the Washington D.C. issues you alluded to. That would include upholstered furniture flammability, wood dust, finishing materials, working conditions in factories, and clean air standards in general, I suppose.
BERNHARDT: Yes, there was always an ebb and flow of these issues, and constant concerns about working conditions and clean air. We also had pension plan funding issues that we were all concerned about. In upholstery, the flammability issue obviously was a major concern and challenge. The industry created the Upholstered Furniture Action Council, which established voluntary fire-safety standards. After much debate about how effective they were, the federal government essentially accepted our set of voluntary regulations, as opposed to having mandatory federal rules imposed upon us. The impact of governmental regulations was very real, and of equal concern to people in both the northern and the southern furniture manufacturer's groups.
The American Furniture Manufacturers Association established a lobbying office in Washington D.C. headed by Joe Gerard, who served the entire industry with distinction for many years. He was a fine man. The association's board of directors would meet in Washington D.C. every two years, if memory serves me. Under Joe's leadership the board would meet with various key members of Congress, and also with politicians from our own home districts, and we would discuss issues of concern with them.
INTERVIEWER: Were you or members of your staff involved in any of these regulatory issues and the various lobbying efforts?
BERNHARDT: The staff members here in Lenoir definitely played an active role in various issues, but I personally didn't focus on any particular issue. I was more involved in governance of the trade association as we tried to recruit the right people from our industry to testify before congressional committees, and lobby the right members of Congress. Formulating the agendas for the meetings and ensuring membership involvement was more where my focus was centered.
INTERVIEWER: Did you ever feel that government regulations of any sort hampered the growth of Bernhardt?
BERNHARDT: I don’t feel that government regulations affected Bernhardt more than any of our competitors. I felt at least it was an even playing field. I described my grandfather and father both being in the timber industry, and my interest in Boy Scouts and outdoor activities. I come from a long line of conservationists interested in preserving what was important to the natural setting of this area and of the entire country.
I looked at a number of regulations as worthwhile in trying to preserve clean water and clean air, and ensure good working conditions for our employees, which seemed appropriate to me. I never felt that the government unfairly interfered with our company any more than with any of our competitors. That is, until globalization came along. We then were competing against factories that did not have Environmental Protection Agency, Occupational Safety and Health Administration, minimum wage or any other regulations. It no longer was an even playing field at that time and that remains true today. Of course, that was partially what drove so much of the residential case goods industry out of the U.S. and into Asia.
INTERVIEWER: Did you get involved in the anti-dumping issue, when a group of U.S. bedroom manufacturers banded together to get duties imposed on Chinese imports?
BERNHARDT: I did get involved in the sense that I decided not to participate in the anti-dumping coalition. If I remember correctly, the issue came up in about 2003. We discussed the issue at great length in the trade association, by which I mean American Furniture Manufacturers Association. The members were very divided over what was appropriate, and the AFMA wisely opted not to take a firm position, realizing it would inevitably alienate at least half its membership regardless of what decision was made.
Bernhardt came down on the side of free trade, saying we didn't think that tariffs of any type were advisable. We remembered our history lessons about Great Britain and other nations that tried to put up trade barriers, and we didn't think that was appropriate.
Bernhardt was asked, rather recruited, to join the anti-dumping coalition. The coalition leadership said it would make their case more viable if they had companies of our stature and longevity in the coalition. We said we didn't believe in limiting free trade. Of course, we had been importing our wood furniture lines for some time. We made no bones about it. We were proud of the fact that we had employees in Asia.
The anti-dumping coalition operated outside of the AFMA and succeeded in getting duties imposed on wooden bedroom furniture from Chinese factories. Some of the duties were pretty low, some were very high, depending on which factory was involved. Of course, Bernhardt was importing bedroom furniture from China, so we were paying duties. That continued to go on for a number of years, and it's still going on today.
I will say that it was a bit frustrating at first that those duties were paid to the anti-dumping coalition members, some of whom are our direct competitors. I won't name names, but some are located within five miles of where we're sitting here in Lenoir. The laws were later changed, so now those duties go directly into the U.S. treasury.
Had Bernhardt opted to participate in the anti-dumping effort, our company would have been the recipient, not the payer, of those duties. Having said that, as a matter of principal, I think we did the right thing, and I wouldn't change our decision if we had to do it all over again.
INTERVIEWER: Would you agree that the anti-dumping issue was probably the most divisive industry issue of the past 50 years?
BERNHARDT: I would agree with that statement. People felt very passionately about it on both sides, and a few people changed their stripes pragmatically along the way.
INTERVIEWER: Some of the anti-dumping petitioners were importing furniture themselves.
BERNHARDT: Yes, that was absolutely true.
INTERVIEWER: And the issue not only divided the manufacturing community, but it separated manufacturers from retailers.
BERNHARDT: That is also true. Some of the bigger retailers were importing directly from China and elsewhere. They had to decide which side of the issue to come down on as well. I know some of the anti-dumping petitioners lost some retail accounts because of the decision. It is another example of how globalization certainly is one of the largest macroeconomic changes the furniture industry, and certainly the case goods industry specifically, has faced in the past 50 years.
INTERVIEWER: You mentioned that Bernhardt imports leather upholstery. Why not fabric upholstery as well?
BERNHARDT: To answer that, two things come to mind. Leather furniture is more expensive than fabric furniture. When computing the cost of shipping a 96-inch sofa 12,000 miles, the percentage of freight is lower if the price of the sofa is higher. On average, a leather sofa sells for twice as much as what a fabric sofa sells for, so the freight percentage is half as great.
The second thing is that, for whatever reason, consumers seem to buy mostly brown leather. Bernhardt and other companies have experimented with virtually any color you can think of, but at the end of the day, a huge percentage of what is sold comes down to brown leather. The consumer has never taken advantage of the myriad of choices of colors in leather. Therefore, it's more of a commodity, thus more suitable for importing. In fabric sofas, consumers have taken advantage of the huge range of choices available, which means more customization. That is more suitable to domestic manufacturing.
Bernhardt has imported some fully upholstered fabric furniture, and, conversely, our company also still makes some leather upholstery here in the U.S. But in general, leather furniture, as opposed to fabric furniture, is more likely to be a good buy out of Asia.
INTERVIEWER: Back in the '80s and '90s, a less divisive issue was that of the North Carolina discounters. These were retailers in that state, some of whom sold mainly by toll-free 800 phone numbers to consumers in other states at low prices. In addition, they didn't collect local sales taxes. Retailers in the other states said that was unfair and asked manufacturers not to sell to the N.C. discounters. Did Bernhardt get caught up in that issue? Did you sell to the discounters?
BERNHARDT: Yes, Bernhardt did sell to the North Carolina discounters. That was during an era when some manufacturers were beginning to open their own stores. Ethan Allan, of course, had company stores from the start. At that point, Thomasville started opening company stores, and Bassett and other companies followed. Manufacturers were making decisions to narrow their distribution and sell largely through company stores. Those stores were sometimes called dedicated stores and they were usually either owned by the manufacturer or a franchisee. In any case, the stores looked much the same and were merchandised similarly. Some manufacturers took the opposite approach, and tried to sell to broader constituencies.
We took the latter approach. We have never opened Bernhardt stores. We continue to sell to a large network of independent furniture and department store retailers. Our distribution was scattered all over the country, including any company that we could sell to in North Carolina. We looked for retailers or distributors who were able to pay their bills on time and run a reputable business.
Most of the so-called North Carolina discounters were established retailers with big investments in beautiful stores with well- maintained displays. They took care of their customers after the sale and did all of the things a good retailer should do. These retailers or distributors enjoyed the advantage of being closer to most of the North Carolina and southern Virginia manufacturers, which lowered their freight costs. They were beginning to take significant bits of market share away from out-of-state retailers, particularly along the east coast.
Some of that business came from telephone sales, but much of it originated from consumers driving up and down Interstate 85 and Interstate 95, going to Florida in the winter and coming back north for the summer. It became fashionable to stop off in High Point or neighboring cities and buy furniture from the discounters.
There is some irony in this issue because, in my view, virtually every single retailer in America was and continues to be a discounter. No company has ever sold any furniture for the suggested retail price. It doesn't matter whether it's 10 percent off, 20 percent off, 30 percent off or 50 percent off - all retailers discount furniture. The consumer has come to expect that.
Bernhardt finally worked its way through the discounter issue. Our company and a number of other furniture companies tried something we called ‘minimum retail price policies’. We experimented with telling retailers that we didn't want our furniture sold for any lower amount than the minimum retail price. We checked and found that practice was legal, and that it was practiced in some other related industries. So Bernhardt and some of our competitors tried that approach.
But, it turned out, that wasn't a great idea. Our company felt like we were running a police state, where we had to check up on the prices of all of our customers, get verification on whether they did or did not sell by telephone, and so on. We finally went back to our original mantra of free trade: Bernhardt will sell the furniture and then our retailers and distributors could do with it as they saw fit. We wound up telling some of our retailers, in Florida, New York and other parts of the country, who were complaining, that they would just have to find a way to be competitive on their own.
Eventually, that is what happened. The local stores became more competitive, and the larger stores in North Carolina became somewhat less competitive and aggressive in their pricing. The phenomenon seemed to run its course and is no longer much of an issue in the marketplace.
INTERVIEWER: I believe almost all of the North Carolina discounters who sold mainly via phone banks or catalogs no longer exist.
BERNHARDT: That is correct. But, some things don't change. People now do it, or try to do it, through the Internet rather than through 800 numbers. There are always non-stocking retailers who try to get their hands on a company’s product and undercut the full-service retailers. We have to be mindful of that and avoid selling to someone who has made no investment in the home furnishings business. On the other hand, Bernhardt is a responsible believer in free-market competition. No retailer in a given area should be entitled to gouge consumers with an inappropriately high price.
INTERVIEWER: Furniture sales over the Internet are growing. How do you see that playing out? Does Bernhardt sell to Internet retailers?
BERNHARDT: At the current time, we sell very little to Internet retailers. We have sold some of our closeouts to Internet retailers. We have a website, of course, and we've seen a very large traffic increase in recent years. What we believe is going on is that consumers are trying to get information, but not necessarily about prices, since the Bernhardt website does not post prices. We get a huge number of hits daily, monthly and annually from people who are looking at our designs and using the site's floor-planning programs. We think they are comparing our products to those of our competitors in terms of scale, size, look, delivery, et cetera. Then, consumers typically go to a store to actually shop and buy.
Decades ago, consumers went into a furniture store without any preconceived notion, for the most part, about what they were going to see there. Other than some national advertising, or a photograph in a shelter magazine, most people were first exposed to what was available in home furnishings in the actual store. Today though, through the availability of more and more shelter magazines, and particularly through websites, most people have done a lot of homework before they even go to the store to purchase furniture.
INTERVIEWER: I take it the Bernhardt website has a retailer locator.
BERNHARDT: Yes, it does indeed. We have different websites for each of our three divisions — residential, office and hospitality — and each gives contact information, either for the sales rep that handles that particular product line, or where our residential furniture can be purchased.
INTERVIEWER: Do you see this changing in any significant way? Is your son or perhaps his successor going to have to make some hard decisions about selling on the Internet?
BERNHARDT: Yes, I see those decisions needing to be made in the next few years. None of us know now in what form those challenges will present themselves, but we know they will arise and that the strong will survive. Bernhardt is very fortunate in that my older nephew, Rountree Collett, and my son, Alex Bernhardt Jr., are working hand-in-hand to move the company forward. They're very bright young men with graduate degrees and years of experience. They are completely dedicated to what they are doing.
We are also blessed by being a privately-owned family company, with family shareholders supportive of what we are doing. We are blessed with a good balance sheet. We have cash in the bank and no debt whatsoever. Bernhardt has a good reputation in the trade. People trust us and believe that we will be fair with them. I believe that whatever these challenges, with the Internet or more globalization or whatever, I am comfortable that the Bernhardt company is in good shape and well prepared to handle anything.
INTERVIEWER: Did Bernhardt ever consider going public?
BERNHARDT: Yes, we have considered going public. We think it's our obligation to the family and to the company to always consider every option. There is nothing we wouldn't consider and think about. But we haven't considered going public too often or too long, although it certainly would be an option and a possibility. But there are other possibilities — a sale of the company, or a portion of the company, acquisitions of other companies, since we have cash in the bank, no debt and a good ability to borrow. We have many options in front of us. That is a great blessing and we are very fortunate and humbled by having such a great set of circumstances.
As of this moment, there are no plans to go public or to sell the company. But we never say never. We would never paint ourselves into a corner or limit our options.
INTERVIEWER: I would guess that over the years, you've gotten plenty of offers to buy the company.
BERNHARDT: Yes, that is true. We have had several offers to buy the company. We continue to get calls pretty regularly from private equity groups and others. We are always polite and courteous when we say no; again, we don't know what the future holds. But we do feel a great sense of loyalty to our community and to our employees. Bernhardt employs between 1,200 and 1,300 people, and we are an important part of the fabric of this community in Lenoir.
Bernhardt has created a foundation that gets a percentage of the company profits each year, and the board of the foundation directs the donation of those funds to various charities in the areas where our employees live and work. We give our employees time off from work to do volunteer work in the community. We encourage people to be on the board of directors for everything from the hospital to the United Way to the Chamber of Commerce.
Bernhardt is very active in a program called Communities in Schools, which is an anti-dropout program. The company supplies about 50 mentors every week who go out and spend at least an hour in the public schools with a student from a family that is less privileged and is at risk of dropping out. That is just one example of a way in which the company gives back to the community.
INTERVIEWER: Do you have an employee stock ownership plan, or ESOP?
BERNHARDT: Currently, Bernhardt does not have an ESOP. We looked into it. The regulations may have changed, but when we looked at it, after 10 years we had to give options to people to trade their company stock for other stock, which meant that we would have to come up with a considerable amount of cash at that point. There were a variety of benefits to creating an ESOP, but also a lot of unanswerable questions that steered us away from going down that road.
INTERVIEWER: The company is debt free now, but have you been able to grow without borrowing large sums of money?
BERNHARDT: We have had no impediments to our growth because of finances. The company certainly has been in debt at various times in its existence. Under my leadership, Bernhardt has been in debt, out of debt, back in debt, back out of debt. We are not categorically opposed to borrowing money, but in recent years we haven't needed to do that. One result of globalization has been the closure of a number of facilities, which means the case goods industry is less capital intensive than it previously had been.
I mentioned earlier about attending furniture machinery shows. Bernhardt buys a very small percentage now of new machinery and equipment compared to 15 or 20 years ago, when we were totally vertically integrated in case goods. We owned a sawmill, a veneer facility, a glue company and a particleboard company. We were manufacturing our raw materials as well as making the furniture itself. In the early 1980s, I decided that we would shift our focus to become more of a marketing driven entity as opposed to a manufacturing driven entity. From that point on, we would be less concerned about how to fill up the factory with orders and more concerned about what our customers really wanted to buy.
It was a cosmic shift to say we would take more interest in marketing and finding the right products, whether they fit our factory or not. That coincided with globalization, because we could go to Asia and find factories that would make the products we thought the market needed and wanted, whether or not they fit our domestic factories. That meant we were investing less in woodworking machinery than we did previously, which helped the company financially.
INTERVIEWER: Do you consider Bernhardt to be a lean manufacturer?
BERNHARDT: Yes, I do.
INTERVIEWER: So, in other words, you have little inventory and don't carry much in stock.
BERNHARDT: Well, that would vary, depending on the division of our business. The contract or office furniture division of our business is strictly made to order. In other divisions, like residential case goods, we make to stock. We make cuttings or batch lots in bedroom and dining room, and put it on a shelf so it's available when retailers order it. We don’t do that with sofas, for example, because we don't know what fabric the customer will choose. And, we don't do that with office furniture because the architect will pick particular veneers and solids. We also don't have excess inventory in hotel furniture because every hotel wants different furniture. But, we are doing all of it in a lean fashion, with a mind towards good values and keeping our expenses as low as we can.
INTERVIEWER: Has Bernhardt ever done consumer research?
BERNHARDT: Yes, we have done some consumer research but we haven't pursued it aggressively. It is expensive and time consuming. Residential furniture is a fashion business, and it moves quickly. There has always been talk of having only one market a year. I laughed at that and I still do. We have at least four markets per year, depending on how it’s counted - all of which have new product. We really don't have time to talk to a lot of consumers and try to find out what they want.
We found that consumers expect us to come up with the next new thing. They want something that they themselves have never considered. They can only imagine what they are familiar with or something they have already seen. They don't know what they don't know, and they are looking for leadership in design. Our strategy is to be a design leader, an innovator providing new, and exciting designs - not run-of-the-mill, pedestrian products.
We use quite a few freelance designers who are usually paid on some sort of royalty system. We also have a team of in-house designers and we develop a fair amount of our products internally. Therefore, we have a hybrid design system.
INTERVIEWER: How has Bernhardt gone about the task of being a style and design leader?
BERNHARDT: Well, it is certainly our intention to be a style leader. Great risks come with the rewards, however, because when you are trying to step out front and do unusual things, it's like a baseball player who is swinging for the fences. It's great fun when it is a home run, but we often strike out a lot along the way.
We do introduce quite a bit of new product annually, and we expect some of it to be very successful, but we acknowledge that some of it won't be as successful.
INTERVIEWER: Tell us about a few of the home runs, and perhaps a strikeout or two.
BERNHARDT: That brings back a lot of memories, most of them associated with case goods collections. The order of events is that we come up with a name for the collection, of course, and they generally run anywhere from 40 to 70 stock-keeping units, or SKUs. We start with a design brief and say, ‘OK, we need an 18th century group, or a Colonial group, or a Spanish, Mediterranean or Italian collection and so on.’
We had some phenomenal runs with several Oriental collections. One named Shibui was innovative and very different, so we tried to follow up with an Asian design with Japanese influences. It was a colossal failure. Both of those were unusual efforts, ones which we found challenging and enjoyable — to attempt, at least.
We have had a long-running interest in the American chestnut tree, which was the most common species in the southern Appalachian Mountains for centuries, and certainly in the early part of the furniture industry. It was particularly of interest to my dad and grandfather, back in the days of the sawmill business, when chestnut trees were ubiquitous. They were hit by a blight and are now nearly extinct, except for small amounts of trees. We developed a collection called Tribute, which had small pieces of walnut and chestnut veneer. It was very, very successful — so successful we couldn't get any more chestnut.
You asked earlier about my father and some of the things he'd done, and you also asked about what kind of benefits we had. Just a reflection or two about him on that subject. Under his leadership, we were the first company in this area, to our knowledge, to have any kind of a retirement plan. We put in a pension plan in the late 1950s, one of the first in the entire industry. We were also one of the first companies to offer any kind of medical and hospitalization program to our employees.
Another differentiator of which I am very proud, was my father's leadership on racial issues. One early memory of growing up in this area was going to the movies, where there was segregation in seating between white and colored people, as they were called at that time. The same thing was true of restaurants and most furniture factories.
In 1954, after the Supreme Court ruled school segregation was illegal, my father was the first to desegregate the plants, everything from the toilets to the cafeteria. They were completely integrated. He took some criticism for that, but not much, because he was so respected as a leader, and he had such great respect in the community from both African-Americans and whites. He was looked at as a leader who should be followed, so he was able to pull that off.
I remember distinctly that he was one of the founders of the biracial committee here in town that worked to ensure that there would be continued racial harmony. When Martin Luther King Jr. was assassinated in 1968, I walked with my father as he led the parade in tribute, along with a black associate of his, through the streets of Lenoir.
Some people at our church asked my father what we should do if black people tried to come to our services. My father said, “I'll tell you exactly what to do, please ask them to come in and be seated next to my family.” That dispelled any hint of discrimination in our church.
He had a great legacy in caring for all of humanity, for all of his employees, regardless of their socioeconomic status or race. He set some high standards that hopefully the company continues to practice today, with an interest in being a good place to work with good benefits, so people choose to work here because they want to work at Bernhardt, not because they have to.
INTERVIEWER: How do you think your father developed his racial attitudes, which weren't very common in the South?
BERNHARDT: Well, I don't know the answer to that question specifically, except that I know as a young man growing up, he had black friends, as did I when I was growing up. He was interested in music and was a guitar player, as I later became, and some of our best music friends locally are black musicians. My father was just a very loving, caring individual, and certainly not prejudiced about much of anything. He was raised in a church environment where loving humanity as a whole was espoused and preached. He was a very decent human being.
INTERVIEWER: Was Davidson College integrated when either he or you attended the school?
BERNHARDT: No, it was not integrated when he was there. When I was there in the '60s, it had become integrated, although still all male. The college became co-ed and allowed women in 1973.
We had a protest march in the small town of Davidson, which I participated in back in the 60s. It was heartfelt, but also a little bit tongue in cheek, because the protest was against the barber shops in Davidson, all of which were owned and operated by black barbers. Two of the barbers had refused to cut the hair of the black students who had been recently enrolled at Davidson.
INTERVIEWER: During the recessions you've talked about, I assume you had to lay off some of your workforce.
BERNHARDT: Yes, we did have some layoffs. Those layoffs and closing factories are the two most painful things that I’ve ever had to do. At the end of the day, we were trying to do what would preserve the company, and what would do the most good for the most people. If we let the company fail, then we have utterly failed in our responsibilities. Somehow, for 125 years, we've been able to do the right thing most of the time, certainly not all of the time. I can't think of any other family furniture business of any size that's made it for 125 years.
Apparently, by the grace of God, a lot of luck, mostly hard work and a family that has been committed to the company, we have been able to survive. That does require occasional layoffs as things go up and down. We have to be willing to do what's required to remain in business.
INTERVIEWER: Have labor shortages ever hampered your growth?
BERNHARDT: I mentioned that in 1972, we opened an upholstery plant in Shelby, North Carolina, because we couldn't get enough trained upholsterers here in Lenoir. Around 1979 or 1980 when we opened the promotional dining room factory in Troutman, North Carolina that also was driven by a desire to find a different labor market. We later closed the Shelby, North Carolina plant, but reopened it in 2013, again because the labor supply there was greater than here in Caldwell County.
The ebb and flow of the business and the availability of labor does affect our company, and there have been times of surplus and times of shortage. The deep recession that hit in 2008 resulted in significant layoffs, but we have resumed hiring since that time. We are not back to the levels of 2006 or 2007, which were boom years, but we are getting close. On the highway outside our office here, the hiring signs are up.
INTERVIEWER: Will you be able to fill those jobs with qualified people?
BERNHARDT: It will most likely take a while, because some of the specific skills like upholstering, fabric cutting and sewing are in short supply. With globalization and computerization, the jobs have changed from mostly manual labor to requiring more education and broader skills than in earlier days.
INTERVIEWER: Have there been any unionization attempts at Bernhardt?
BERNHARDT: Yes, there have been. In the late '50s, early '60s, there were a couple of half-hearted attempts when union organizers came to Lenoir, but the issue never came to a vote. I am not aware of any organizing activity in the last couple of decades. There has been no successful unionization of Bernhardt, or any of our competitors, or any furniture manufacturer in the South during its long furniture history.
INTERVIEWER: How would you describe your management techniques?
BERNHARDT: What I would say about myself applies to my predecessors and my colleagues here today. We are collaborative and collegial. We get along with each other. There has been very little hierarchical status seeking, very little importance put on titles. There is a genuine shared interest in reaching common goals, a great deal of pride in each other and our accomplishments, as opposed to competition to try to get someone else's job. That collegiality goes back to some degree to being a private family business, with the owners actively involved in the company.
I would say that is an advantage that other companies just don't have, so people in a leadership role here at Bernhardt have to like each other, they have to like the family, or they shouldn't come to work here. It results in a high degree of loyalty. We have very little turnover in our management ranks, or elsewhere in the company, but particularly in management roles. That creates confidence for our customers. They know we are competent and stable, collaborative and collegial.
The retailers know our company, and they know we will get any problems solved. We frequently hand out our personal cell phone and home telephone numbers to large clients, saying that if they have an issue, they should call us and we'll make it right.
There is nothing truly innovative about that, but it is easier to talk about than it is to actually do it. Probably every company in the world likes to talk about how good its people are and how well they get along, but it's actually true here. One of our nearby competitors had five different presidents and three different owners over an eight year period. That creates a lack of stability that employees, customers and suppliers are well aware of and have to work around. Our stability and collaborative style is a great strategic advantage.
INTERVIEWER: How much do you emphasize growth? That seems to be almost an obsession of publicly owned companies.
BERNHARDT: Yes, that’s right. Growth is imperative for public companies. I don't think my views on growth would be different than my predecessors or my successors. That is, growth, at least some growth, is good to have. Employees can see career ladders that they can progress through, and they want to play on a winning team. Having said that, we don't think growth is hugely important. We think that running a company ethically and appropriately, making a good profit and a reasonable return on investment for shareholders – that’s what is important.
The residential furniture business is sadly littered with people who were just trying to be big. On the retail side, Heilig-Meyers grew to become the biggest retailer in the furniture industry, and soon went out of business. I won't name some of those on the manufacturing side, but there are a number of them. We don't think bigger is better, and we don't measure our success by the size of the company.
INTERVIEWER: Do you think being a privately owned company has made it easier to balance your business and family life? Having most of your family involved in the business is challenging enough, is it not?
BERNHARDT: It absolutely is very challenging to live and work together every day. It's also an opportunity, and it's been a rich blessing for me for 50 years, and for my predecessors. I'd take that any day over public ownership. I know who my owners are and that they care about me, the company and the community.
INTERVIEWER: I take it your son, Alex Jr., was much like you in that he liked the furniture business and wanted to join the company.
BERNHARDT: Yes, that is very true. He's the fourth generation here at Bernhardt. We have three young men here as the fourth generation; one is my son and the other two are the sons of my sister. None of the three young men were forced to come to work here. We told each of them they should have some kind of other experience before coming here. They needed to go to graduate school or get a job somewhere else, or a combination of both. That exposure would give them experience and maturity, so they could be sure that they really wanted to work here. They came in at different times, and we were able to find important roles for them. It's very important that a family member be qualified and fill a legitimate need in the business, so a job is never viewed as an entitlement that's waiting for them simply because they are a Bernhardt family member.
I'm very proud of all three of these young men. They work harder than or just as hard as I ever did. They are part of the ethics of how we run our company. There are no company cars. No one from the company comes to mow our grass. All the furniture in our homes we bought and paid for similar to our own employees. We don't take anything from the company, since we don't expect our employees to do so.
INTERVIEWER: So your son is the only one of your three children directly involved in the company?
BERNHARDT: Yes. Alex Jr. is married and lives in Hickory with his wife and little girl. He is now CEO of the entire company. Anne and I have two daughters, Lilian has a lovely husband and two children, and lives in Boulder, Colorado; Mary also is married with two children, and she lives in Atlanta.
INTERVIEWER: Did your son have summer jobs here while in high school?
BERNHARDT: Yes, he did. Alex Jr. followed very much the same path that I did. He had summer jobs here at Bernhardt. He went to college and then when he finished graduate school he got a job in commercial real estate. When he joined Bernhardt, he worked in each department in the factory. The same thing happened with my two nephews, Rountree Collett and William Collett. After college, both men went to graduate school and had a job elsewhere, then they came here and spent roughly a year in the factories working through every department. They also had summer jobs here while they were high school students. All three members of the fourth generation did the same thing I did, except that I came into the company right out of college.
INTERVIEWER: Did any of them work briefly for another furniture company just to get a different perspective on things?
BERNHARDT: No, not really. They spent time with sales reps in the field, and my son actually spent a summer in New York working at a retailer, but that was a short-term, temporary thing.
INTERVIEWER: Tell us about your relationships with key suppliers.
BERNHARDT: I mentioned that we stopped trying to be a vertical manufacturer, so we have had many suppliers all over the world. We are customers of Leggett & Platt, Hickory Springs, and many others. We take great pride in always paying our bills on time and operating with integrity. We try to treat our suppliers the way we want to be treated. Building those relationships is hugely important. I talked about the importance of our company’s stability. We look at our suppliers the same way. If we know who owns them, who runs them, and we see they are stable and have been around for a while, we are more comfortable doing business with them.
We have different suppliers in our different business segments, and in a macro sense we are totally dependent on them. We have to treat them appropriately, and we expect them to also treat us with respect and integrity.
INTERVIEWER: What key retailer accounts do you have today? Do you sell to department stores?
BERNHARDT: We do sell to many department stores. Those include Macy's, Dillard’s and Bloomingdales. Those are the three that immediately come to mind. Department stores are not the force they once were in the retail world. As recently as 10 years ago, we had a much bigger department store business. Companies like Marshall Fields and others have been bought by Macy’s and the number of department stores has dwindled.
INTERVIEWER: I doubt if your dad ever sold to many department stores, since Bernhardt then was a promotional source.
BERNHARDT: No, he did sell to some of them, perhaps accounting for about five to 10 percent of the business. At that time, there was Macy's, John Wanamakers, Gimbles, Sears Roebuck & Company, and the May Company was still around. So, there were quite a few.
INTERVIEWER: Are most of your accounts today independent chains?
BERNHARDT: Yes, they are. Some of the chains, like Havertys, are publicly owned. Others, like Raymour & Flanigan, are privately-owned chains. Then we sell to many family-owned businesses with anywhere from one to four or more stores. It's a very diverse, broad-ranging group, and our philosophy is to sell many accounts rather than restrict the distribution. We have many product lines, and that facilitates doing a lot of business with a lot of people and planning the distribution accordingly.
INTERVIEWER: When you joined the company, was it a national company with accounts on the West Coast?
BERNHARDT: Oh, yes it was. Most of those accounts are gone now, but Barker Brothers and Breuners were big chains in California. We had department stores like Bon Marche in Seattle and Robinsons in Southern California. We have been a national company for 50 years. It's just that a lot of those names are no longer around. They have disappeared for one reason or another.
INTERVIEWER: When you came on board, I would assume distribution was mainly by railroad, and today it is mainly by truck. Is that correct?
BERNHARDT: That is correct.
INTERVIEWER: Do you have your own trucks?
BERNHARDT: We do have our own trucks. We own about 100 pieces of equipment and we deliver maybe 25 percent of our output on our own trucks. It depends on who the client is, what they want, where they're located and how often we are in that area. When I came to work, we would never have had a factory without a rail siding. Today, we don't need rail sidings. Everything is either inbound or outbound truck freight.
We deliver in our own trucks when it makes sense to do so, mostly within 600 miles from Lenoir. We don't want to drive a truck all the way to California and have it come back empty. For distant deliveries, we use dedicated furniture haulers. They normally have two drivers per truck, and they have refrigerated trucks so they can bring back produce.
INTERVIEWER: Have you considered a West Coast distribution center?
BERNHARDT: Yes, we have. But, every time we have looked into it we have decided not to do it. Keeping our inventory manageable in one place works better for us.
INTERVIEWER: Have your delivery times gotten faster over the years?
BERNHARDT: Actually, I don't think they've changed much since I've been here. Although, you do hear a lot of talk about manufacturers shipping faster. Back when I started, if business was really good, we could deliver some goods in three to four weeks, but in truth it was typically more like six weeks. That really hasn't changed, whether it's domestic or international service. In residential case goods, we have a certain percent sitting on a shelf that we are able to deliver quickly. We have another percentage that is coming through the production pipeline. It is being readied for distribution, and whether that happens to be in North Carolina or China, it's the same situation. When we combine the case goods that are shipped off the shelf and the part that is in production, it probably averages about four to five weeks for delivery. That hasn't changed significantly.
When retailers buy our new products at market, it is still usually six months before it is delivered to their store.
INTERVIEWER: Do you have customers that take entire containers of furniture coming directly from the Far East?
BERNHARDT: We do indeed have customers that do that. A large client may opt to take containers directly from Asian factories. That customer may then choose to supplement and fill in with product out of our warehouses in Lenoir. We have tried at one time or another almost any possible distribution method. We try to do what our client wants as opposed to what is easy or convenient for us.
INTERVIEWER: Do you offer exclusivity to any of your dealers?
BERNHARDT: Yes, we certainly do that. It is an important element of our marketing, although not the predominant method of marketing. We have also manufactured private-label furniture for select retailers over the years. That is where they put the store's label on the product. It's not unusual to have a case goods or upholstery collection restricted to certain retailers in a particular trading area.
INTERVIEWER: And do you have dedicated sales reps?
BERNHARDT: Yes, we have three separate sales forces: one for residential, one for contract, and one for hospitality. The reps aren't Bernhardt employees. With a few exceptions, they are self-employed, independent contractors who sell only Bernhardt products. The sales force has grown as we've added the contract and hospitality divisions.
Some manufacturers have cut their sales forces. While, it is certainly true that large retailers want to deal directly with management, that doesn't mean they don't also want to have a feet-on-the-ground sales person, who can quickly resolve problems and many other things. As a general rule, our biggest customers still have a sales rep that's servicing the account. From our standpoint, sales reps are very important and always have been. We don't foresee the day when they won't be an integral part of our sales and marketing.
INTERVIEWER: Did you ever consider showing in Las Vegas?
BERNHARDT: As I've said, we consider everything, but we quickly decided not to have a showroom in Vegas and we have no plans to do so.
One of the things I haven't mentioned is that during the early '80s, when we were transitioning from a manufacturing to a marketing company, I closed our regional market showrooms in San Francisco, Dallas and Atlanta. That turned out to be absolutely the right thing to do. We have found that showrooms in multiple markets are not productive.
A Las Vegas showroom, in addition to being expensive, simply doesn't fit our strategies. We don't need it, don't want it and we don't plan to go to Vegas. Again, we never say never. I don't currently know what my son may do, but I'd be surprised if he went to Vegas. We have no current plans to show residential furniture anywhere except High Point.
INTERVIEWER: You haven't mentioned that Bernhardt once made furniture for Martha Stewart. How did that happen?
BERNHARDT: Other companies in the industry had been making a number of licensed furniture lines. We had never done that, but had begun looking into the possibilities of doing that. I had talked to some fashion apparel designers such as Giorgio Armani, Tommy Hilfiger, Donna Karan and others. We decided they didn't add enough value to be worth the trouble and expense because they had no credentials in home furnishings.
One day, Martha Stewart's company called us about doing a licensed line for her. We said, “Hey, this is different. She has credentials in the home arena and is well respected by homemakers.” So we signed the deal and brought out a line of Martha Stewart Furniture. That arrangement lasted for about seven years, and we parted on good terms. Very few things last forever in the furniture business, and it just felt like it had run its course and had become old news. She wanted to do some different things and went in a different direction.
INTERVIEWER: It was a good collection for you while it lasted, I assume.
BERNHARDT: It was a good collection. I was proud of the Martha Stewart line and said from the beginning that she would co-brand, meaning that she wanted her name and our name to both appear on the products. She realized that our name was important, and that was pleasing and a good arrangement. We think it helped Bernhardt's brand recognition, since a lot of furniture went out over the seven years, and it was featured on all of her television programs.
INTERVIEWER: Are there any other important civic or charitable efforts you've been involved in that you haven't mentioned?
BERNHARDT: I've tried to be active in numerous ways. It's a long list but no more than my father did when he was alive. My son and nephews are all deeply involved in community activities as well. That has become part of what's expected here at Bernhardt. I've mentioned conservation; that's something that is particularly important to me. I've been chairman of the North Carolina Chapter of The Nature Conservancy and continue to serve on that board.
Giving back is an important part of our 125th birthday celebration at Bernhardt this year. We have a separate website for the anniversary that recognizes rank-and-file employees who have made outstanding contributions to their communities in one form of service or another.
INTERVIEWER: Are you thinking about retiring?
BERNHARDT: I guess the most accurate description is that I'm semi-retired at the current time. I'm here less than when I was CEO, but I still stay pretty active and busy. I'm certainly not running the day-to-day activities of the company, which my son and nephews do admirably. I'm still involved in civic affairs and company strategic issues. I still go to trade shows. I try to be aware of what's going on in the business and to offer advice when I'm asked for it, if I'm asked for it, by the people currently running the company. I try to refrain from offering my unsolicited advice.
INTERVIEWER: Do you stay in touch with key retailers, if only to keep your finger on the pulse of the market?
BERNHARDT: I do keep in touch with some retailers, but decidedly less so than before. For one thing, most of them are either dead or retired. Very few of my cohorts are still active and involved in the business.
INTERVIEWER: Have you had any key mentors you haven't mentioned before?
BERNHARDT: I don't think I’ve left anyone out. I've mentioned my dad, Wes Collins, Lewis Norman, my wife from inside the business, and various retailers we've admired and have had long relationships with over the years. I've had a lot of friends along the way in the furniture industry. Recently, I've been trying to cultivate friends and relationships in the office furniture business.
INTERVIEWER: Is that business quite different from residential?
BERNHARDT: Yes, the office furniture business is quite different, but not in some of the basics. To be successful, a company has to have a good product and good relationships, and some of it gets down to old-fashioned salesmanship. People have to trust your company and believe in what you're doing. That's the same in office furniture as it is in residential.
INTERVIEWER: I haven't asked you about women's issues in the industry. Your wife obviously is a key element of the business.
BERNHARDT: Yes, that is definitely true. Women are playing a much bigger role in the industry now compared to when I joined the company. We've just named two new product development executives that are female. I'd also say that maybe 70 percent of the sales reps are female now.
INTERVIEWER: Is your wife still working full time?
BERNHARDT: Yes, she is. She is not semi-retired like I am, but she's withdrawn from work a little bit.
INTERVIEWER: What kind of leisure activities do you and perhaps your wife enjoy?
BERNHARDT: We don't play golf. We enjoy traveling and we like to trout fish. Of course, we enjoy our grandchildren. I play some string music and am involved with various fiddler's conventions. We are interested in the culture and history of the southern Appalachian Mountains.
INTERVIEWER: What do you consider the greatest challenge facing the residential furniture industry today?
BERNHARDT: From our perspective, it would be the channels of distribution. We think we can get the supplies we need to make the furniture, and we think consumers will always demand furniture for their homes. It's the channel between us and them — the retailers — which concerns us. Will there be enough retailers who are well financed and well run? I've mentioned some prominent retailers that no longer exist. Fortunately, some new ones are springing up, but we don't know how that will work out. Then, as you mentioned, there's the Internet, which is a growing channel of distribution. Again, we're concerned about how that will play out. We, of course, will be able to come up with good designs and produce furniture for consumers out there who need and want it, but how we will connect with them remains to be seen.
INTERVIEWER: Would the continued consolidation at retail help to some degree?
BERNHARDT: Perhaps continued consolidation would help. But again, bigger is not always better. Some of those consolidations have resulted in failure, and some of our best-run retailers are small independents with just a few stores.
INTERVIEWER: Retailing is a hard business.
BERNHARDT: Yes, retailing is a challenging business and so is manufacturing. Knowing what not to do is as important as knowing what to do, I think.
That is something that was brought home to me in a very clear way after serving on two public company boards of directors. One was a bank, where I served for 10 years, and the other was an electric power utility, where I served for 20 years. That exposure was very enlightening and educational, from the viewpoint of corporate governance, organization, strategic planning, employee benefits and globalization to government regulations and how to deal with being compliant. That has been something I've been fortunate to be involved with and learn from over the years.
INTERVIEWER: Have you or your family been involved in any business ventures other than furniture?
BERNHARDT: Well, we have gotten into some relatively small real estate ventures such as strip shopping centers and land development. My nephew Rountree Collett tends to those investments. They are important, but definitely sidelines compared to the furniture enterprise.
INTERVIEWER: What do you consider your greatest contribution to the industry?
BERNHARDT: I think the fact that I held the place together for 50 years, and left it in at least as good a position as I found it for my successors. That's it. That’s my contribution.
INTERVIEWER: Do you see a future for family-owned furniture makers?
BERNHARDT: I do think family-owned furniture makers will continue to succeed. Or, we'd be out trying to sell the business.
INTERVIEWER: Could you be the dinosaur?
BERNHARDT: That could possibly be true. Or else, maybe we have had just enough things going our way to buck the trends.
INTERVIEWER: Thanks very much for your time. It's been enjoyable for me, and I'm sure the industry will be very interested in what you have to say.