o. william fenn, jr.; ladd furniture
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
APRIL 24, 2008
HIGH POINT, NORTH CAROLINA
RESIDENCE OF O. WILLIAM FENN, JR.
Tony Bengel, Interviewer
INTERVIEWER: First we want to know a little bit about your personal background: when you were born and where, and about your family.
FENN: I was born in Sherman, Texas, in 1927. My mother and father grew up in the southwest and we lived in Dallas for a while and then New Orleans for a short period of time. I went through grade school and high school in Tyler, Texas, in the eastern part of the state. I got out of high school in 1944 and, of course, the war was on at that point. I was 17 years old and I volunteered for the military. They sent me up to Oklahoma in what they call the ASTP program – the Army Specialized Training Program – to study engineering.
I was up there one semester and making good grades, not having to study too hard, and having a good time. I saw that they were going to take a couple hundred youngsters, young army people, and teach them Japanese. They listed some of the places they were going to do that. They were going to have a program at Yale University, one at Michigan, at Colorado, at Berkley, California, and one in Hawaii. I thought, “Boy, oh boy, I want to go to Hawaii.” So I signed up for the Japanese language program and they sent me to Yale. Of course, that’s a little removed from Hawaii but that’s the way things go.
INTERVIEWER: Had you studied any languages in high school?
FENN: I had probably a couple of semesters of Spanish and a little bit of Latin early on, but no, I really didn’t consider myself especially talented in the language area. I was probably more engineering oriented but the Army taught this thing verbally in school. It was an interesting program; the Japanese instructors were mostly Nisei – American-born Japanese from the West Coast. They’d sit in a room with seven or eight of us and they would say a word in Japanese. I will never forget the first one was “ohio gozimas.” I looked down on the paper and it said, phonetically, “ohio gozimas,” just like that. It was spelled like Ohio, like the state, with gozimas on the back of it. The instructor then said, “Good morning.” So “ohio gozimas” meant “good morning”.
We would study those words, pronounce them, and mimic them exactly like the instructor was saying. We did 20 of them and that was what we did for the day. Then I had a little Oriental geography and a little bit of politics, then physical education and that was the day. I thought, “Boy, this is going to be really easy.”
But at the end of five days, they pulled out all the five reports that we had done each day, the 20 words or so that we had learned, and we went over them all. I had forgotten two-thirds of them by then; that was the trick. As you learn those things verbally like that, memory is the thing. We spent a lot of time and we had flash cards and learned how to do it.
I was at Yale for three semesters in the Japanese language program and then they sent me out to the University of Minnesota. I finished my last term out there in the Japanese language program.
I went to basic training during that period of time and the war ended. They’d planned to have each of these people, these Japanese language students, assigned to the military units going to invade Japan, which would have been a very tough job. But with the war being over, they didn’t really have anything for us to do so they just assigned us to the first occupation forces going into Japan.
I was assigned to one that went into Yokohama with the 1st Cavalry Division and I worked there for a few months. It was not very exciting work. I started looking around and I found an Army intelligence unit in Tokyo that was called the Army Security Agency and had the responsibility for our cryptographic work. I got a job with them and what we did was analyze what the Japanese had learned about our code systems. We knew that the world would know about them, that the enemy had learned about them, so we could make them more secure. We also studied to see what their system was. But the big job we had was to make our transmissions secure. I worked in a code center there in MacArthur’s Headquarters. We were not assigned. Our badges all said we were GHQ, general headquarters, MacArthur’s Headquarters, but we really were part of a little war department intelligence agency. We did that other work in our spare time.
INTERVIEWER: What rank were you with this group?
FENN: I went through all that as a PFC but while I was working with this security agency in Japan, they asked me to come back, get a commission and go back out there. So I did. I attended the Army Signal Corps Officer Candidate School. (They did not have an officer’s candidate program for intelligence.) After completing O.C.S., I returned to Japan as a second lieutenant in the Army Security Agency.
INTERVIEWER: While you were in Japan, did you speak Japanese every day? Or were you in an English-speaking enclave?
FENN: The first job I had over there was going out and interviewing some Japanese people about what they thought about the war. I remember the first question was, “What do you think of MacArthur?” I would go out, talk to them, ask them what they thought of MacArthur and write a report on it. You could get good at Japanese but we were in the general headquarters so there was a lot of English spoken there. It was an interesting experience.
When I got out of that after the war was over, I came home, went back to Yale and finished up in applied economics. I didn’t study language when I got back but went with economics and business. I graduated from Yale in 1949 and thought, “All that’s behind me now – on to a business career.”
I went to work for the Armstrong Cork Company, went through a training program in Pennsylvania, and then moved out to Kansas City as a district representative for Armstrong in the flooring business.
INTERVIEWER: Were you managing a territory or were you a rep?
FENN: I was a sales rep at that point. I hadn’t been there but about six months and the Korean War came along. Uncle Sam invited me to come back and work with them some more. I got recalled and I went back to the same agency, the Army Security Agency. We went to Washington. We put together a little radio intercept company and went to Korea. Our job there was to intercept North Korean and Chinese radio messages when they got in the war and decipher them, break their codes. That was an interesting job and I traveled all over Korea at that point. I finished up my tour over there, came back home and went back to work for Armstrong. That was my military career.
INTERVIEWER: How long did you stay with Armstrong?
FENN: I was interested in something that would give me a good training program. There were two or three companies at that point that had probably the most notable training programs. Proctor & Gamble was one. IBM was one. But Armstrong was right at the top of the list, and they had a six-month training program that you went through when you joined the company in Lancaster, Pennsylvania, before you were ever assigned.
We learned all the manufacturing techniques, what was going on in the marketing and sales end of the business, and then we were sent out representing the company. We sold our products to wholesalers, and wholesalers sold them to retailers, and retailers sold them to consumers. Our job was to work with those wholesale units and sell the line.
INTERVIEWER: You had no family that was ever in furniture or home furnishings?
FENN: No, that was the thing. I thought a little bit about this session today. I think that what might be the most unique aspect of my career is that I always considered myself an outsider to the furniture industry. You’ll say, “Well, you were in the furniture industry for 30 years. How could you be an outsider?”
Fundamentally, I went through a business introduction that was in the resilient flooring business and it was almost diametrically the opposite of furniture. It was very highly technical and manufacturing oriented and you worked with chemical materials as opposed to raw materials. Only two or three companies managed most of the industry. It’s entirely different from furniture with our fragmented system here.
When I was with Armstrong, after a few years, they acquired Thomasville Furniture Industries in 1970. They sent two other fellows and me down to work with Thomasville. The three of us came down here and got into the furniture business.
As I look back on it, I think of the things that have taken place in the furniture business since that time and what the difference was of me having that other background, which is entirely different from what most people had. The fellows that grew up in this business were all typically in family businesses and they were very manufacturing oriented and did not spend a lot of time on marketing. They did some marketing, but it was pretty rudimentary compared to most of the advanced industries in the country. We at Armstrong were really somewhat sophisticated in the marketing side of the business.
When I came here, two things in the furniture business struck me as unusual. One was that there was not a major emphasis on marketing. It was more of a manufacturing and distribution-oriented business as opposed to a marketing business. The second thing was that there was very little international business done. As I looked at it, I had been in the international business. Armstrong was an international company, did a lot of business in foreign spots, so I’d had some exposure there.
My military experience said to me that there were going to be some things happening out in the Far East that were going to dramatically change the furniture industry worldwide. At that point there wasn’t much talk about that in the furniture industry
INTERVIEWER: When you were at Armstrong, were you with the Armstrong Corporation?
FENN: Armstrong Corp. was the name of the company, but they had three major divisions. The biggest one was the flooring business, which made resilient flooring materials – Linoleum and those things. Then they had a ceilings business, an acoustical business, and they had a little industrial business. That was basically the company. I was strictly in the flooring business with Armstrong Corp.
INTERVIEWER: Did they do consumer research?
FENN: They did tremendous amounts of consumer research, and they had been advertising nationally for maybe 25 to 50 years at that stage of the game. They had very well-known brand awareness in the marketplace compared to anything in the home furnishings industry.
INTERVIEWER: In 1970 you were in Thomasville, North Carolina.
FENN: That’s right.
INTERVIEWER: Who were your early mentors?
FENN: The number one mentor in my background would be Tom Finch – a great guy. Tom was one of the most learned fellows that I have ever worked with, and of course he grew up in the furniture business from day one, so he really knew the industry. Tom and I became good friends. We not only worked together, but we were very good personal friends. He really took me under his wing and taught me the furniture business; he was the fellow that had the most to do with it. I had another mentor that was in the same category when I joined LADD, working with Don Hunziker.
Don had a great manufacturing background, and I didn’t know much about the furniture manufacturing business. In fact, I didn’t know anything about it when I moved to Thomasville. But by the time I got to LADD, I had been at Thomasville for five years and then with the Mead Paper Company for a while, then at Stanley Furniture Company. I went up to Stanley and was president of Stanley for a while. Then we formed LADD. That was in 1980. I came back to High Point and worked with Don Hunziker. Don did a great job of balancing what I knew about marketing with what was going on in the manufacturing side of the business.
When we formed LADD, we had three principle people. It turned out to be a good situation. Don Hunziker was a manufacturing man; that was his background. Then there was a fellow named Dick Allen with Sperry & Hutchinson, which we bought the company from, and Dick was probably as good a financial man as there was in the industry. But they had nobody in the marketing and sales side of the business, so that’s when they recruited me from Stanley to come down and join them when they put that company together. The three of us really ran LADD as a triumvirate
INTERVIEWER: Let’s go back to your Thomasville days. Describe your learning curve and your positions.
FENN: I came down here as a general sales manager for them, so I was responsible for all the sales of the company and the distribution system out across the country. That was probably the best fit possible because, being from the floor covering business; I didn’t know an étagère from an armoire at that stage of the game. I had to learn the furniture nomenclature a little bit and also a little bit about the manufacturing. I did know their distribution system fairly well because we sold to furniture stores all over the United States, and at that stage almost all the furniture stores, particularly in small towns, had a floor covering department. I would sell them floor coverings. I got to know the furniture dealers around the country simply because they happened to be in the common distribution system.
INTERVIEWER: There were no Thomasville stores then.
FENN: That’s right, exactly.
INTERVIEWER: You were dealing with independent furniture stores or small-chain retailers.
FENN: That’s right, all those people.
INTERVIEWER: Did Thomasville sell to Sears or Montgomery Ward?
FENN: Yes, we did. We sold a good bit at that point to Montgomery Ward. They were the largest furniture distributor among the major retail chains so we did sell them. The principal advantage to Thomasville was that they had pretty good brand awareness. They were very unusual in the furniture business in that they had been doing national advertising for maybe 15 or 20 years before I arrived there. Virtually nobody else in the furniture business was doing that – maybe a spasmodic ad on some promotion – but it was a consistent, planned program every year for Thomasville.
As a result, they had built up fairly good recognition, certainly among retailers, and among consumers there was pretty good knowledge of the company. It was a fairly marketing-oriented company for furniture at that stage of the game.
INTERVIEWER: Was it Tom Finch’s idea to become a national player?
FENN: It was Tom’s. Of course, Tom’s father was in that business and their family had started that business. Tom had a good education. He went to Princeton and traveled a lot. Tom had a great flair for product design; that was probably his forte. He saw the possibility of the business becoming a much more nationwide business than most furniture manufacturers did at that point.
INTERVIEWER: They were doing virtually all their manufacturing in the Thomasville area?
FENN: That’s right, that’s exactly right. They had bought two or three other companies at that point. They had a plant in Winston-Salem that made a line of products and they had some plants out in the western part of North Carolina that made chairs and other parts. They had about six or seven plants in Thomasville and they were individual plants. The reason that they had so many small plants – and it was typical of the furniture industry at that point – is that the most efficient manufacturing operation, with all the parts and all the complexity of furniture, was to have a couple of hundred employees and maybe do $40 or $50 million worth of furniture out of a facility, because a good supervisor could get his arms around it, supervise and operate it. Rather than expand the business and make it more complex as a factory, they would set up a separate one over here. They’d make you general manager of one over here and me general manager over there. They would operate better than trying to put them together.
In Thomasville they had these various plants. They had a plant that made chairs primarily. They had another one that made case pieces. They had a bedroom company, a bedroom factory. They had a couple of parts suppliers – a veneer operation in one, a turnings plant in another and an area where they did the design.
INTERVIEWER: Thomasville had no upholstery at that point?
FENN: They had a little bit. They were certainly not known as an upholstery company, but they did have an upholstery line. They used it primarily as an adjunct to their case goods.
We called it a furniture group as opposed to a suite. A suite would be a bedroom suite or a dining room suite. A group would probably have a bedroom and dining room but it would also have living room pieces, tables and upholstery. They had one plant in Thomasville that made upholstery and that was the extent of their business. It was upscale, and of course at that point, Thomasville was in the upper half of the furniture industry, probably above medium – not the most expensive, but above average at least. They were quality manufacturers.
INTERVIEWER: As a general sales manager, you were promoting the entire line.
FENN: That’s right, exactly. I was working with their sales reps that were around the country. These other companies had separate distribution systems. Hundley was one of those companies that Thomasville owned. It was over in Winston-Salem. They had another company out in the Lenoir area and all those were separate operations.
I was in charge of all of those operations selling product. It was mainly Thomasville that was the mother ship.
INTERVIEWER: There were other brands involved?
FENN: Yes, that’s right.
INTERVIEWER: Describe the distribution set-up and the role the reps played. You must have done a lot of traveling.
FENN: I was on the road I would say at least half of the time and probably two-thirds of the time in my entire career at Thomasville and most of the time after that because I found it awfully important in a diffused system, like we have in furniture, to get out there and know these people because they were independent entities. You needed to have a rapport with them to have them support your line.
INTERVIEWER: You had no dedicated reps?
FENN: We did; the reps were dedicated. They were exclusive, particularly at Thomasville.
I had always had marketing people in the flooring business that were salaried employees. They really operated as marketing consultants, trying to get the dealers to do more effective marketing and to support our line. But in furniture, the rep took on a different position, and I really had to learn that because I was very surprised when I saw that they were on commissions when I got here. They were making very high incomes compared to what good salesmen were making in all these other industries. I thought, “There’s something wrong here.”
What you find is that a furniture rep, at that stage of the game particularly, would go into a town and determine the distribution. He might go into town and there’d be one good furniture store there, and he would sell Thomasville exclusively to that one dealer and not sell the other accounts. He might go into another town and there would be not really one outstanding store but two or three good ones. So he would sell part of the line to one retailer, part of the line to another and part of the line to the other one. There would be three dealers there that had exclusive patterns or designs from Thomasville but not the whole line.
Then in the next town, there would be nobody there that was really outstanding so he would sell his products to any of the retailers in town that wanted to buy. He made those decisions. That’s the critical decision because he gave you a lot more support, advertising-wise; he was obviously anxious to sell your line; he’s very tied to you, as opposed to the other companies. You were always balancing how you could get the most business out of the territory. That was the genius of these reps. The good reps were able to go in, analyze a town and say, “Here’s where I’ll sell my products.”
I would consult with them on this and they’d make changes. Of course you might have an ideal distribution system now – if you had one strong dealer in a town and it was run by a very dynamic owner. If the owner dies and his son or daughter comes in, they run the business. All of a sudden the business is not nearly as effective as it was. You’ve got to decide: “Do I stay with this account and try to build them back up to what they were, or do I change to one of those other dealers?”
The sales reps in the furniture industry are much more than just order-takers or salesmen of a product to a given individual. They go in, size up the distribution and make that decision.
INTERVIEWER: Tell us about some of the outstanding reps that you dealt with and also about the retailers.
FENN: The Thomasville reps were really known nationally as being very high-type guys, very successful fellows, both financially and industry-wise. One of my favorites was the one in North Carolina. He really helped me a lot to learn the differences between a salaried marketing rep, like we had in the flooring business, and an independent, commission-paid salesman in the furniture industry. That would have been John Lindsey here in High Point. John had North and South Carolina and he had a young fellow working for him at the time named Ed Smothers. They were the partnership that sold the line in this area.
I learned from them this proposition of analyzing the distribution in a town and deciding exactly who they should sell and who they shouldn’t. They were highly regarded in this area. We had other fellows all across the country that were well known and did a good job. Most of the salesmen of Thomasville stayed with them for a long time. It was not uncommon for those fellows to be there 20 or 25 years in the same territory because they built up a certain amount of expertise and it was not as easy to move them. You can’t move as much of their knowledge as you’d like to because a lot of it ties to the geography of the territory. They have a tendency to stay in one spot and work there.
There were major retailers all across the country. Some of my best friends to this day are fellows that ran those businesses. A lot of them are dying at this point. One that was up for (nomination into) the American Furniture Hall of Fame just this past year was Sammy Finger down in Houston. Sammy was a great man, a good friend of mine and a good customer for years and years. There are all kinds of others right across the country. You could just go to almost any town and pick up a particular account there that was very close and important.
INTERVIEWER: Did you have major distribution on the West Coast back in the ’70s?
FENN: Yes, we did. Thomasville did a good job of selling to department stores – the Macy’s and Bloomingdale’s. All the major ones across the country typically had West Coast distribution as well. You almost picked up distribution if you sold Macy’s. You were selling Macy’s San Francisco as well as Macy’s New York. We spent a lot of time with those fellows and of course we sold all the independents in those areas as well.
INTERVIEWER: You and the territory rep must have called on a lot of these major accounts together.
FENN: Exactly, that was the normal procedure.
INTERVIEWER: You would work out your distribution. Obviously, if you had independents in that area and you had a Macy’s, you wouldn’t sell them the same collections.
FENN: That’s right. You’d sell them different pattern assortments and work that way. The other thing that we spent a lot of time on was getting a good display and sales training on the floors so people could talk about why our products were better or more appropriate to a consumer that came in than other products would be. In addition to that, we spent a good bit of time in these towns trying to develop promotional ideas that were good and getting them to do advertising, to do in-store promotions. We worked with them on a lot of different ideas of that type from time to time.
INTERVIEWER: You had co-op advertising?
FENN: Co-op, sure did. Co-op was a key part of the business at that point for sure.
INTERVIEWER: Tell us about product development. You must have played a key role in that.
FENN: We had a fellow that ran the design department at Thomasville named Walter Bono, and Walter was an outstanding designer and had years of good experience. He was in charge of that department, but Tom Finch also had a tremendous eye for furniture. Tom would go to New York City after every market and analyze what was going on there. Then he’d go to Florida. He had a lot of good friends in the business. He particularly knew a lot of people well in those two markets so he’d go to both of those two spots and try to decide what we would do at the next market to bring product out. He and Walter worked very closely on that and I worked some on that.
I made a real effort to broaden that more, to look at what was going on in the Midwest and on the West Coast and spend more time there. Those two fellows both did some of that but they were so strong and so well known in the New York Metropolitan Market and in Florida, particularly in the Miami area, that they probably spent more of their time there and I spent more of my time in the other spots. We would come to some consensus on what were the best things to put into the line at the next market.
INTERVIEWER: I assume High Point was the major market at that point for Thomasville and your showroom was at one of the factories.
FENN: That’s right, in Thomasville. In fact, we built a major showroom down there. It’s interesting; the distribution was quite different at that point from the way it is now, in terms of markets. There were dozens, and I mean literally dozens, of markets worldwide that were more regional. It made sense that they were regional at that time and aimed to a particular country because most of the furniture that was manufactured by individual manufacturers was sold in the country where it was manufactured. Most of the retailers in that particular country sold products that were made in that country. There wasn’t nearly as much internationalizing as there is today.
Logically then, you’d have a good market in France, you’d have a good market in Germany and you’d have one in England. The United States is so big that you’d have three of them here – three or four. You’d have High Point, which was already the biggest market at that point but not by any large advantage.
You had a big market in Dallas.
INTERVIEWER: Dallas was already going in the early ’70s.
FENN: It was, as was Chicago, San Francisco and New York City. New York was the weakest one of those but all of those were regional markets and they served their regions. What happened at about that time was that – I really could see this coming – there was going to be a lot of furniture manufactured outside of the areas where people normally operated because of the labor costs, freight costs and so forth. If you find people all of a sudden buying furniture from other areas of the world, they needed to go someplace where they could see those products. They needed an international market as opposed to a regional market, which is what those first ones were. High Point was lucky in many ways, but they were lucky because they developed it and High Point really became one of the major international markets.
An example: a retailer from Canada would certainly go to the Toronto show or to a show in one of the other big cities up there. (They had two or three markets.) But they would come to High Point, too, because they were buying things outside of Canada and they didn’t see those at the shows in Toronto, in Spokane and so forth. They would come here and the same thing happened worldwide. People began to come to the High Point Market because they could see a wide variety of products. There was a show in Germany, the Cologne Fair, and it was another one where people would go because they saw not just German products but products from worldwide. That would give them a chance to see these products and that was the start of the boom in trade distribution worldwide.
INTERVIEWER: Thomasville actually sold or displayed at markets in Europe at that point?
FENN: They did not on a regular basis, but occasionally. They would go to these markets to talk about their products and meet the retailers there, get to know them. We sold some products there and we had some shows in spots, but that really came about in the ’70s, ’80s and early ’90s when the trade shows became more internationalized in that sense
INTERVIEWER: Did Thomasville, within its line, have low, medium and high-end, targeted at different segments of the market? How did that break down?
FENN: If you took the entire spectrum of products from low, medium to high, Thomasville concentrated in the upper-medium range and the lower end of the high range. They didn’t do much in the low-end but Huntley did. Huntley was one of their products and it was more reasonably priced down just below that. They had a couple of products where they got into the international accessory business, and when I say accessories, I’m talking about furniture accessories, not decorative things but individual pieces, a program we called Four Corners. We brought products in from all over the world that would be accent pieces and sold them. They were a little more high-end. They were a cut above the others there.
INTERVIEWER: How did you decide where to make those pieces?
FENN: We had a fellow that ran that division for us that traveled all over the world and he had a good eye for design. He knew enough about pricing and costing and so forth that he was very good. He would go to the Philippines and look at teak pieces there. He would select three or four or 10 or 20, buy those, bring them back here, and we’d put them in the Four Corners line. He’d go to China and buy a few things there, then to Europe and South America. He traveled virtually all the time and was picking out pieces that were unique to that area that were good values. We would put them in the Four Corners program.
INTERVIEWER: I assume you ran into the fact that retailers wanted this tweaked and that tweaked for them exclusively.
FENN: Yeah, some of that. Also, that was one of the great advantages of premarket. We had these High Point pre-markets that came prior to the full Furniture Market. They were typically a month in advance. The purpose of those pre-markets at that point – and still to a degree today – was three-fold.
It was a wonderful chance to show product that you were planning to bring out at the next market to your key customers. Only the larger ones would come in and they would critique it. They would say: “The finish is a little too brown or it’s a little too red. Change that a little bit. Wouldn’t a piece here with a little different hardware look better? How about a case that’s a different size?” They would critique your line and you could make changes in that last month. You would literally change it from the premarket to the Market. That was one of the key reasons to have a premarket. The key customers could critique your line.
The second thing was that when they came in, you could work out distribution – this question about who are you going to sell and who you aren’t going to sell. If a large dealer comes in and he falls in love with a group, says it’s the most wonderful thing he’s ever seen, you’d say, “We’ll sell it to him exclusively in this market because he’ll promote it, and he’ll buy all the pieces, put them on the floor, and do a good job.” You’d determine your distribution system to a degree. If another guy comes in and he’s lukewarm, he says, “I really like the bedroom but I don’t care about the dining room portion of it.” You might do a different distribution there. That’s the second thing you get – distribution that you decide.
The third thing is that all the key management people from the company were at the premarket and they’d spend time with retailers. These were the biggest, most important retailers in the country. You got an interchange between the top brass of the furniture company in High Point and the retailers from the various areas.
Those three reasons really were the genesis of premarket and it was a very worthwhile thing. Those things still apply to a degree today, but of course they’ve changed a lot with the internationalizing of the business.
INTERVIEWER: What happened when some of the cuttings didn’t make it? Obviously, some retailers would have committed to it but not enough. How did you handle those situations?
FENN: Yeah, that again was almost a case-by-case decision. You would try to pre-market them enough so that you had a pretty good feel for which ones were going to be really good. But you never know. It’s a little bit like an election. You think it’s going to be great but we’ve had many of them that flop.
Tom Finch told me something early in the game that I really, truly believe. He said that if you design a pattern, you bring it out, and the retailers won’t buy it, that’s really a loss. But he said it’s far worse if you bring out a suite and the retailers like it to a degree, enough to have you cut it, and then they put it on the floor and it doesn’t sell to the consumer. Because then you’ve got the dealer tied up out there with his floor space on something that’s not selling well.
Of course, he doesn’t buy any more from you because he didn’t sell any. So you’ve got a factory load back here and the retailer has got one out there. You’ve got two inventories that have to go out before you can get another one in. The worst mistake you can make is not to have one that doesn’t sell to retailers; the worst one you can make is the one that sells to retailers and then doesn’t sell to the consumers. You would have to go all the way through the chain to make it work.
INTERVIEWER: Was Thomasville doing any consumer research in those days?
FENN: They were. We had an advisory group that would come in soon after Market, and discuss the things that would be good additions to our line for the future. They’d say, “You need a French provincial suite, and there’s not one that’s available in your price bracket with your expertise.”
So we’d work on a French provincial one or something else. We would put together a lot of sample cases. Maybe we were going to do a French provincial suite. We’d take four different approaches to that and have a case made with this particular technique. They’d bring the retailers back in and say, “OK, now we’re going to do a French provincial group and here are some ideas. What do you think about them?”
Sometimes they’d say, “Oh, boy, that’s the one, right there.” Or sometimes they’d say, “I like the hardware on this one but I like the finish on this one. That case size over there looks a little better to me.” We’d have sketches and show them the rest of the pieces in the line; they would critique it. We would go from there to put that suite into the line.
INTERVIEWER: You’re talking about the retailers looking at it?
INTERVIEWER: But you never did consumer focus groups back in those days, right?
FENN: Not too much. There was not much done of that at that point. There was a lot of it done in the flooring business so I was really well aware of that.
INTERVIEWER: You couldn’t convince the powers that be that this was the way you ought to go.
FENN: That’s right. They were a little more provincial down here than to do consumer research at that point.
INTERVIEWER: The company you were using actually did survey consumers in some way, right?
FENN: Oh, yes, we sure did.
INTERVIEWER: Do you think their information was worthwhile, reliable?
FENN: It was like anything. There are degrees of success. I can remember early on that we were working on a wall material in the flooring business, a wall material for hospitals that would be easy to clean and sanitize and so forth. We developed a product. Then we went to architects because architects did the specification work in those places. We showed them these ideas and they thought it was the greatest thing they’d ever seen; it was really going to be a hit. Our market research said, “You’ve really got a substantial winner here.”
But when we brought it into the marketplace, we found that it was a very different thing because it was the last of the finishing materials in a hospital. They’d had all their expenses up to that point. If they’re running over on things, they’d say, “We’ve got to find a way to cut some money at the end of this project to make it come in on budget, so we’ll paint the walls rather than put the new wall material on there.”
Our market research said it was great but when we got to the marketplace, it was mediocre at best. That’s the thing you have to worry about. I think in any market research a lot of times people will say one thing – not to mislead you in any way, that’s just what they think. But when you get down to voting with your dollars, the money and your mouth are two different things
INTERVIEWER: What were some of the big hits that Thomasville had back in the early ’70s when you were with them?
FENN: Every few years they would have one that was really good. I’ve got one of them upstairs in my dinette area right now. It was called Allegro. Allegro was a nice, fresh look from England that they had designed. It had a bamboo-look to it and was very sophisticated. We made it in three or four finishes. We kept adding a finish and discontinuing one for a time. Allegro was a great seller for many years.
They had Châteaux Provence, which of course was a French group. It was very, very strong for a long period of time. Typically, a good-selling pattern in a line will come in and it will sell very well for two or three years. Then it fades and dies. But occasionally you’ll find one that lasts on and on. Allegro was one of those that went on and on. They had one called Collector’s Cherry that was also a classic and many others along the way.
INTERVIEWER: Tell us about the growth during the years you were at Thomasville. Did you have any success in marketing abroad?
FENN: Yeah, we just got started in that. But again, having traveled as much as I had internationally and then having worked for a company that did a good bit of international business, I was really aware that it was a possibility. It was in theory a lot easier than actually doing it because there wasn’t too much of it being done at that point.
Having said that, at every Market in High Point, we’d have a few foreign customers that would come to North Carolina to buy products. They were really kind of specialty operators in those markets. Several companies from the Near East – from Saudi Arabia and Dubai and so forth – and a few from Europe would come in. Most of them were unusual stores that were selling products that were out of the mainstream.
INTERVIEWER: Was this more than a one-sies and two-sies business?
FENN: Yeah, it was. Normally they didn’t have quite as easy of a job restocking. It takes a lot longer. If you talk about cuttings, it might be two or three months in the making. So when you place an order, they’ve got another month or two before the cutting comes through. By the time you ship it to Europe or the Far East, you’ve put another month or two on top of it. It was very difficult to resupply.
Typically, those stores would buy an assortment. They might buy six suites if they were mildly interested in it. They might buy 12 if they thought it was really great. They would buy in pretty good quantity when they bought it and they’d try to limit the number of different pieces so they could turn their inventory pretty well.
INTERVIEWER: What about Canada? Was that a major customer for Thomasville?
FENN: Yes, it sure was, and Canada has the potential to be about 10 percent of the United States. We were doing good business up there. We had two or three different reps that worked that area and they were very successful. We did some business in Mexico as well.
INTERVIEWER: Roughly what was Thomasville’s volume when you came and what was it when you left? Was there a recession in there sometime?
FENN: Yeah, in the early ’70s, but when I got there it was pretty much on the uptick. I was there five years. Then I went up to Stanley (in Virginia), so in the second half of the ’70s, I was at Stanley. We formed LADD in 1980.
I came back to High Point and worked here. Thomasville was always in the top three or four manufacturers in the furniture business.
INTERVIEWER: I’m sure it was growing back in those days.
FENN: Oh, yeah, it was growing very nicely at that point.
INTERVIEWER: Is there anything else you want to say about your Thomasville stint?
FENN: No, I think those are the main things there.
INTERVIEWER: Let’s move on to your period at Stanley, another bellwether industry company.
FENN: Yes. The first five years at Thomasville, I really would say I learned a good bit about the idiosyncrasies of the furniture business. The Mead Paper Company bought Stanley from the Stanley family up in Martinsville, Virginia, and they were looking for some professional marketing people to be in that business – professional furniture people to be there. They hired me to come up as the vice president of sales and work with Tom Stanley, who was on the board of the Mead Company at that point. A fellow named Timnick also was brought in as a manager. After a year or so Hank Timnick moved from Stanley to Mead to head up a new division they were developing to manufacture interior furnishing materials – not just furniture but there were other items as well.
I ran Stanley at that point. That was an interesting time because we got very interested in two things – promoting the groups that were designed to be unique in the marketplace and selling them around the country. The other thing we did that was a little unusual was that we got some international business going and developed some international business as well.
INTERVIEWER: Had Stanley hit some rough times just before you joined them?
FENN: They had been through the recession of the early ’70s, but they had unusually good distribution. They had good reps across the country so their business held up pretty well during that time and we grew it fairly substantially. We put a lot more emphasis on markets. We did a lot of things with markets that made our company more high-profile in the individual markets when we would go there.
INTERVIEWER: Stanley was in general at slightly lower price points than Thomasville, and you were in a slightly different niche of the market?
FENN: Yeah, but not much. If Thomasville would be high-middle to low-top quarter, Stanley would be squarely in the middle. They didn’t make the cheapest products but they made products that were pretty affordable and in the middle of the price range. They were just a touch below Thomasville and did a lot of work in specialty items. They were particularly strong in youth furniture at that point and they did a good job on youth furniture. They did a good job on painted furniture. They had a lot of paint finishes that were very good and that sold especially well in the shoreline areas along the Gulf Coast, California, Florida and so forth.
INTERVIEWER: Stanley was a national case goods source at that point and didn’t have upholstery.
FENN: That’s correct. It was strictly a wood furniture business and all the products were made in Stanleytown, which is right outside of Martinsville. They did have a plant up in Winchester, Virginia, and one in the Pinehurst area of North Carolina, but their main operation was right there in Martinsville and Stanleytown.
INTERVIEWER: I take it they were still pretty much on the Thomasville model with separate plants for dining room and bedroom.
FENN: They had taken a different approach to it, but not much. They did have a chair plant, they did have a case goods plant, and they did have a table plant but they were all in the same complex. They were all separately managed and separately operated. They had a very good facility in Stanleytown. They put production there side-by-side in each case
INTERVIEWER: Were you selling to retailers you hadn’t come in contact with before because of the slightly lower price points Stanley was serving?
FENN: Some, but not much, because there was enough overlap there that I suspect I knew well about 90 percent of their customers when I got there. Now they might be a little different in emphasis. In other words, the ones that might be number one in Thomasville might be further down the list with Stanley and a number one with Stanley would do a lot more than he did with Thomasville. But there was a good bit of overlap, so that was pretty much the same group.
INTERVIEWER: Tell us about the rep force at Stanley.
FENN: The rep force was unusually strong. They had had a good run of business in their lines and consequently their reps were strong. They did something there that we didn’t do at Thomasville; I found it surprising and very effective at Market time. Almost all the best reps would have an assistant that would come in; many times it was a young lady that was from High Point. They would work with them Market after Market after Market so they got to know their customers better. These reps were selling to slightly larger territories so they were busy as could be. A very good customer might come in just when you’d started with another good customer so you had to spend time with him.
These ladies would then take them through. We’d serve lunches so they always could take them to lunch if it was that time of day or in the back to have a cup of coffee. They would actually show them the product. After several Markets of working for the same rep, they would always pair up that way so that they’d have the same person that they worked with. They got to know the accounts a little bit and they got to know the line also and consequently they could take people through.
The rep would make the final decision and he would certainly catch up with them before they’d finish, but these ladies really multiplied the effectiveness of the reps – fellows who had big, important territories. I remember the guy in Buffalo had a lady that could have been a salesman any time, any place if she had decided to, but she was a High Point native and wanted to stay here and just did this work at Market time.
INTERVIEWER: The reps pretty much controlled distribution in their territories like you described at Thomasville.
FENN: They were paid a commission and worked as they did at Thomasville to make the distribution decisions and make the territory work. That’s right.
INTERVIEWER: Did you have any participation in the contract aspect of the business? I think both Thomasville and Stanley did contract work, correct?
FENN: It was very spasmodic, though. They didn’t really market the thing. The number one company in that category was American of Martinsville. I was aware of that business because of my friends at American of Martinsville when I was up there with Stanley. Later on American of Martinsville became one of the LADD companies and they probably were the largest hospitality – which is the hotel/motel business – supplier in the world.
INTERVIEWER: At Stanley, who were some of the chief people you worked with and learned from and taught?
FENN: There was a good group of people up there. I mentioned Hank Timnick. Timnick qualified as a professional manager. He was not a furniture man, although he obviously learned the furniture business when he was there. His expertise and strength were in marketing concepts and general management. There was a bright young fellow that worked with me there that I was very fond of named Albert Prillaman. Albert had grown up in that business. He started out in the personnel end of the business at Stanley and he was from the area right there. It was his home. He was fresh out of college when he went to work there and he was outstanding, did a great job. He became president of that company at a later date.
Tom Stanley was a mainstay there, as I mentioned. Tom left pretty soon after I was there. He had been on the Mead board and he died soon thereafter. Most of my experience with him was in the first year. He was a topnotch guy and a very knowledgeable furniture man, particularly in manufacturing.
INTERVIEWER: You spent about five years at Stanley.
FENN: About five years.
INTERVIEWER: Were you beginning to see some changes in the industry, more internationalization perhaps?
FENN: Absolutely right. As I mentioned before, that was something that I was determined to do more in because I thought that I saw a great possibility there. We made some progress on that nicely at Stanley. We had some good business and we went to several markets in Europe – Cologne. We went to the Dubai show a couple of times. We were in Mexico on several occasions, at Guadalajara, for the show down there. But it really blossomed when I got with LADD. That was where we really made substantial progress in that area.
INTERVIEWER: Did Stanley import any accent pieces or anything like that while you were there?
FENN: Not too much. They did some importing of components. They would buy veneers from other parts of the world. They were very strong on veneer work and they did some of that. Occasionally we would get some hardware from overseas, but we didn’t bring any finished pieces into the assortment. They were all made locally at that point.
INTERVIEWER: Can you remember, in any detail, the first furniture market you attended?
FENN: It’s an interesting thing. I was thinking about it just recently. I’ve got a picture of the old High Point Furniture Market building upstairs. It was on Main Street, where they had one of the first buildings.
INTERVIEWER: The Southern Furniture Exhibition Building, it used to be called, right?
FENN: That’s right. OK, you will find this amusing, I think. The Armstrong Floor division had an office on the first floor of that building and it was our district office, I guess we called it at that point. I trudged those Market halls long before I knew anything about furniture. We had that small office and a couple people there. We had a sales rep that was a distribution manager and that was our office. I was exposed to the furniture business – not that I had any thought that I’d ever be involved in the furniture business back in the 1960s.
INTERVIEWER: Did Armstrong have a small display? Was it actually a showroom?
FENN: It was a small showroom there.
INTERVIEWER: Some furniture dealers would have come in.
FENN: That’s right, and as I mentioned earlier, in small towns especially, the furniture dealers typically were in the flooring business. They sometimes were also undertakers. You’d find an undertaker with a flooring operation and a furniture operation all hooked together in the town. Our interest there was selling them my floor coverings and many of them did that. There was a showroom there but we didn’t use it at Market time; it was really primarily to house our distribution system in the southeastern U.S.
We had wholesalers in each of the major markets. The local one was down in Lexington and covered this area. We had another one in South Carolina and one in Virginia, in Richmond. Those were the guys who would overlap and sell the furniture dealers that were all through here.
INTERVIEWER: Tell us about the advertising that Stanley did. Did they do national advertising?
FENN: They did what we call promotional advertising. Quite a few of the first companies did. They would develop a new group. It’d be one that you’d think was going to be really good. They would do a national ad and tie in that group. It was really a dealer incentive idea to do that. Sometimes we would put their names on ads and tie it in that way, but it was a spasmodic thing. It was not a planned national program that builds consumer awareness over a period of time. It was really a promotional activity that they did. But we did do some of those, yes.
INTERVIEWER: What about product development at Stanley? I’m sure you were a key person in that.
FENN: All the top management was involved in that. You had to have the manufacturing people involved because you needed to be able to make it, and you had to have the sales/marketing group because you had to sell it. Then you had to have the production people as well because of what elements were in it, what kind of hardware and what finish materials you were going to use and so forth. We had a good group and it was one that was based on in-house designers. Some of the companies would use in-house designers; others would hire outside people to do the design, but we did most of our stuff internally at that point.
INTERVIEWER: At Stanley, what sort of retailing changes were you aware of?
FENN: As a general rule, Stanley sold – and again, it depended on the territory and the rep, to a degree. They were at both poles of the distribution. They sold some of the very largest stores and did a good job with them in those areas, but the majority of their business was done with the smaller retailers out across the country, so they were kind of at the poles. They weren’t as much in the middle.
Thomasville was more in the middle and maybe a little bit skewed to the department stores and so forth but basically the high-end retailers; whereas Stanley was much more of the smaller dealers in a lot of towns and then a few of the very big ones that they did very well with. A few of them, but that was not their mainstay.
INTERVIEWER: Did they have significant department store penetration?
FENN: They did some department store business – not nearly as much as Thomasville did and not as much as we did at LADD as we went on, because with Stanley it was really more of the independent stores where they fit better.
INTERVIEWER: Was it the same cuttings and distribution system when you were at Stanley, much the way you described it at Thomasville?
FENN: That’s exactly right.
INTERVIEWER: Tell us about the origins of LADD and how it all came about from your standpoint.
FENN: It was an interesting development. The Sperry & Hutchinson Company, which most people knew through S&H Green Stamps, was actually a conglomerate that had three small furniture operations. They had originally envisioned that they would build that into a whole department of home furnishings, just like several of the other conglomerates did. But then when they got looking at it, they said, “This really doesn’t fit our stamp business.” They decided that furniture was a little foreign for them so they would spin these companies off.
Those were the three companies; they had Lea Industries, which is up in Richmond, Virginia, that made bedroom furniture and so forth. In South Boston, Virginia, they had Daystrom that made casual dining products. They had American Drew out in the western part of North Carolina that made wooden furniture. They decided to sell those three companies.
Don Hunziker was operating Lea Industries in Richmond and Dick Allen was an employee of S&H. The two of them said, “We might try to buy these companies.”
They didn’t have much money but they had a good idea. When they started putting a package together, they realized that Don, with his manufacturing background, was good, and Dick, with his financial background, was great. But they needed somebody in the marketing side of the business so they recruited me to work with them in establishing that business. We did and we took the company private and mortgaged our houses to get a little money to put it together.
Our timing was great. It was one of those things that was just dumb luck, where you hit a period when the furniture business is on a strong uptick. In about three years’ time, we had established that company pretty firmly in the marketplace and began to grow it. That’s where the name LADD came from. It was Lea Industries, American Drew and Daystrom. Those were the three.
INTERVIEWER: Had you known Don and Dick for some years before LADD was launched?
FENN: No, I really had not. I knew them, of course. Everybody in the furniture industry knows everybody in a casual way and I knew them both in a casual way. But I knew Don a little better than Dick because he was a little more active in the American Furniture Manufacturers Association and other organizations and so forth, so I did know them. They knew me, obviously, because I had been at both Thomasville and Stanley and we had had good, strong distribution at those companies. Our sales grew nicely at both companies during my time so they thought this might be the kind of guy that they needed to get into the group.
INTERVIEWER: They got in touch with you?
FENN: Yes, that’s right. They sure did.
INTERVIEWER: You mentioned about mortgaging your homes. I assume you also had to go to the banks.
FENN: Yeah, that’s right and sign big notes, which seemed like a herculean amount of money at the time. Any six-digit number was a lot of money at that point – still is – but it was even more so then.
We really were highly leveraged but we were very successful. We had a lot of good sales and good profits in the first two or three years. The company became very strong. Of course we took it public and had a good source of income then.
INTERVIEWER: What sort of opportunity did you three see? It turned out to be a huge success, of course, but how did you see it going in?
FENN: It was an interesting thing to me at the time and I didn’t really have a total concept of it, but I could see that the industry was becoming a much more marketing-oriented situation. The industry was moving toward bigger companies with broader distribution than most companies had been in the past and that was true not just for LADD. All companies were going through this same thing. For lack of a better term, we saw the opportunity for a professionally managed group to do well in the furniture business. There were a lot of very outstanding individual operators in the business, but there weren’t too many that were taking an approach of a strong marketing-oriented group of companies. That’s basically what we set out to do – to build those businesses and to balance out our line in every way that we could to make it stronger.
INTERVIEWER: You had three separate facilities. You were used to the plants being clustered at Thomasville and Stanley but here you had three scattered facilities.
FENN: And three very different business. Daystrom was making metal – turning out metal pipe products – and American Drew was making wooden furniture, and Lea Industries was primarily a youth manufacturer at that point. They were all specialty businesses in different areas but they were operated autonomously, at least from a marketing point of view. Their manufacturing was separate, too.
All the plants were different. We tried to coordinate the staff functions. In other words, the purchasing and the recruitment of people, personnel, and all the finances were centralized, so we tried to centralize the staff and still operate them independently because they were such different businesses. Their distribution was entirely different and their approach was different in many cases.
INTERVIEWER: That sounds like a marketing nightmare.
FENN: It was an interesting thing. You just had to isolate them individually and treat them separately because they all had different parts of the business. It was a fascinating, fun thing to do because Daystrom’s casual dining business was entirely different. There was already a good bit of imports in that business so again it said that this thing was going on in the international business that made these products develop pretty well. We saw that and that gave us the chance. Of course, there was the youth business at Lea. There were only about three or four manufacturers that were really strong in the youth furniture business at that point.
INTERVIEWER: Stanley was one of them, right?
FENN: Yes, Stanley was one of the top ones. They really were. They were in the middle-price bracket. Thomasville did very well in the upper part of the youth business with more expensive things, but the most important one was Dixie Furniture. It was really the king of the youth business and that business was beginning to grow and change. There was a good opportunity for a company like Stanley, which was a little less expensive and very design-oriented, to break into that business pretty well.
INTERVIEWER: But LADD had very little or no upholstery?
FENN: That’s correct. There was no upholstery. Most people in the furniture business will tell you an old wives’ tale. (It turns out it’s really quite true in a lot of ways.) Companies that are successful in the upholstery business are not necessarily successful in the case goods business. Case goods manufacturers are not really good in upholstery. You say that you can show some exceptions to that and you can. But they are very different kinds of businesses.
In other words, you could be a very successful upholstery manufacturer, because you knew a lot about fabrics and you knew a lot about hand work and things that don’t really apply much to the case goods business. He could be very successful over here, could be very good with veneers, and he know joinery and woods and so forth, but that doesn’t make him a good upholstery man. They’re quite different businesses now. There are some good exceptions to that, but in almost every case you’ll find that they’ve managed to segregate them and do them as separate kinds of operations because they are very different. Of course, metal is entirely different from them both. That’s a whole different world there.
INTERVIEWER: LADD was based in High Point?
FENN: That’s right, exactly right.
INTERVIEWER: But you all were traveling to the three plants fairly often.
INTERVIEWER: You had to market effectively three separate companies. You had distribution in place. I guess you had reps in place. Describe what you were tasked with at that point.
FENN: The advantage I had at that point was the Thomasville experience and the Stanley experience because there even was some overlap in a few cases where fellows would have handled one of our lines.
The thing about those businesses and the advantages we had was that having been at Thomasville and having seen how their distribution operated and then having been through the Stanley thing, which was with very aggressive people, and then we got to LADD and they had their distribution, of course. I knew a lot of those people because they had been competitors of ours. We tried to treat the LADD businesses as separate distribution organizations. It was pretty important to do that because their businesses were quite different when you think about it.
The patio business is a separate business from case goods and youth furniture is very different from adult residential products like we made at American Drew. They were even in little different price brackets so we really did treat them as individual companies. We added a lot of companies over a period of time because we were pretty successful in marketing those products. As I said, the industry was strong at that point so we grew pretty rapidly. It was our intention to make a world-class company out of it.
INTERVIEWER: There were no weak sisters involved here?
FENN: No, those were all pretty strong, pretty good companies. They were relatively small companies. The biggest one was American Drew. It had a good reputation. The Cherry Grove collection was their main product out there that had been so strong through the years. American Drew’s Cherry Grove was the oldest existing pattern in the furniture industry and it was the number-one selling pattern in some of those years. It was really a classical design and their business was built around traditional designs in the bedroom and dining room business.
Daystrom was an entirely different business and Lea was a youth business. They were really pretty separate operations.
We showed them together at markets. There was a plus to that because we could get somebody that was very strong in the youth business to come next door and look at American Drew. We’d get somebody strong at American Drew get him over to the Daystrom space to look at their products. They were all side-by-side showrooms.
INTERVIEWER: Tell us about some of the retailers you were dealing with at that point. How did you convince them that this was a viable company?
FENN: What we tried to do originally was reinforce what we had. Anytime a company is sold or bought, there’s always a lot of speculation about what’s going to happen. We spent the first year or two – I spent a lot of my time – with the existing accounts, to get into them and convince them that we were here to stay, that the company was going to be viable, and that they would be well served with us. That was very successful.
We didn’t lose any accounts to speak of that were significant to us along the way. After having worked with those other two companies, I had a feel for what their distribution was like in these markets and who was really strong. I would go back to some old friends from my Thomasville and Stanley days and get them to carry some of our products in the LADD assortment, which was a very big plus for us.
INTERVIEWER: Most of LADD’s lines were pretty much middle-market, were they not?
FENN: They were. At that point they definitely were. All three of those companies would be in that middle-price bracket. But as we went along, we had Brown Jordan. That was high-end. Kittinger also was one of our companies. We bought the Kittinger company and that was high-end case goods. Then we got into the upholstery business in a major way and most of our upholstery manufacturers were low-end. Clayton Marcus would have been in the middle-price brackets but Barclay was in the lower-price brackets. They were all pretty separate businesses. We really juggled them all as individual operations as opposed to trying to put them all under one common headquarters.
INTERVIEWER: Your objective from day one at LADD was to grow by acquisition?
FENN: Both ways – internally and by acquisition. The thing that we did on the acquisition side was that we tried to fill in niches, places where we didn’t have a real strong position. We would have two choices. We could either develop a line to fit a niche or go out and acquire somebody. We went the acquisition route on that. We tried to develop those individual companies within their current sphere of operation. However, we didn’t try to get them to go higher or lower in price but just to be strengthened in their own basic market area.
INTERVIEWER: How did you decide which companies you wanted to acquire?
FENN: We looked around – it’s a small industry in a lot of ways. You see what everybody is doing; you get to know them a little bit. A lot of them were family businesses and a lot of them were start-up kinds of businesses where they would get to the point where they needed to liquidate some of their holdings. We stayed in touch with a lot of people. Don was especially good at that because he knew almost all those people and I had a pretty good feel for it because I’d see how successful they were in the marketplace.
I’d hear a little bit about what their management group was like, what their ownership was like, and we were very opportunistic. We would look at everything that was going on. We didn’t rule out hardly anything but we didn’t buy everything. We looked at a lot of things that didn’t work and would not fit.
Dick was very good on the financial side of it. He could look at it, see what we could do investment-wise and make it work. I would have to say, “OK, we can really distribute this product and get more volume than they’re doing now.” Don would have to say, “OK, I can take this manufacturing operation and make it more efficient than it is now.” We’d try to do all three of those things, really.
INTERVIEWER: You took a pretty close look, all three of you, at any particular company.
FENN: That’s exactly right.
INTERVIEWER: How did you finance these acquisitions?
FENN: At that point we had gone public so we had some wherewithal there. We were very profitable and our business was growing, so the banks were eager to work with us on acquisitions as they came along.
I’m thinking of one like when we bought American of Martinsville. All three of us were up there with Dick Simmons, who owned that company; it was his family business. We sat down with Dick. I’d known Dick from my Stanley days because we were practically in the same town and Dick and I became good friends.
I knew that he was getting to the point where, family-wise, it was a good thing for him to sell that business, so I approached him. We went to him and the three of us – Don, Dick and I – sat down with Dick Simmons and made that deal up. That was not uncommon; right around the horn, it’d be almost a personal relationship that we’d had in one place or another.
INTERVIEWER: Step us through some of the major elements in LADD’s history. Your first acquisition was...? I can’t remember the sequence.
FENN: I get them all mixed up too. We started out with those three original companies. Then we bought the Barclay group down in Mississippi. They were low-end cost-wise but they had quite a stylish line. They sold their products to department stores primarily. They sold some to independent retailers, but the biggest part of their business was with department stores and that’s a pretty stylish business.
Their niche, the thing that they were very successful with, was the fact that they could design a product that would have appeal on a good department store floor, at a price that consumers could pay for it and a quality they could live with. It had to be pretty good quality because department stores – you know how they are. We developed that business with Barclay. There were five fellows that owned that company and had put it together. They were basically four sales fellows that were very successful around the country and a manufacturing guy that was in Mississippi. They had built that business up and like most people, they got to the point where they need to liquefy a part of their assets for estate reasons or personal reasons. That’s how that one came about.
We talked to them and we tried in every case to make it very good for them and very good for us. We paid them what I would consider a good price for that product, for that line down there. We also signed each one of them to a five-year contract to stay with the company, and if they met their growth expectations over that period of time, they got a lot more money. They hit the ground really running to make it work.
A lot of times when people would buy one of these companies, they would take it into their own organization, maybe even let go some of the people that had been running it. You have a lot of lost motion because of that, whereas in our case we would try to wire them in so they’d be very interested in seeing the company succeed. Those fellows made that business grow tremendously in the next few years after that.
INTERVIEWER: You weren’t looking for dogs to turn around.
FENN: That’s exactly right.
INTERVIEWER: Barclay was almost completely a Mississippi-made upholstery line, correct? No cut-and-sew importing, hardly anything else imported back in those days.
FENN: Hardly anybody was doing it that way. That came later on.
The Clayton Marcus thing was another good business. Clayton Marcus upholstery was such a nice fit for us because it was at about the same price brackets as American Drew and had a lot of the same customers because they were that middle-price traditional furniture line – eight-way hand-tied frames, a good value, a pretty stylish design. That was a good company.
Again, that was a situation where the owners of that company were family. The Teagues had built that business from a little garage-like operation on the edge of town into a very nice $50- to $100-million business and very profitable. They were both getting up to the age where they had started looking at what they were going to do about their personal affairs, and Herschel and Joe made a deal with us. Again, we kept them on. They were in the business for five years after they sold the company to us and it was very successful. It worked very well for us both ways.
INTERVIEWER: In addition to cashing out for personal reasons, what advantages did these companies see in becoming a part of LADD?
FENN: Part of it was our success. It breeds on itself and they would say, “Boy, these guys are making a mark in the business so tying up with them probably isn’t a bad thing to do.” I think a lot of times when they talk about selling their company, they want to see it perpetuated. They don’t want to see that company flitter away. They also have some financial interest in it. They’re anxious to do it with somebody that’s likely to grow the business and we had a pretty good reputation in the industry as being people that make things work.
INTERVIEWER: You’ve acquired Clayton Marcus.
FENN: Yes, that’s right. The Pennsylvania House deal was another big one, as you can imagine. That was a totally different business.
INTERVIEWER: Was American of Martinsville after that?
FENN: Yes, it was. Pennsylvania House was a pretty well-established company. They fit into our situation because they were a solid-wood manufacturer, as opposed to our veneer work at American Drew and Lea and so forth. They were a little step up in terms of price point. They did have a distribution system that was different because they did sell a lot of stores that were, if not totally dedicated to them, pretty heavily into the business as opposed to having a lot of different lines in the store. A little different distribution system, a little different product, very good name in the marketplace, and that was another good one to have work.
INTERVIEWER: Was it a family-owned company?
FENN: We bought it from a corporation. It was a holding company that owned them at that point. They had bought them. I’m not sure exactly who they did buy that one from. I’ve forgotten exactly, but it was a holding company that had it and they were anxious to have some furniture people tie up with them.
INTERVIEWER: Now that you had Pennsylvania House, you were serving a higher-end niche, and there were some dedicated stores. That was a different game.
FENN: That’s right. They had a different distribution system and we helped to develop that. After a period of time we added to that thing. They actually owned a few company stores of their own and that was another avenue that we learned a lot about – the economics of retail when we had those individual stores that were totally owned.
Another interesting one was the Maguire Company. They were on the West Coast. The Maguires had developed their business from being in the Philippines during the war and they brought a few containers back and sold them. They had a very high-end, stylish kind of business. They, again, were getting to the age where they needed to look at what they were going to do with that business long-term.
They were both in their 50s or 60s at that point, and they looked around at who might be a good candidate for them. We talked to them. The first thing we knew, we worked well with them. They were a good acquisition for us because they were very high-end and introduced us a lot to that designer trade that was so strong.
INTERVIEWER: Wasn’t it mostly imported accent pieces?
FENN: Yes, they were but it was a pretty broad line. In other words, they were like a Braxton Culler – basically accent products but with upholstered living room furniture. There were a lot of occasional pieces, tables for the dining room, and chairs for the dining room; they had covered a lot of things. It was all pretty much specialty stuff and very expensive, very high-end, very decorator-oriented and very design-oriented. They were in San Francisco so they were right in the middle of that designer business.
INTERVIEWER: The acquisition of American of Martinsville was still to come, right?
FENN: That’s right, American of Martinsville with Dick Simmons. As we were talking before, Dick had a family business and he had always done some nice business with furniture retailers on particular lines. He would develop a group and it would sell extremely well, but then they’d move on to something else. They were kind of a style leader and that’s a wonderful position.
You get a lot of attention but, boy; it’s a hard one to hold because you’ve got to have good things as you go along. They had recognized that as they got into that, so they started doing the hospitality business. They developed it more and more on the hospitality side of the business. When we bought it, it was two-thirds hospitality and one-third retail business. Dick stayed on and ran that company with us and was a good friend of mine from my Martinsville days.
We spent a lot of time together and they got into a lot of international work. I remember one of the big jobs we did – in fact, it was kind of amusing to me and it was to them, too. When we were looking at the numbers, I noticed that they had a sample order on their books for about $30,000. That was a lot of money at that point. I said, “Oh, what’s this here?”
They said, “Those are the samples for the job in Hong Kong.” I said, “You’ve got a job in Hong Kong?” They said, “No, we haven’t got a job but we’re bidding on a job over there.”
I said, “What happens to the samples if you don’t get the job?” They said: “That’s the nature of the hospitality business. You make the products and try to sell the job. If you get it, you’re in great shape. If you don’t, you go look for another one.
I was holding my breath during that period of time. If we didn’t get that job, we had spent a lot of money for nothing. I traveled to Hong Kong with them several times. Incidentally, we did get the contract. We were putting another job in over there and they were very good at taking high-end custom jobs. Almost all of the furniture that we sold in the hospitality business was designed specifically for a facility. They did a lot of business at that time with Marriott and they would design for a given site – not for the Marriott chain, but for that Marriott facility, that particular one. They were the most successful of the contract people from my point of view.
They were able to design a product and make it in short order on a custom basis. Typically, with all our other businesses, we’d design and make furniture for the long-term, saying we’re going to be making this for the next three or four years certainly and maybe longer if we’re lucky.
But with American of Martinsville’s hospitality business, we were going to make this one job and when we were done with it, it was over. The patterns were no good; the work was no good. You’d say, “Boy, that’s got to be expensive,” but they’d developed a very good system of being able to engineer and build samples and the product itself, and then move onto the next one. That’s very foreign to most manufactures. All the previous manufacturers that I worked with were anxious to make the same product over and over again.
INTERVIEWER: Because that was the most efficient way to do it.
FENN: Absolutely. That’s right.
INTERVIEWER: You wanted to have a group that would last, say, 20 years.
FENN: They used to say – and really it was an old wives’ tale but really true. They’d say, “You’ll never make money on the first cutting, you learn really how to make it on the second cutting, and by the third cutting it really gets to be a good thing for you.” That means it’s a year’s worth of activity for you before you’re really zeroed in on a good product. It’s very important to have those.
INTERVIEWER: Did these LADD acquisitions bring you into new furniture markets? I mean wholesale markets like High Point.
FENN: Yes, they did. It wasn’t by design but by the way things work. In the casual furniture business, the biggest show in the country is in Chicago. Of course Daystrom and Maguire both were very heavy into casual furniture, which our other companies had never been. That was one market and then there were some of the international things too. Some of these companies were much more into particular markets internationally and that would give us an idea about going into those areas, as well. The Maguires, with their contacts in the Far East, were a very good source for us to use in other parts of the business as well.
INTERVIEWER: You mentioned the Cologne Market.
FENN: Yes, Cologne was a big show in Germany and we used Cologne a good bit because it covered so much of the European market. They were truly an international market, like High Point; they were the only two that I would call truly international markets. The rest of them were major regional markets, but Cologne was a competitor to High Point. High Point was large, always had been, and those were the two big ones. A couple of ones in the Far East were pretty important, too. Tokyo, at one point, was a major market but it kind of fell to the wayside when China and the Philippines began to develop a lot. The two big ones that were truly international markets early on would have been Cologne and High Point.
INTERVIEWER: Do you recall the first market you attended in Tokyo, Hong Kong or elsewhere in the Far East?
FENN: When I was at Stanley I went to Tokyo several times and I had a lot of friends in Japan. A funny story and it’s almost unbelievable; it’s so unlikely to happen. When I lived in Japan back in the ’50s, my wife came over after I got out of Korea. I was doing some work in Tokyo and going to be there for six months or a year before I got out of the military so she came over, and we bought some tables in town. At this point I had no furniture experience at all. I was a floor-covering man.
We went to a little store in downtown Tokyo and picked out tables. I’ll show them to you; they’re upstairs in our living room. We just picked out the dimensions we wanted for a coffee table, a particular carving we wanted on the leg and the color we wanted. We picked out some end tables to match them – they’re different sizes. They said that they would custom make them. I said, “When will you have them?” They said it would take three weeks. That, to me, seemed like a long time because I didn’t know anything about furniture making.
INTERVIEWER: But that was super fast.
FENN: You couldn’t have found anybody in the United States that would have done it in that period of time. So I was dumb, happy and fine. We got the tables. They’re nice and all that. We’ve used them all these years and shown them to friends and they all like them. Then, two years ago, I was cleaning out some old files of mine. (I’m telling you a bad story here about how long I hang onto files.)
I was looking through some of this stuff and I came across this receipt for those three tables in Tokyo. I looked up at the top and I was dumbfounded to notice that the company’s name was Kasuga. It’s the second-largest furniture manufacturer now in Japan and probably my best friend in Japan is Mr. Kasuga. In the furniture business we’ve come full circle. He’s been in my home here several times. So I sent him this old, original receipt. This was from their company back in the ’50s. It was his grandfather that was running the business at that time. I sent him that receipt and I said, “You’re going to have to treat me with a lot more respect from now on because I’m one of your first customers.”
That thing is still hanging in his office today, that receipt. What are the odds of that? Walking in a little store in a big metropolitan area like that, and of course they were tiny at that point. It was after the war. They were just struggling to get along. We bought that furniture from them and then we came to be good friends years and years later.
INTERVIEWER: They were doing custom furniture in three weeks. Did you ever find out how they did that? They must have had a big labor force.
FENN: That was it exactly. It was all hand-done. They had people in there and they didn’t have much business at that point. They weren’t a big manufacturer at that point. They are now. They’ve gotten the Japanese industry entirely automated today, but at that point it was all handwork. It was soon after the war and I don’t even know where they manufactured that furniture – probably in some homes in Tokyo or in some small shops would be my guess.
INTERVIEWER: You said you went to furniture markets in Tokyo when you were with Stanley, right?
FENN: That’s correct, yes.
INTERVIEWER: Did you consider it a Japanese market or were there people from all over the Far East buying there?
FENN: Far East people primarily. About half Japanese and the other half would be from surrounding countries. Some Koreans came, a few Chinese came, people from Okinawa, from the Philippines, and the general area. Of course, with my background, I got to know a lot of those people well and we were very active in those markets.
Several years later, they did an interesting thing. They decided to acknowledge some people who had been instrumental in building their market. They were mostly Japanese people but they had two people from outside of Japan that were on that list and I have a plaque from that. I was one of those people. They considered me as having helped develop the Japanese show. Of course, I was really an outsider but I was close to all those people and did a lot with them.
INTERVIEWER: At this point you were selling the regular Stanley line to retailers of all sizes and stripes in Japan?
FENN: Yes, but it was more when I got to LADD. We did a lot more of that when I was with LADD than at Stanley. I did go over there with Stanley and we did some business.
INTERVIEWER: This would have been in the late ’70s?
FENN: That’s exactly right.
INTERVIEWER: You built on that at LADD. What about in China? What was the first furniture market you attended in China?
FENN: The first one was in Shanghai and that was a fairly well-established show but a small one. The Chinese market was small in the ’70s but that one was in a major metropolitan area – a very cosmopolitan city. A lot of foreigners lived, worked and went through there. So they started a market pretty early on, but it was crude by our standards because they didn’t have a developed furniture industry like they do now.
The show would be furniture but it also would be furniture manufacturing machinery, textiles, and anything that they could tie in that was close to it. It was a much different kind of a show than there is today but that’s how it got started. That’s not uncommon in a developing market. You can appreciate that they don’t have enough of a particular product to make a show so they tie in the things around it that fit with it.
INTERVIEWER: In Shanghai back then, was it mostly non-Chinese manufacturers?
FENN: No, it was mostly Chinese manufacturers, although there were a few foreigners. The people who did the best job internationally were the Italians. I always marveled at the fact they’d always have a pavilion there and they were showing a lot of product. They’d have four times the space that we would from the United States. They were very active. But mostly it was Oriental firms – China, the Philippines, Indonesia, and Japan – but there were some from Europe and some from the United States. The one company that I used to see most frequently over there was Leggett & Platt. Leggett & Platt was there selling components rather than finished product. I used to see them quite often there.
INTERVIEWER: Was this when you were at Thomasville or Stanley that you went to Shanghai for the first time?
FENN: That was LADD.
INTERVIEWER: You were selling in a pavilion arrangement with other U.S. manufacturers?
FENN: Yes. Later on, after I retired from LADD, I opened the Furniture Export Office in High Point for the state of North Carolina. Basically what we did at that point was that we would contract for space in half a dozen shows that we thought were the most important ones around the world. I’d pick out the ones that I thought were most important and we would get space. Then we would go to the manufacturers and get them to commit for a portion of the space that we had.
We’d get six to 20 U.S. manufacturers – North Carolina manufacturers, fundamentally – to come into that show and be a part of our pavilion. The biggest, most successful ones we had were Cologne. We did Cologne almost every year. We almost always did Guadalajara in Mexico every year. We occasionally went to Brazil and South America and we went to Tokyo a number of times because of my connections probably as much as anything else. It was not potentially as big of a market as some of those others but that was a good one for us. We’d go to Dubai. Those were the basic shows we’d go to. We’d aggressively go after U.S. manufacturers to show in those places and do business over there.
INTERVIEWER: While you were still working as a manufacturer, what sort of experience did you have with the buyers at these shows, the retailers? All sizes and stripes, I assume. How could you serve them?
FENN: We often didn’t know at first. A guy would walk in and he may have had a tiny little store the size of this room or he may have had 50 stores. We’d have to try to qualify them in some way. Those shows were quite varied. The people that go to them are fairly sophisticated. If you’re talking about local people, that’s one group. But if there’s somebody that comes into a show in Tokyo, as an example, and he’s from the Philippines, he’s a fairly substantial retailer or he wouldn’t be coming from the Philippines to the show there.
Of course, when you’d take an order, you would check the credit on it before you’d ship it and you’d learn something about them then if you didn’t have some financial information already. But many times you would not know anything about them until they came into your showroom.
INTERVIEWER: Was that business a growing part of the business at Thomasville, Stanley and LADD?
FENN: It really was, yes. We did an unusual job on that at LADD. We hired a fellow – we actually didn’t hire him since he’d been with us at American Drew – named Dave Ogren. Dave Ogren was our international representative. At markets he had a space that was separate from all the individual operating companies and that was the LADD International area. If offshore people would come to any of the LADD companies, we would refer them to Dave. He and his people would take them through the various LADD showrooms and try to sell them as many different parts of the lines as they could. Dave built that business up beautifully along the way. He was doing 10 percent of LADD’s total volume in these international markets and nobody else in the industry was interested in it to that degree.
Everybody was doing a little bit of business but it was just lucky business, walk-in business. The guy would come to the Market in High Point, go in and buy something, whereas we were actually working those markets pretty thoroughly. Dave did an excellent job of developing that business and making it a big part of our business. At that point LADD was a $50-million business and he was doing 10 percent of that, so, you know, he was doing very well.
INTERVIEWER: What were your major overseas markets at LADD?
FENN: It was really pretty well dispersed but a good bit of it was in the Far East. We did a good bit of business with big dealers over there. There were quite a few large dealers in Korea and Japan especially, and a few in the Philippines that we did big business with. We did a good bit of business in the Middle East. Saudi Arabia and all the Middle Eastern countries have wealth and they like American furniture so we did well there.
INTERVIEWER: You must have sold there mostly at Cologne, right? Dubai came on later as a market?
FENN: That’s right, it did. Dubai was a much smaller market but it was a very successful and a very good one for us because the Arabs supported it very greatly. The U.S. Department of Commerce took our companies over there. That was one of our most successful shows. We did very well there.
INTERVIEWER: In the Middle East, weren’t most American companies selling very big, very gaudy kinds of furniture?
FENN: That’s right. That was the case. They liked a lot of bells and whistles on it. No doubt about it.
INTERVIEWER: What would you say was your most significant contribution to the furniture industry?
FENN: I think in some ways the most significant contribution that I made to the industry – it’s at least something a little different from anything else – was the internationalizing of the business and how that came about. Of course, I had had that military experience and I traveled, business-wise. We developed some nice business, particularly at LADD where we were doing business outside the USA.
When I retired, Jim Hunt was the governor of North Carolina. I first met Jim in Japan. I was over there on a U.S. Department of Commerce trade mission and he was between terms as governor – you can go two terms, but can’t do a third term. It was after his two terms and he was doing some lobbying work over there for some local North Carolina places.
I met him two or three times at social events while we were there on a trade mission and we’d just visit. I’m a Republican and he was, of course, a Democratic governor. We didn’t have much in common except that we were both interested in international trade. I got on a plane to come home and, sure enough, I was seated next to Jim Hunt on the airplane. It just happened we had the same plane. We each got to know each other better than the other probably wanted to.
When he ran for governor for the second two terms, he asked me if I would work with them on international trade because he knew that I’d been active in that area. I told him that I’d do anything I could do to help and to let me know if there was anything I could do. Well, he got elected and he asked me to set up this international trade division for the North Carolina Department of Commerce and establish an office here in High Point. To this day I’m surprised that he was so interested in international business.
INTERVIEWER: What year was this?
FENN: Let’s see, I left LADD in ’92, so it was about 1992, ’93, right in there. I established this office in town and got this thing going, built it up and so forth.
INTERVIEWER: What was your mission?
FENN: To help North Carolina firms do international trade in the furniture business.
INTERVIEWER: It was furniture focused?
FENN: Exactly. The state’s Department of Commerce did a good bit of work on international things, generally, but it’s the only office that specialized in furniture and I don’t know of any other state in the country that has such a specialized office. It was a very unusual undertaking. We established a Furniture Export Council and I had 25 manufacturers – the presidents of 25 of the major manufacturing firms – on that council. We recommended to the state anything they could do to help and they did anything that they could to recommend us so that we could do a better job of international trade.
One of the things we did in that office was go to these major markets and lease space, sublet it, promote it, and have a North Carolina booth so that they could have a place to work out of and so forth.
It really turned out to be a very successful venture and that office still exists to this day.
I mentioned Bob Maricich, former president of Century Furniture and now president of the World Market Center in Las Vegas – I recruited him to be president of the council at one time, and Charlie Green, who is here in High Point, is doing it now. I lined Charlie up to do that job. The fellow before him was with the Department of Commerce; I brought him over here for that job. Really, it’s been a good thing for the area and it’s a unique one.
In addition to that – or while I was doing that work – I spent a lot of time in Japan going to the markets and I saw a lot of my friends again. A few years ago, the Japanese government asked me if I would be their representative in this area to promote business between the two countries. That was not just furniture. That was any kind of business activity. So in 1999, I was appointed an honorary consul general for Japan. Of course they have an ambassador in Washington and they have a consul general in Atlanta, a Japanese guy. But they had nobody in between and so I represented them in this area.
There are probably 20 of those around the country but it’s unusual for a Caucasian to be representing the Japanese government. I did that and there’s a plaque for it right there for the five-year appointment. When that time ran out, I told them I didn’t have time to do it anymore. I was going to pass on that job. Unfortunately, they haven’t found another one in the area, so I’ve kind of stayed on to do a few things for them. My Japanese friends kid me a lot. They say I was the honorary consul general of Japan.
Those two activities – what I did with the North Carolina Department of Commerce and the Japanese government – when you put them together have done a good bit to encourage business between the furniture industry here in North Carolina and the Far East especially.
INTERVIEWER: Before you got involved with Governor Hunt and the N.C. Department of Commerce, weren’t you doing work for the U.S. Department of Commerce?
FENN: That’s right, I sure was.
INTERVIEWER: How did that happen?
FENN: They, from time to time, participated in a trade mission to a particular part of the world and I went on at least three trade missions that I can remember right off the bat. There was a major one that we did in Europe; I went with the U.S. Department of Commerce on that. I went to South America with them one time, and the one in the Far East was one that was during the early part of 1992. I went on two of those while I was still at LADD so that would have been the early ’90s.
INTERVIEWER: Let’s go back and wrap up your stint at LADD. You had acquired a handful of companies, which you’ve talked about. Was your objective always to create some synergy and then to sell out?
FENN: The sellout didn’t occur to us at first because we soon became a public company. The stock was traded and if you needed, for estate purposes or whatever, to liquefy some of your ownership, all you had to do was to sell stock. There wasn’t any great incentive to get rid of the company or to sell it, but rather to grow it. I have a Bible of how to grow a business. That’s why we acquired so many companies, because we were looking to make it larger and more successful.
The furniture industry is not one big industry. It’s a lot of little subsets and niche players. We would pick them up as we saw a place that would fit with us.
INTERVIEWER: We didn’t cover your product development strategies at LADD. You let the individual companies pretty much operate and market on their own, but did you ever get to a point where you did a joint whole home collection?
FENN: Not too much. I was a part of the Armstrong-Thomasville conglomerate and I watched and worked with all the others. So did Don and Dick along the way. The Sperry & Hutchinson Company was exactly the same idea – to have a conglomerate. None of those things worked, because, at that point at least, the furniture business was so much of a proprietary kind of business. The companies were all a little different. There were a lot of niches. There was no real manufacturing synergy between the companies because they really were too different.
Even the marketing, as I mentioned when we looked at Daystrom, American Drew and Lea Industries, didn’t really have a lot of things in common – some commonality of accounts but very different kinds of businesses. We kind of came to the conclusion along the way that the smart thing to do was to try to get good companies and then try to keep the management that was there that made them successful. We could supplement them with new people that we could bring in that we thought would help grow the business. We’d supervise it pretty carefully and we’d supervise it closely from a financial point of view. Dick would do that. Don would look at their manufacturing to see if there was anything we could do there and I did a lot to try to synergize their businesses, marketing-wise, with what our other companies were doing.
We had a lot of overlapping people, too. We’d move people from one company to the other. I mentioned Bob Maricich. Bob came to us with American of Martinsville. He became president up there after about three moves up. Then we promoted him to American Drew and brought him down here. Century recruited him and took him out. That’s what we would do. We would try to get good, top people into each of these businesses but fundamentally run them differently.
INTERVIEWER: You saw your own role as a kind of consultant on marketing.
FENN: That’s right.
INTERVIEWER: Did you really push them in certain directions because you’d had so much experience?
FENN: I’d like to say that I counseled them. They were their decisions to make. In other words, I didn’t just say, “This is what you’ll do: this, this and this.” But I would try to point out to them where other companies were being successful, either inside or outside of LADD, and how that might apply to the businesses they were doing. My job was really to be a facilitator, if you will, of improvement in their performances.
INTERVIEWER: Did you sign off on product introductions? Did you have to?
FENN: No, nope, did not. That was their job to do. I would obviously critique them from time to time and tell them what I would see. But as far as saying they need to add a piece here or you ought to change this color to this or this hardware to that – I never did that. I would say to them: “Have you thought about this? Is there another market over here for this that you might do? You might need some other pieces for that.”
But it was their decision to make because if you don’t leave that responsibility with them, you can’t really hold them accountable for it.
INTERVIEWER: Did you push any of the companies into international markets?
FENN: I definitely did encourage them in that direction pretty strongly. What I would do was show them the success of some of the other companies that were in LADD, and say: “Here’s what we’re doing in that area. If you can get the amount of business that we’re getting overseas somewhere else, then that’s OK with me. But if you don’t, then I think you ought to look at this.”
When their boss said that, they would look at it pretty strongly. We did pull them in under it when we had Dave Ogren operating the international division. They all worked through Dave on that.
INTERVIEWER: You didn’t have a hard sell because they could see there was success already out there.
FENN: Exactly, and I provided marketing assistance that they couldn’t get anywhere else. You could say, “I’ll do it on my own.” You’d have to try to develop people and Dave already had people in those places. He was traveling to those markets and the customers were there. The logical thing to do was to use the resources that were at hand.
INTERVIEWER: Let’s get to the sale of LADD to La-Z-Boy.
FENN: That was after my time. I was out of the business by that time. I retired in ’92 and I stayed on the board for three years after that.
INTERVIEWER: What prompted you to retire?
FENN: When we put the company together, Don Hunziker and I – and Dick Allen agreed with us as well – had an automatic retirement date at age 65. When Don and I reached 65, we did that.
Incidentally, I think that’s an excellent rule. You’ll meet a person from time to time that is very capable at that age and good for another 10 or 15 years, but that’s the exception that proves the rule. If you don’t have an automatic cutoff date, you get people into that age and they don’t want to retire.
I think it’s smart to have that rule and it worked for us at LADD. When I reached 65 and Don did too, we both retired that same year because we were the same age. We had it so that you’d retire at the end of the year when you became 65.
INTERVIEWER: As you were nearing mandatory retirement age, what did you see happening in the industry and what did you do to prepare yourself to retire?
FENN: The thing that I was sure of that was bound to be a major factor more and more was the internationalizing and the globalization of the furniture industry. Of course I’d been on several of these trade missions with the Department of Commerce. They had lots of things that they wanted me to do. Then Hunt gets to me on this deal of working for the state, so I really worked for the state for six years, full-time. I had that office in High Point and for a while, I temporarily managed the entire international trade division of the Department of Commerce for the state in Raleigh. But I did not want to do that. I didn’t want to move over there. I wanted to stay here in the furniture business. That was pretty much it.
INTERVIEWER: What did you see happening at LADD in the year or two before you retired? Did you see things still continuing to grow? Were they still developing along the lines you would have expected?
FENN: They were and I had good people in place to do that. See, Don and I retired, but Dick was 10 years or so younger than we were, so he became president of the company. That meant the same basic philosophy was in place. We had some awfully good people in place at these companies that were in LADD.
INTERVIEWER: Were you tasked with finding a good marketing man to serve LADD before you retired?
FENN: No, I really wasn’t. We didn’t look at it that way exactly, because by that time we had developed enough internal expertise among the various companies. We had Dave Ogren in the international division. We had Bob Maricich at American Drew and right around each of the companies we had some good international people and good marketing people in place. We didn’t feel like we needed one.
INTERVIEWER: Did LADD consider keeping you on as a consultant? Did they ask you or was that an option you considered?
FENN: To the extent that I stayed on the board of directors and so did Don, incidentally. We were technically outside directors at that point because we were no longer officers of the company. We stayed on for a few years, but again, the company was flourishing. We didn’t see the need for us to be involved in more detail than that.
INTERVIEWER: When you retired, how much importing were the LADD companies doing? At that point, Taiwan would have been the major importer of furniture into the United States, right?
FENN: Yeah, they were the largest importer. Interesting you mentioned that, because that business then migrated from Taiwan to mainland China because Taiwan began to flourish and be successful and they wanted more high-tech businesses in Taiwan. They got into the electronics business and they discouraged furniture business. Maybe half of the furniture manufacturers in China now are in the southern part of the country, in a province just north of Hong Kong and directly across from Taiwan. The Taiwanese moved over there and they established the business. Now they’re beginning to get some native Chinese in there.
INTERVIEWER: Were a lot of the leading U.S. case goods companies at least importing a lot of components in the early ’90s?
FENN: Yes they were, almost all of them.
INTERVIEWER: Becoming more assembly and finishing operations rather than full-bore manufacturers?
FENN: It varied by company, obviously. Solid wood furniture was harder to do so Pennsylvania House didn’t bring much over here. But American Drew was doing a good bit of importing. Almost all the chairs that were coming in for Daystrom and Lea Industries for youth furniture were made over there. That’s what companies would do – they’d pick and choose. They were doing a good bit of business over there at that point.
INTERVIEWER: Still very little importing of finished product.
FENN: As it is today, that’s right. Very little of that.
INTERVIEWER: Were you still on the LADD board when La-Z-Boy bought it?
FENN: Nope, that happened just after I left the board.
INTERVIEWER: Did you see it coming? Were you on the board when negotiations began or anything like that? How did you view it?
FENN: I have a very high regard for that company. I thought that La-Z-Boy was a very successful company, so from that point of view it was a good fit.
INTERVIEWER: They needed case goods.
FENN: That’s right. They wanted to broaden out their line. In retrospect it was only marginally successful when you got down to it; things have changed so much since that time. They closed up a lot of those companies and they’ve actually shrunk the case goods side of the business. But it was a good fit because we were a very strong company on the case goods side. They were an extremely strong company on the upholstery side. It looked like there ought to be more synergy than maybe developed and that’s probably true of most of the companies that came about by mergers.
INTERVIEWER: You’ve already talked about your work for the export council. Let’s go into a little more detail. Did you have a hard sell at first getting North Carolina furniture manufacturers to really look at and serve the export market?
FENN: Yes and no. The thing is, if you asked any of them if they would like to do more business internationally, the answer almost unequivocally was yes, yes, yes. Then you’d say, “OK, here are the things you need to do.” You might be talking about a year to a two-year proposition. You’d have to put somebody in management dedicated to it. You’d have to travel internationally and set up a distribution system. Some of them would say, “Gee whiz, that’s a lot more effort than I would have thought you’d need to put into it.” They just wanted to write an order immediately.
I’d say: “Wait a minute now. If you were doing no business today, zero business today in California, and you decided to develop the California market, how long would it take you?”
“Oh, it’d take us a couple of years to do that because we’d have to get out there and get to know those accounts. We’d have to set up a distribution system. We’d have to go after it.”
But that’s the answer – developing a business takes time, and that’s probably the biggest disadvantage.
There’s another fly in the ointment on international trade and that’s the fluctuations in currencies – not only in different economic cycles. The fact that each of these countries are on different economic cycles is a good thing because your business may be down in the United States, but it may be booming in Mexico. It may be down a little bit in Canada, but five years later, Canada will be up and Mexico will be down. That smoothes it out.
You mentioned Canada earlier, and the problem they’re having now in shipping their products into the United States is because of the strong Canadian dollar. At that time, we were having the same problem in Canada – doing enough business up there because our dollar was so strong compared to the Canadian currency.
Those things vary from time to time and they are another factor that you have to work with when you’re developing business. It can be very discouraging to have a nice business building up gradually and a new small one that you’re working on and then to have the currency vary and start pushing you down. You’ll have a couple years down, then maybe up some again. But long-term, it’s a wonderful thing because it smoothes out your opportunities and of course, it increases the size of your opportunities. It’s obviously the way to go. It’s the way it’s gone. It’s going to continue that way too.
INTERVIEWER: Can you describe a couple of your most interesting projects or encounters as you were trying to boost North Carolina’s furniture exports?
FENN: In the success area, I would say Mexico would be one of the areas where we have had a lot of real success. We got involved heavily in the Guadalajara Market. That’s one of the bigger markets – the biggest one in Mexico. The state of North Carolina put a representative down there in Mexico City – a Spanish-speaking North Carolinian – and developed that market very nicely. That became a very good market for us and it is to this day. That would be a good one.
Another one that would stand out would be the development we did in Europe. Europe’s a tough market because there’s not a European market. There’s a whole bunch of subsets, but we were very successful in developing business over there. We did it by putting a man in England and a man in Germany and they worked those markets. Consequently, that developed the business very, very well for North Carolina.
INTERVIEWER: What do you see as the major successes? Do you think it was a particular style of furniture we could offer? Price points?
FENN: We made a lot of errors – trial and error – on those things. One of the errors that we made was that we’d go to these countries and look at the furniture there. We’d go to Germany, as an example, and they have a lot of very heavy oak furniture. We’d come back here and design a big, heavy oak suite that looked much like theirs, try to sell it, and we were largely unsuccessful. They were buying it at home. Why wouldn’t they buy it from us? We were, in effect, mimicking in that case.
We’d ask people in those countries, “What kind of American furniture would you like to see and to be able to buy?” They’d say, “We’d like to see and buy American furniture – the designs and styles that you have there.”
Not everybody would want that but some people would. In every country you go into in the world, there are people that are interested in products from other parts of the world. The real success of the thing is to take what we do as genuinely American and promote it on that basis in those countries.
Sometimes you have to make some adjustments. You go to the Far East and those rooms are so small that smaller-scale furniture works. They still want to see American things and they’ll buy a lot of oversized pieces for rooms simply because they want it to be American. But if you can adapt it some to fit their needs, that’s a good thing to do. That’s the kind of adapting to do.
It would be foolish for us to go to Japan and try to sell tables like you saw in my living room, for us to say, “You ought to be buying these from the United States.” They’d say: “Wait a minute. We’ve been buying them from here forever and these are the authentic ones. Yours are the copies.” Unusual, isn’t it, when you think about it that way?
INTERVIEWER: Did the state have anybody to assist these companies with currency fluctuations?
FENN: There’s not much you can do on that. That’s a difficult one. There’s no one.
INTERVIEWER: There are certain deals you can strike that are supposed to level out the peaks and valleys of currency fluctuations?
FENN: Of course you can hedge, and for buying, that’s the thing to do. It works great on bulk things, like wheat and so forth, but it doesn’t work too well on furniture because, again, your demands and desires fluctuate a lot. You can’t really tie those together. I think the real key is to develop a good, strong network in a marketplace, do pretty well, and then recognize if the currency rates go against you for a year or two or three, you’re probably not going to grow. You’re probably going to shrink a little bit in size, but if you’ve got good bait, there’ll be some people that’ll bite anyway. When the thing turns up, you grow again. That’s exactly what’s happening in Canada right now.
We saw that business – ours grew like mad at LADD. Then it was kind of flat for a while, floating down just a little bit because we weren’t as good a value as the others because of currency. Now it’s going the other way and they’re seeing the thing go up again. It’s just one more obstacle that you’ve got – obstacle or opportunity, depending on which way the fluctuation is going in the international market
INTERVIEWER: Since we’re making less furniture in North Carolina than we used to, you’d think that exports inevitably would be going down. Do you see any real future in exporting and what would that be?
FENN: Actually, in the last two years, furniture exports from North Carolina have increased by 5 to 10 percent, which is very good, particularly considering that the United States was flat or going down a little bit overall at that point.
What you find in almost every case is that there’s a certain demand for American products all over the world today, whether it’s furniture or automobiles or whatever. That’s not everybody but there are people in every country you go into that want “the American look.” Not everybody says, “Oh, I want to buy American furniture,” but some do. There are a percentage of them that do.
What’s happened on this whole international thing is fascinating to me. When I got into the business, there were regional furniture manufacturers and they sold all their furniture in that area where they were – 500 miles, 1,000 miles from where their plants were. That’s where they sold. If you were to go in any of the furniture stores in that area, all the furniture they were buying was from manufacturers in that area. Along came this internationalizing of the business and bingo. All of a sudden the retailer finds, “There are some things I can buy from China or from Italy or from wherever that are a little better value.”
So he brings those in and they begin to sell on his floor and he does well with them. He needs to have someplace to go look at that furniture to see what he’s going to or not going to buy next. He needs to go to an international market. He goes. He used to do all his purchasing at some local or regional market where he lives, but now he needs to go someplace where he can see them all because all of a sudden he’s buying a little bit from Italy; he’s buying a little bit from Japan; he’s buying a lot from China and buying a little bit from South America. He’s got to go where he can see those things. He’s looking for an international market.
As for the manufacturers in his area, he’s been selling all his products here, but all of a sudden he’s finding somebody from somewhere else, maybe from overseas, who wants to buy some of his product. They come in and buy a little stuff from him. The first thing you know, he says, “Gee, I’ve got to go somewhere where I’m going see more of those international buyers.” So he goes to a big international show and it just makes the whole thing, internationalizing and globalizing, continue.
INTERVIEWER: If I were a U.S. furniture manufacturer, where would you suggest I show? Where are the hot spots?
FENN: Number one, I would not try to sell everybody in the world. That’s a little bit of a stretch. I would look where the greatest opportunities are and I see them as one of two things. One is very logical economically and the other one is kind of crazy. The first thing I would do is try to do business in Canada and Mexico. They’re right next door; they’re easy to get to; they know all about America; they have a lot of exposure here. Those are naturals.
The other thing I would do is that if I had some sort of intangible connection to a market, if I had parents that had grown up there or I’m very close to say Italy, then I would go after Italy. If I had spent a lot of time in the Far East and knew a lot of people in Japan, I’d go after Japan. I wouldn’t go after every country in the world but I’d select one or two. I’d get a good distribution system going in that market and work that one.
I’d branch out from there. If I did well in Japan, I’d begin to do a little bit in Korea. If I did well in Korea, I’d move over to the Philippines and branch out that way. But do it closest, easiest first, and then wherever you had a particular interest or connection.
INTERVIEWER: You’d have to ally with some middlemen, perhaps rep groups. How exactly would that work?
FENN: Several ways. Sometimes you’d just do it direct. In other words, there are two or three U.S. companies that are doing nice business in Japan on a direct basis with the very large retailers over there. There are two or three very large ones and a couple of department stores that are very good.
INTERVIEWER: They would come to the High Point Market?
FENN: Absolutely. They come to High Point and they buy from this Market. The manufacturer goes over there once or twice a year to see them and see what’s on their floor and what they’re doing. That’s the approach that a lot of them will take.
You may ask, “Why did you pick Japan? It’s halfway around the world and there are a lot of places closer.” But with my knowledge of people there and so forth, it was a good, logical one for us to do.
INTERVIEWER: Do you see opportunities in South America?
FENN: The furniture business does keep migrating around – to cheaper labor areas; there’s no question about it. It’s going to continue to go wherever the cheapest labor is. For years, ever since I’ve been in the business, everybody says that the next big opportunity is South America. That’s for both exporting our product and for us manufacturing products there.
It’s never fully developed. It’s still there and the potential is still there. One of these days it’s going to be there but the governments down there are not as progressive on that as they probably should be. The business culture there is tough. The way they do business is a little foreign to the way we do it, so it has never developed to the degree that it can. But it’s growing and even now some people are going particularly into Brazil. They’ve got all those raw materials there and they’ve got cheap labor, so there’s no question. Of course they like American products, so our products sell. I see traffic both ways on that. I think that’s the next big one that we’ll see.
Some people say India and India’s another one that is a possibility. There are a lot of economic problems in India and some big advantages. They speak English, for one thing, and they’re a democratic country, which is another thing that’s a plus there, but it’s still a difficult country to develop new businesses in.
INTERVIEWER: Are there major markets in Brazil? That may be part of the distribution problem.
FENN: All countries have markets and if you compare it to High Point, they’re not big markets. But if you compare it to the regional markets around the world, in almost all these areas there is one. I’ve been to the show in São Paulo two or three times and it’s a big show. It’s a bigger show than Guadalajara is but it’s mostly for South Americans so we’re not as aware of it. The U.S. presence is minimal.
INTERVIEWER: How about U.S. retailers? Are they beginning to catch on?
FENN: They do some business there and they’re beginning to buy more and more stuff. It’s happening. The other thing that we’re finding, particularly in South America, is that the opportunities for cooperative arrangements are pretty good. In other words, a lot of manufacturers are buying cut-and-sew things, shipping them here and assembling upholstery.
INTERVIEWER: In your capacity as honorary consul for Japan, how much furniture have you been involved with in that role?
FENN: Quite a bit. You say, “That was more because of your export office activities or it might have been because of your previous activities at LADD.” Those are factors, but when Japanese manufacturers come over here to sell their products, they need someone to talk to – to get ideas about what is going on. I see them at Market and when major retailers come over here, they too want to know who they should go look at and what kind of products are available that would fit their market. The logical thing is to ask me because I’ve seen both markets and I’ve got to steer them in the direction where they’re most likely to find a good arrangement for them.
INTERVIEWER: Is there a major Japanese furniture maker that is on the verge of breaking through into the U.S. market?
FENN: Not particularly. They were one of the most reclusive manufacturers in the world. I used to say except for the United States – we were the worst that I knew – but they were the same way; it was a very similar situation. Japan was a very prosperous country in the last 20 years and they had a very homogeneous market there that was almost identical from north to south. Japan manufacturers did good business there.
They’re very sophisticated manufacturers. They’ve got very good equipment and they make expensive furniture; it’s excellent quality furniture. They were doing a good business in Japan so they didn’t look outside much, much like the U.S. manufacturers.
There’s so much business in the United States, the U.S. guys would say to me: “Why do I need international trade? I’m getting 2 percent of the business in the United States. All I’ve got to do is go to 3 percent and I increase my business 50 percent so why should I go halfway around the world and try to develop a little bit of business?” As long as you can grow business here, you have to say they’re right – go ahead, get a little bit more here.
But when the business is down here and the business is up over there, they’re saying, “How do I get some of that international business?” That’s what happened with most of the U.S. manufacturers. When they see a slump in this country or they get some nice business from a given account or two in a foreign market, then all of the sudden they say: “This thing is good for my overall business. It smoothes it out; it’s a plus business and it’s not nearly as competitive when I sell something in Japan with maybe two or three U.S. manufacturers that I’m competing with. If I sell something in Chicago, there’s going to be 50 of them trying to sell it.” There are some advantages both ways.
INTERVIEWER: What U.S. furniture manufacturers are the most successful in Japan?
FENN: Most of the ones that are successful are high-end people. There are a couple of upholstery manufacturers here in North Carolina that make the most expensive furniture in North Carolina. They do very well in Japan with the department stores. The other thing is that there are two or three very large retailers, big-box kind of stores. They do a good bit of business with the high-end alliance. The high end of our business is the best part in Japan because they’re a more affluent society and they’re very quality conscious. Better goods appeal more to them.
INTERVIEWER: You’re still on the Vaughan-Bassett board and have that direct connection to the U.S. furniture industry. What have you seen there that’s of industry interest?
FENN: Strategically, they’ve taken a little different approach than a lot of the other U.S. manufacturers. Most of the other manufacturers in the United States have gone to offshore sourcing – making product overseas – and bringing it over here, distributing it, and sometimes finishing it or doing things to it here but basically having it made overseas. Vaughan-Bassett’s approach was that they were going to try to be the most efficient manufacturer in the United States and they were going to try to do the kinds of things that are hard to do halfway around the world and do them very well, thereby earning some business.
That’s what they’ve done. They’ll have a group of furniture that looks like it’s going to be really successful. They’ll have five or six finishes in the group and they’ll be mix-and-match finishes. You have chairs in one finish, the desk in another, and the dining room table in another one. It’s very difficult if you’re trying to make all those pieces around the world and get them here. How many reds are you going to sell, how many greens, and how many yellows?
But here they’re close by and they give delivery within two weeks. If you try to buy it halfway around the world, it takes two months or longer to get it. They’ve got an advantage in that kind of a product, so that’s what they do.
They work hard to develop products that are hard to duplicate overseas. They say, “Can you buy something cheaper over there?” Absolutely. “Can you make this particular chair cheaper over there?” Yes, you could. But you can’t have a choice of seven colors and have it shipped within two weeks. That’s what they do. They did a good bit of work in that area. That’s been a successful program for them.
They’re also trying hard to have the most efficient manufacturing techniques. That’s got to be easier to do because the good equipment is becoming a lot more available in this country and the people who have been run out of business put a lot of darn good equipment on sale for bargain prices. Vaughan-Bassett has been able to equip itself quite well. With prices going up overseas, like they are right now in China, that’s an advantage for them.
Put yourself in this position: if you’re in the furniture retailing business and you’re buying your furniture from China and you’ve got the whole floor – everything on there – coming from China and everything is going great, you’re doing well. But then you hear talk about a possible steamship strike or a strike by West Coast longshoremen. You say, “Whoops, that means we might not get any furniture for two months.”
Then you’ve got the Chinese New Year, where you can’t get anything shipped for about a month. You realize you either have to buy it earlier, (and it’s hard to determine what to buy so far out) or do without. You say: “I’m going to put 20 percent of my floor in easily accessible furniture, so that gives me kind of a flywheel in case I have problems with my major resources overseas. I’ll have this steady, ongoing business here.”
Vaughan-Bassett has found a niche for itself where they can be a portion of the business on the retail floor, even when the retailer can buy things cheaper in China and can get them in good quantities over there. But when you get back to the service and supply thing, it’s a little different. That’s what they’re doing. It’s been proven successful.
INTERVIEWER: They sell to the broad middle of the market.
FENN: That’s exactly right.
INTERVIEWER: With customizable furniture and quick delivery. That’s pretty much the formula there. Do you see the U.S. industry surviving on that basis?
FENN: Yes, I do, and probably adapting more and more to the economic conditions. The reason I say that is that I’m looking back at Europe. In Europe, all the furniture was made there 100 years ago, but then the American market came about and we got all these resources over here. We had all this cheap labor. The furniture began to be made in this country, but the European market didn’t go away. Did it go down? Yes, it did go down in manufacturing. And did they adapt? Yes, they did.
They have a lot of what they call flat-line furniture over there, where they make panels and put the panels together. You can automate that so much better than you could if it’s got curves and bends and 42 different shapes and sizes. They’ve developed an industry over there that is somewhat different than what is available in the rest of the world because of the way they make it. That’s what happened there.
INTERVIEWER: How do you see furniture markets evolving over the next five or 10 years? Las Vegas is the big thing in the United States, but is Cologne going to do well? What’s going to happen?
FENN: Cologne has been there a long time. It’s been there as long as High Point and very successfully. In my opinion, what’s going to happen is that we’re going to end up with two or three or maybe four major international markets. The purpose of those is just what we discussed earlier – that people who are buying product from all over the world have got to go to those places and people that are selling products all over the world need to be in international markets also.
There’ll certainly be one in High Point; there’ll certainly be one in Cologne; there’ll be one in the Far East someplace. I think it’ll probably be the Shanghai show and there might be another one coming along the way. That might be in South America or that might be even in Las Vegas. You could have two in the United States; it’s a little close but it could happen.
You’ll have those and then you’ll have a lot of good, strong regional markets because, in spite of all the globalization and internationalizing that’s going on, almost everybody sells a disproportionate amount of their product to people that are in their general area. They’re going to want to go to markets in those general areas.
People in California, as an example, are going to want to go to some market that shows most of the people that distribute product west of the Mississippi. That’s not High Point; that would be San Francisco, Las Vegas, or maybe even the market in Los Angeles. That’s what I think you’ll find. There’ll be one in South America that’ll do the same thing; there’ll be one in Mexico and one in Canada. Those regional markets will flourish. They’ll do OK. But those big international markets will be the key markets, and we’ll have a combination of the two – international and regional.
INTERVIEWER: Do you see continuing consolidation at manufacturing and retail?
FENN: I do. The retail side is hard to read for me and I think for most people right now. There’s no question but that the big-box stores are going to be more and more important in the industry. There are also going to be more products sold through stores that are dedicated to a single manufacturer’s product line – that would be the Ethan Allens of the world, the La-Z-Boy stores, the Thomasville galleries and stores, and those kinds of things. But there’s also going to be a big market for specialty operators that operate in only a given category or niche in the business.
INTERVIEWER: Going back to the markets, it seems that in the last year and a half or so, I’ve been hearing about all these Far East markets – especially Chinese, but also in other Southeast Asian countries – that are now ballyhooing their markets. I guess these markets have always been there but they’ve just been small, regional markets and now they have international ambitions perhaps. Doesn’t there need to be a shakeout in these markets somehow?
FENN: I think you’re right. I think that’s what will happen. I get back, though, to the fact that there is a place for local markets as well. There are local markets for the smaller dealers and they cater to the smaller manufacturers in that area. They can’t grow and become a major market; they don’t have the money or the inclination to do that. They’re going to sell their goods locally. They’re going to work hard at it.
Tupelo would be a good example of that. Take those little manufacturers down in that area of the southern United States – the Tupelo Market is a good market for them. But if people come there, they want to buy low-end, good quality, good value upholstery so they go there. There’ll be a place for those markets, but it’ll be a secondary place. They’ll come and go some, too, I think.
INTERVIEWER: How would you account for the success Ashley has had? What made them a leading company?
FENN: That’s a good question and I really tip my hat to them. I think they’ve been the most successful company in the American furniture industry in the last 20 years. They did two or three things that I think were very smart and that very few other people did. Number one is that one of the Wanek boys (from the family that owns the company) moved to China, lived over there, worked in their manufacturing operations over there with the people that they were affiliated with, and learned that business from the ground up. That’s opposed to an outsider going over there and saying that they’ll buy this and that.
Then there’s logistics. They’re the Wal-Mart of the furniture industry. They’ve got a superb distribution system. They’ve got the knowledge of the market they’re in, they’ve got an excellent distribution system, and they’re absolutely dedicated. The whole Wanek family is all furniture people; they really specialize in it. I think that they’ve just got a solid strategy that’s working.
INTERVIEWER: Apparently Ashley’s going great guns in their dedicated stores.
FENN: They are. They’ll have problems with that, though. Everybody else has.
INTERVIEWER: How so?
FENN: Dedicated stores are great when they’re good, but when they’re bad, they’re an albatross. Get away from Ashley for a minute and look at some of the dedicated stores we had at Pennsylvania House. The good ones were really, really good, but when you sign a long-term lease in Kansas City and the business moves to the other side of town…You say, “We’re losing money on this store. Close it up.” OK, but you’ve got another 10 years to pay the lease on it so it limps along.
Every one of them has had problems like this because no one has been smart enough yet to determine what location is going to be best in these markets, particularly if you’re looking five or 10 years out because it keeps moving. They’ll all have some weak stores, some that’ll close, and some that they’ll lose money on.
It’s not a panacea but it is a distribution system and it’s one that’ll work, too. Ethan Allen – look at how successful they’ve been over the years. But even there you’ll find that they get locations that cause them problems.
INTERVIEWER: Klaussner has been a fine manufacturer but they’ve had trouble with their dedicated stores or at least the marketplace has told them that something’s not right.
FENN: Yeah, and you know the old wives’ tale about how you rarely find a furniture case goods manufacturer that’s good in upholstery and you rarely find an upholstery one that’s really good in case goods. I think the same thing applies here – that because you’re a really good manufacturer doesn’t necessarily make you a good retailer. A good retailer – some of them have bought factories and they operate them but they will have real problems. I think that they are different businesses and they require different strategies. If you’re successful in this one, you may or may not be successful in that one, but you’ve got twice the chance to have a problem.
INTERVIEWER: Growth can present its own problem.
FENN: It’s also a necessity, too, with the way that our economy is set up.
INTERVIEWER: You’ve talked about some changes in production. What about sales and marketing? What would be the major changes that you’ve seen in that area?
FENN: I think the biggest change that I’ve seen is the migration toward marketing as opposed to selling. It works best with dedicated stores, where the sales representative is going into these types of stores and is interested in helping with the display, with the sales meetings, and with the general assortment of product that is on the floor, as opposed to a salesman going in there to sell product. Then it’s the store’s job to educate the salespeople and to determine what the display ought to look like. That’s a move away from sales to marketing. You’d say that they’re very interrelated and they definitely are but they’re a different beast, really.
You saw a lot of salesmen that were not really good on the follow-up. You see a lot of guys that are very excellent in helping you keep your samples backed up with stock, to train your salespeople and so forth, but not really good at getting the orders. I see a change there towards more of those marketing kinds of people rather than the old-line salesmen that were so successful and so important to the development of the industry 25 years ago.
INTERVIEWER: Has that marketing development been more driven by manufacturers or retailers?
FENN: That’s a very good question. It’s a two-pronged answer, I think. With the very large retailers, I think the retailers have carried the main load on that score. But with most independent retailers, they don’t have the facilities to do it as well so they rely on the manufacturer. If you and I were going to start a hamburger stand tomorrow, the smart thing to do would be to get with Wendy’s or McDonald’s or any of the big chains and get their expertise on how to run a hamburger store. On the other hand, if you and I decide to start a Furniture/Today trade publication, I’d rely pretty heavily on what you know and go from there.
It’s the same thing you run into here in the furniture business. It’s simpler for people to get in and to operate successfully under the umbrella of a manufacturer. But if they’re a really good merchant, I think they can do a better job than a manufacturer can in San Diego or wherever they may be.
INTERVIEWER: Is there a future for reps in the furniture industry?
FENN: Yes, there is, but I think it’s changing. I think it’s developing more and more from that marketing concept as opposed to going out there and getting the order first thing in the morning. I think the reps are here to stay and the good ones will do extremely well. But I think that they’ll have to perform more services than they did early on and they seem to be doing that.
INTERVIEWER: Some manufacturers have been quoted as saying that reps add no value. We can do it all here at the plant, they say.
FENN: I don’t see it that way. This thing about determining the distribution in a town – it’s very hard for me to sit in North Carolina and determine what the distribution ought to be in Seattle. In Seattle, you might say, “Well, you can do that but how about Spokane?”
Then you’ve got all these midsized towns that somebody has got to keep analyzing what’s available there potentially for good business and what you’ve got to do with this or that account to make them good. Do they need a lot of sales help or do they need promotional help or what? I think the rep has got a place in the scheme of things. I really do.
INTERVIEWER: What has been your central, personal goal in business?
FENN: I think that as I look back on the time that I spent in the industry and what I enjoyed about it, what I appreciated about it is expanding the business, this globalization of the business and developing a broader business than what existed 50 years ago.
INTERVIEWER: How about your involvement with industry trade associations?
FENN: I got into the business 30 years ago, but as I said earlier I’ve always considered myself pretty much an outsider. I was never as active in those organizations. I knew those people well; I had a high regard for them and what they were doing, but I always felt that I could spend my time more efficiently and effectively out with the retailers and marrying up their capabilities with the manufacturers. So I didn’t do as much in the trade associations as a lot of people did.
I think it’s a very important effort. I’m not belittling it. I’m just simply saying that that wasn’t really where my ability to contribute was the greatest. My ability to contribute was probably greater in the internationalizing of things and I spent a lot of time helping other people’s businesses grow there than I did in the trade associations.
INTERVIEWER: Were you ever directly involved in retailing?
FENN: No, I was not. I went with Armstrong right out of school and I was a manufacturer’s rep to wholesalers that sold those old floor coverings. Then when I went to Thomasville, I moved down here directly into a management position and have been in some sort of a management capacity in the industry since.
INTERVIEWER: Did you ever consider going back and getting an MBA?
FENN: No, I really didn’t. I had an awful lot of schooling. Actually, during the war years and in my time there, I had some credits from Texas University. I then went to summer school at SMU (Southern Methodist University) in Dallas one year. I was in Oklahoma for some time. I had enough credits at Yale in language to get a degree. I went to the University of Minnesota. I was the only foreign student in the Imperial University in Tokyo at one time, and I studied economics there. I had a lot of schooling and I never really felt the burning desire to go back and get an advanced degree. I thought I was probably better off spending my time assimilating some of these disparate things I had experienced through the years.
INTERVIEWER: What do you see as the most serious problem facing the industry today?
FENN: Short-term, I think the problem is integrating foreign manufacturing into domestic distribution and sales activity. I think that’s the short-term, the intermediate time problem.
INTERVIEWER: Is that being worked out fairly well? Are there successes or failures that have pointed the way?
FENN: There are a lot of successes and a lot of failures, but I think that it’s the wave of the future, whether you say that’s a good thing or a bad thing. It’s here to stay. I think that’ll work out, but it’s the biggest single problem I see, short-term.
Long-term, I guess the question that most people have about furniture is about where it fits into the economic scheme of things. You say, “Well, everybody’s got to have furniture.”
Do they want furniture for life? Do they want the functions that we have today? Do they want the difficulties of buying furniture today and getting it delivered and the assortment that we have? Very few countries in the world have the broad assortment that we have in the United States. Almost every other country has got a much, much narrower scope of things. How that’ll work out long-term, I don’t know. But I think that’s the thing: is the American model going to be the one that is good or is it going to be the European model or is it going to be something that we don’t conceive today? Where does furniture fit in the utilitarian scheme of things?
INTERVIEWER: Concerning the influence of outside factors on the furniture industry, how has the industry been affected by women’s issues?
FENN: We haven’t done very well on that. I’d give us only a C- at best, maybe even a D+. It’s illogical when you think about it. When you think about home furnishings and who is most interested and knowledgeable in the home environment, it’s got to be women as opposed to men, but the nature of the business, and particularly the manufacturing side of the business, didn’t lend itself greatly to females early on. Being in the South, it probably had limitations on people that were interested in manufacturing kinds of work. It’s been slow in coming but its coming. It’s like the economy generally as far as I see it. You see a lot more women in there today and I think you’ll see a lot more of them in the future.
INTERVIEWER: Did you deal with some great women sales reps?
FENN: Yes, as a matter of fact we hired the first female rep at Thomasville when I was there and she turned out to be exceptionally successful. She was very good and after that time I worked with maybe a dozen or two. But when you work with a couple hundred men and you say a couple dozen women, that tells you something right there. It’s a limited group but they’re naturals for the work in terms of interest in décor, interest in what’s available and the whole scheme of distribution. They rarely find one that has been at it as long as most of the men, so you say that they haven’t got the experience. But they’ve got the opportunity, I think, to do a lot more there.
INTERVIEWER: What about women retailers?
FENN: There are a lot of women in the designer end of the business. They would dominate in the designer end of the business. That’s only 20 percent of the total, but I think that at retail they’ve definitely got a place in the market to grow pretty substantially and will over a period of time.
INTERVIEWER: What about racial issues and problems? You had a unique perspective perhaps on the Japanese culture but in this country there is a whole range of races and cultures.
FENN: Yeah, that’s right, and we’re probably fortunate in that being the case in the United States because it gives us a little better perspective on things. I don’t see racial issues as being big issues in the furniture industry. It’s more of a national/political issue than it is an industry one. We’ve largely dodged it and it’s surprising to me in some ways because so much of the business was oriented in the South, where there were a lot of built-in prejudices early on. I think it’s largely a non-issue as far as furniture goes.
INTERVIEWER: We hear more and more about marketing to Hispanics these days. Was LADD doing anything along those lines?
FENN: We had sales reps in Mexico and South America that could speak the language, so to that extent we were working on it.
INTERVIEWER: What about particular collections targeted to Hispanic populations?
FENN: Not too much. We learned early on the hard way that it’s very difficult to pattern products for ethnic groups because they could get them better locally. Now, there were a few exceptions to that; we did a couple of Oriental things that were very successful. Orientals ought to be able to do them better but ours really had American touches to them. They were hybrids, I would say, and I think that’s pretty true on the Mexican and Spanish things. The best example I can give you is that I know of two major manufacturers in Mexico that were very successful down there and were not very successful in the United States.
They were doing exactly what we did early on. They would come up here and look at our early American furniture and come up with an early American design that would compete with the ones we had. It’d turn out boxy and the finish wouldn’t be just exactly right so they couldn’t sell them. A couple of those guys said, “I’m just going to bring some of my old El Rancho materials up here next market in three or four different colors of yellow and red and so forth.” They sold very well in a limited area.
So the answer is that you almost always need to do what you do best and take that portion of the market. Realize that you’re not going to sell everybody a product different than what they have now.
INTERVIEWER: Are you ever going to actually retire?
FENN: My wife asks that quite often, and the answer is: probably not. I really enjoy the camaraderie of the industry and the way it’s changing. I like to look at it. I like to stay active, so I’ll probably continue that as long as God’s willing and the creek don’t rise.
INTERVIEWER: You’ll remain on the Vaughan-Bassett board.
FENN: Yeah. You know, I said we had a mandatory retirement age at LADD of 65.
INTERVIEWER: You complied with that but you sure didn’t retire.
FENN: That’s right, but there might be a time where you should get off the board to have younger blood doing it. If I sense that that’s getting to be a strong sentiment and give it thought, I’ll make the change.
INTERVIEWER: In other words, if your wife demands it.
FENN: That’s right, something like that.
INTERVIEWER: Your other current industry-related activities are what?
FENN: Just those two primarily – the Vaughan-Bassett board and my connection to the North Carolina Department of Commerce. Well, it’s three really; the other one is the Japanese connection. I still get calls every few days from some of my Japanese friends, either from there or here. I still do a few things, certainly Market, and act as a go-between for the North Carolina Department of Commerce. That’s three things and that’s enough for a guy that’s retired and likes to play golf.
INTERVIEWER: This has been great. We really appreciate your time. Are there any concluding comments or anything that you’d like to mention?
FENN: No, I think we’ve covered it pretty well.