Stephen m. kincaid; kincaid furniture
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
MAY 4, 2010
HIGH POINT, NORTH CAROLINA
Tony Bengel, Interviewer
INTERVIEWER: Where were you born, and when?
KINCAID: I was born in North Carolina – in Hickory in 1948.
INTERVIEWER: And I’m sure you had family in furniture.
KINCAID: Yes, yes. My father was in the furniture business his whole life, and his father was in the lumber business, and so he had a direct relationship to the furniture business as well, so it was kind of a natural progression for me to get into the furniture business as well.
INTERVIEWER: And your grandfather and father were working in the Hickory-Lenoir area from the very beginning?
KINCAID: Yes, in Lenoir. That’s where I grew up. And my grandfather hauled the logs to Caldwell Furniture, which is now Thomasville. And my father quit school in the eighth grade. He was the oldest of eight children, and had to help support the family. And so my grandfather insisted he quit school to come work in the factory. So my father started when he was 14 years old working at Caldwell Furniture in Lenoir. And that’s how he got in the furniture business.
INTERVIEWER: And Caldwell was a case goods maker?
KINCAID: Case goods company. Sure was.
INTERVIEWER: And was that a family-owned company?
KINCAID: It was the Beard family that owned part of it. There were a lot of names around that are gone now after more than 40 years. There were a lot of companies around Lenoir and Hickory that were family-owned companies, and this was one of those. They later sold out to what I guess was a predecessor to Thomasville, so that’s kind of how it started.
INTERVIEWER: Did your grandfather ever get into furniture-making himself?
KINCAID: He did. He and my father started Kincaid Furniture together in 1946. At the time, my father was working for Broyhill Furniture. He was a supervisor at the factory they had in Conover, North Carolina. And by that time, he had eight children, and he was trying to support them all on the salary of a supervisor, and he couldn’t do it. So he started making little cedar chests at night and on weekends and selling them on Saturdays beside the road. And that grew to a certain point, so he finally left Broyhill in ’48 – excuse me, ’46 – and started Kincaid Furniture along with my grandfather. That’s how the company came to be.
INTERVIEWER: Isn’t there a little community up there called Kincaid?
KINCAID: No, I don’t think so.
INTERVIEWER: So you were born in Hickory, but you actually grew up in Lenoir.
KINCAID: Lenoir. Lived in Lenoir.
INTERVIEWER: And were you the first, middle, or at the end of the eight children your father had?
KINCAID: Well, he went on to have two more children after the eight, so he ended up with 10 children – five boys, five girls. And I was number 9. I was the fifth boy – the ninth child. My mom introduced me as the baby boy. So I was number 9 out of 10.
INTERVIEWER: I’m sure you’re not the only one of those 10 kids that ended up in furniture.
KINCAID: You know, all of us, except for two sisters who never got involved in the business. Everyone else at some point worked in the business. I’m the only one still in the business. I’ve got some nieces and nephews in the business, but I’m the only one of my siblings still hanging around.
INTERVIEWER: Well, did your father literally start making these cedar chests in his garage? How did this actually get underway?
KINCAID: They purchased a little building in Hudson, and it was very small, and they had five employees. And so my grandfather would work there during the day. My father would come up when he got off work at Broyhill Furniture and work on weekends. And they started making these little cedar chests and cedar wardrobes. I once asked him, “Why did you get in the cedar wardrobe business?” He said it was because in that time period, the property taxes were based upon the number of rooms you had. Now today it’s based upon your square footage, how many fireplaces you’ve got, and all kinds of different things. But in the ’40s, you counted the number of rooms you had, and a walk-in closet was a room, so people didn’t build closets because it’d be taxed. So he built these cedar wardrobes – solid cedar. And basically, that’s where people would store their clothes.
INTERVIEWER: But was cedar available in the North Carolina mountains?
KINCAID: No, not so much. He would actually drive over into Tennessee and up through Ohio and Kentucky to buy the cedar. And once the company got started, he would go on buying trips to buy the lumber. He’d take my mom and a couple of kids with him too. So my mother used to tell a lot of stories about going on lumber-buying trips.
INTERVIEWER: So these would be for weeks on end?
KINCAID: Three or four days. And those trips were one of the things that got him going in a different direction; I think it was around 1951. He was still making cedar wardrobes and cedar chests. He’d left Broyhill, and he was doing this full time, and had maybe 20 or 30 employees. But one of his good friends, George Cartledge, from retailer Grand Piano in Roanoke, Virginia (they were contemporaries and became best buddies) … and he called my dad one day and said – they called him Wade; his formal name was J. Wade Kincaid. He said, “Won’t you make this bedroom set for us?” because they were trying to buy it from the David M. Lea company, predecessor to Lea Industries. It was solid mahogany, and it was $99 wholesale. So my father said, “Well, I’ve never made a bedroom set, but if you can get me enough orders, I figure I’d have to do it.”
And so Mr. Cartledge called people at Rhodes and Havertys. He called five or six different people himself. My father didn’t know these people. And he called my father back and said, “Well, I’ve got 2,000 suites sold,” and my father said, “Well, send me the letter.” So my father took that letter stating that he had orders to make 2,000 bedroom sets and went to the banker in North Wilkesboro. It was Northwestern Bank, which is the predecessor to First Union, to Wachovia and all that. But my father would tell me the story that the banker’s name was Mr. Halfacre.
KINCAID: Halfacre was his last name.
INTERVIEWER: He must have gotten a half-acre from his family or something like that ...
KINCAID: I guess, but that was his name. So my father showed him this commitment to buy the bedroom furniture, so Mr. Halfacre started to loan him the money to buy the equipment and the lumber. And that’s how we got in the bedroom business.
INTERVIEWER: Who was your father selling the cedar chests and the cedar wardrobes to at the beginning?
KINCAID: It was primarily the distributors. He didn’t have a sales force, and so he would sell. Back in those days, you had furniture distributors like R.H. Kyle out of Charleston, West Virginia, Bagby out of Baltimore, Purse & Company out of Houston. So instead of having his own sales force, he would just use these distributors to sell it for him.
INTERVIEWER: So he was selling in the Midwest and up the East Coast early on. How did he meet these distributors? Did he come in contact with them when he was at Broyhill?
KINCAID: He did not. He was in manufacturing at Broyhill.
INTERVIEWER: Yes, he was a production guy.
KINCAID: He was showing his cedar chests I think in Hickory early on, and he hired two sales reps, and they had the contacts with the distributors. So that’s kind of how he got started.
INTERVIEWER: So he had help from some furniture reps to get his first contacts.
KINCAID: The first rep that he hired passed away last year. He was 100 years old and lived up in West Jefferson, North Carolina.
INTERVIEWER: So your father decided to get into bedroom, so he had to move to a larger plant and buy equipment.
KINCAID: That is correct.
INTERVIEWER: Was he trying to beat the $99 wholesale price point? Was that part of the agreement?
KINCAID: No, he just had to meet it. That was the same price that the David M. Lea suite was, and they just couldn’t get it. There was a shortage of furniture at that period of time, and so my father made it because the supply was not there from David M. Lea. But once he started selling furniture to these guys, he developed a relationship with them as well.
INTERVIEWER: Was this solid-wood furniture?
KINCAID: Solid wood.
INTERVIEWER: So Kincaid was solid wood at the very beginning.
KINCAID: Even the cedar chests he made with solid wood. My father was very adamant that that’s the only way he was ever going to build furniture. He just did not think that good furniture was made of anything but solid wood components. That was his philosophy. We carry the same philosophy today, that we still make only solid-wood furniture at Kincaid.
INTERVIEWER: What is your earliest memory of the furniture business – of your father being in the furniture business? Do you remember visiting the plant as a toddler or as a very young person?
KINCAID: I guess my first memories are going to the furniture market.
INTERVIEWER: Where was that?
KINCAID: It was in Chicago, and every summer my father would load us all into his car. With 10 children, you only got three or four that were kind of the same age. But my memories were when I was probably 4 or 5 or 6 years old. We would all load up into the car, and we’d drive to Chicago for the furniture market. And for four, five years, that was our family’s vacation. We would stay at the Palmer House, and he’d rent two connecting rooms, and my brothers and sisters would stay in different rooms. There’d just be a bunch of kids up there. But that was my first memory of the market, I guess.
INTERVIEWER: Did you actually go into the market building at any point when you were that young?
KINCAID: I just remember the room service at the Palmer House.
INTERVIEWER: So you were a Southern boy in a big Northern city. You all did fun things, went down to the lake shore, I assume?
KINCAID: My father was a baseball fan. He was a baseball player, and his whole life, he played baseball. Actually, even when he was in the eighth grade, the colleges were scouting him because he was a great pitcher. So he always had a great affinity for baseball. He was a Cubs fan, and sometime during the 10 days we were in Chicago, the Cubs would come to town, so we’d go to baseball games. And in the daytime, my mom would take us to the museums and zoos and other places. So we had a good time.
INTERVIEWER: Was your father ever a semi-pro baseball player?
KINCAID: No. Well, he had all these children. He started working in the factory, and he never really did that.
INTERVIEWER: Was your mother ever involved in the furniture industry in any way? How did your mother and father meet?
KINCAID: Early on, my father had a grocery store, and my mother came in as a customer to his grocery store, and that’s how they met.
INTERVIEWER: This would have been in Lenoir then. Your father started out as a grocer before joining Broyhill, I assume. OK. I believe you said your father really got into bedroom production in ’51. Do you remember the first time you went to the furniture plant as a kid?
KINCAID: We lived about a quarter of a mile away, so we would walk over there. My father had built a big lake with a community center building for the community of Hudson, for the Boy Scouts and all the churches to use. And so every day after school we’d go over there and fish the lakes and play around there. So I was around the factory my whole life. When I was about 10 years old, I would go over on Saturday mornings. Back then, we worked 5 and a half days a week, so Saturday morning was a workday. So I’d go with my dad on Saturday mornings, and I would sweep. That was my job. He paid me to sweep the warehouse. That’s kind of what I did.
INTERVIEWER: The warehouse?
INTERVIEWER: Do you remember the machines and the workers back in those days? Did you ever wander into the plant? I guess that wasn’t legal, maybe, or advisable, but everybody did, I’m sure.
KINCAID: I don’t think it was illegal then, to be honest with you, because everybody had families coming up through the businesses. I didn’t spend much time in that part of the factory. I spent my early days around the warehouse and loading dock – pretty basic things, I guess. Loading trucks.
INTERVIEWER: And that became a summer job, eventually, right?
KINCAID: Right. Every summer, I would come home, even when I was in college. I was expected to come home and go to work in one of the factories. That was very fortunate because I had a chance to work in every department in the furniture factories. So it helped me gain a little bit of knowledge about how to make furniture. I'm surely not an expert, but at least I kinda knew what piece of equipment performed what kind of operations, so that was very beneficial.
INTERVIEWER: So this became your full-time job during the summers later in high school, I assume.
INTERVIEWER: Was it always assumed that you would go off to college? Were you the first generation of your family to go to college?
KINCAID: I had a sister who had gone to college previously, and I had a brother that went for a couple of years, and then quit to start a family. So I was the first boy to go to college and graduate. Back then, it was just normal to go into the business. When you got out of high school, you just went right to work in the family business.
INTERVIEWER: Did your father and mother urge you to get a college education back in those days?
KINCAID: Neither one of them had college educations, but I think by that time, they realized how important it was to go on to school.
INTERVIEWER: And so how did you decide which college to attend?
KINCAID: Well, I really wasn’t sure. I had applied to N.C. State University because they had the furniture manufacturing program. And that’s where I was going, but my girlfriend at the time decided she was going to Appalachian State Teachers College (in Boone, N.C., now Appalachian State University). And so I said, “I think I’ll go up there with you.” So that’s what I did. I went to Appalachian. At that point, it was a state teachers college.
INTERVIEWER: So they had no furniture manufacturing course, but they had business courses, I’d think, back in those days.
KINCAID: They had business, but they also had industrial arts, they called it, which was basically furniture manufacturing. They didn’t call it furniture manufacturing. Through the industrial arts department, they had the basics on how to build stuff. So I did that for about a year, but I realized that really was not my forte. And I would have never really succeeded at N.C. State because that was more of an engineering-based manufacturing program. I kind of gravitated more to the business side of it, and so I switched majors at Appalachian and got into business administration. So that was probably a good move for me.
INTERVIEWER: Does anything stand out in your mind as influential – any teachers or anything that happened during your college days that influenced your future career?
KINCAID: I think I was in my second year of industrial arts, and we had to build a piece of furniture.
INTERVIEWER: Was this upholstery?
KINCAID: No, this was case goods. So I was in there working with these very talented people, and they were building beautiful furniture, and my stuff looked like workshop stuff. So I realized at that point that this was not my skill set. So I got out of that and headed to business. I can’t remember any one professor, to be honest with you, that I remember as particularly influential.
INTERVIEWER: So you graduated from Appalachian in what year?
INTERVIEWER: What did you do next?
KINCAID: Well, that’s when we had the draft, the Vietnam War draft. I wanted to go ahead and be a sales rep because my father had told me early on that you make more money being a sales rep than anything in the furniture business. And that’s something I like to do. My brother was a sales rep in North Carolina for the company – that was his territory. So he was going to bring me on as a partner in ’70. I decided I’d rather go ahead and start working versus go into the military full time, so I joined the National Guard. But it was kind of funny because I had six months before my departure date from when I got out of school, so I spent that six months in my territory.
My brother was very gracious. He gave me everything in western North Carolina, west of what is now Interstate 77, Statesville west, excluding Charlotte and Asheville. He kept the big cities to himself, so I had the little, small mom-and-pop stores. So I spent that six months visiting those stores and building relationships with them. And what was pretty neat about it was that when I went off for basic training, I kept getting my commission checks, and that was a big deal to me to get a $100 check a month from my little business back home. But that’s how I got started – being a sales rep with my brother, and then we gradually took over the state of Virginia.
And then, probably around the early ’80s, we decided to become more than just a regional, East Coast manufacturer. We wanted to spread ourselves westward. At that time, we were selling Montgomery Ward, who was our largest customer, and we had these distributors around the country. So my brother and I took over all the sales west of the Mississippi. We would take turns, with about every three weeks one of us going out and just flying all over the country, whether it be California or Texas or Colorado, selling furniture to those folks out there. We didn’t have enough capacity to have a sales force to sell everybody out there, but we kind of cherry-picked different people in every state to sell.
INTERVIEWER: When you became your brother’s cohort, were you the only two full-time sales reps for Kincaid at that point?
KINCAID: No, there were probably another 15 or so, but they were all located on the East Coast. That’s where our business had started and gravitated toward.
INTERVIEWER: And were these reps dedicated to Kincaid, or were they independent or semi-independent?
KINCAID: Most of them were independent. Most of them had some other product lines.
INTERVIEWER: But you and your brother only sold Kincaid, I assume.
KINCAID: That’s correct.
INTERVIEWER: Was the company still producing mainly bedroom at that point? I assume the capacity had grown substantially.
KINCAID: It had grown.
INTERVIEWER: Maybe several plants had been opened?
KINCAID: We had opened up another division in Lincolnton, North Carolina, called Kincaid Carolina. It was a dining room facility. And it’s a funny story...
INTERVIEWER: Now this was when? Late ’60s?
KINCAID: This would have been the late ’60s. I started working in 1970 with my brother. I’ll never forget. I was traveling with him down in eastern North Carolina, and we checked into a motel called the Heart of Wilson in Wilson, North Carolina. That was the name of the motel. And the first thing you do when you get in a room is you put the television on. My brother and I were staying together. And this would have had to be in late 1970. So I put the television on, and all the sudden we saw a large fire, and they were showing this news coverage of this big fire. I looked, and I said, “Hey, that looks like daddy on television.” And sure enough, it was our father, and the plant in Lincolnton was burning. A TV crew from Charlotte had come up, and they were televising the fire. We didn’t know anything about it till I saw it on television.
INTERVIEWER: So was that a devastating fire, or did they get it under control pretty well?
KINCAID: No, it was an older building my father had bought, and it actually burned to the ground. So after that he moved those operations back up to Hudson and added another facility there. But I’ll never forget turning on the television and seeing my dad and his plant burning. No one was injured, so it was not that kind of a loss.
INTERVIEWER: Fire has always been a big hazard for furniture plants. He obviously lost his dining room capacity for a short period of time, anyway, but was able to recover fairly quickly, I assume.
INTERVIEWER: Tell me a little bit about life on the road, which can be a pretty difficult life. You found it suitable for you?
KINCAID: I enjoyed it. Yes, I did. My father gave me some advice. Of course, he had only an eighth-grade education, but he had a lot of common sense, so I kind of borrowed a lot of that from him, I guess. I’ll never forget what he told me. Most of the time back then we ate steak and potatoes almost every night. We didn’t realize it was bad for us. You stayed at a Holiday Inn, and you ate steak. He said, “Son, when you go in the hotel or motel and you eat a steak, no matter how much it costs, always leave at least a $1 tip.”
INTERVIEWER: Well, that’s practical advice.
KINCAID: It’s practical, yes. So that’s kinda funny. But I enjoyed it. I enjoyed meeting the people, and I think it was a really good way to learn the business, because you can see not only how your product line compares to other product lines but also how the retailer views your product line and what’s important to them. It was very beneficial to me, and so I enjoyed that period.
INTERVIEWER: Did you establish some relationships that lasted for many, many years? Were there certain independents that really became standout retailers and close friends?
KINCAID: Sure. And still are today. This weekend I’m going on a trip with one. I mentioned George Cartledge from Grand Piano – his son and I are going on a trip this weekend. I’ve known that family since I was 14 years old. But I remember calling on Bill Child and R.C. Willey in Utah. Bill was a bedroom buyer then.
INTERVIEWER: So that was when you were targeting the West Coast?
KINCAID: Yes. That would have been in the early ’70s. A lot of those folks are gone. A lot of those people I originally called on are no longer in business today. The ones that hung around are pretty successful, I guess, by this point. But I enjoyed that a lot.
INTERVIEWER: What were Kincaid’s major selling points? What made you a successful sales rep? What were you offering?
KINCAID: The industry was much smaller then. All of your competitors were domestic manufacturers, and you knew who they were. We specialized in Early American solid-wood furniture. That was our niche, and we were pretty good at that.
I think one of the things that really helped my father and the company progress was that, in the mid-’70s, he hired a gentleman named Leo Kahn. Leo was a retailer. At that point, he was president of Bensinger’s in Louisville, Kentucky, and they were the prominent retailer in Louisville. I still remember his sales pitch. He’d been in retail for 34 years, so he understood the retailer’s perspective.
But Leo was very close to the Ethan Allen people. They had one of the first Ethan Allen in-store galleries. And at that point, Ethan Allen was the expert in Colonial furniture, and their furniture was solid wood. So Leo was able to come to my father and say, “This is a style that would work well for you.” So we benefited a lot from Leo’s expertise in the marketplace and in design because of his background in Ethan Allen.
He was an interesting gentleman. He escaped from Germany when he was 19 years old. He was in Nazi Germany, and he came over here with no money and got in the furniture business and became very successful. He and my father became the best of friends.
INTERVIEWER: So he was a customer of yours?
KINCAID: He was a customer before my father hired him.
INTERVIEWER: And your father convinced him he should come over to manufacturing? What did he become at Kincaid, VP of marketing?
KINCAID: VP of sales, which at that point was sales, merchandising and marketing. VP of sales was everything at that point.
INTERVIEWER: So he was your boss.
KINCAID: He was my boss. He really taught me more about the marketing and merchandising and sales part of it than anyone. My father was a manufacturer. After he hired Leo, he wouldn’t even come to market, except maybe one day just to say hello to his old friends. He kind of turned all of that over to Leo. My father loved the employees. He would walk through the factories. He knew everyone’s first name. He came up as a furniture manufacturer, and that’s what he wanted to do. So he handed the selling over to the rest of us at that point.
INTERVIEWER: Did you get involved in product development at that point under Mr. Kahn’s tutelage?
KINCAID: We did, but back then, well, you copied somebody else. In those days, you would see the trends, and if you saw someone like a Henredon come out with some style – they were the very high end – then maybe Thomasville would interpret it, and then somebody below them would interpret it, and then we would interpret it. Then when it got down to the level below us, it’d be gone because it was just too common at that point. But we would kind of see what was happening out in the marketplace. The people we competed with back then were people like Williams Furniture. They’re gone. American Drew, which is now part of La-Z-Boy. We had Crawford. A lot of the New England guys were still…
INTERVIEWER: Crawford of Jamestown?
KINCAID: Crawford of Jamestown was good. Keller was a competitor. Cochrane. So there were a group of companies, but you knew everyone, and you knew what they were producing, and everyone kind of stayed in their own niche, and so it was a simpler time before the imports came and changed the marketplace.
INTERVIEWER: How would you define Kincaid’s niche back in the ’70s? Were you mid-priced? Lower mid-priced? You weren’t going up against the Thomasvilles and the Henredons, but you were probably less expensive than Ethan Allen.
KINCAID: We were. We positioned ourselves above Broyhill. We always told everybody we were between Broyhill and Thomasville; that’s where we positioned ourselves. The pitch was that it was solid-wood furniture at the same price as veneers. That was the pitch. We would hand out pieces of veneer. A piece of treated veneer is 1/25 of an inch thick. So you’d put a stack of those on the table versus a true piece of solid tree lumber and ask, “Which one would you rather have?” And so our whole pitch was talking about the features and benefits of solid-wood furniture. That’s what really made us different. And we were a great value. We were very efficient. We always invested a lot of money back into the operation. My father was not one of these owners that lived a high life off of the company. All the profits we made he put back into the operations. He was always buying new and better equipment and more factories. That’s what he wanted to do. Grow the business.
INTERVIEWER: Tell me about your market experiences now as a sales rep for Kincaid. I assume you were part of the High Point Market, but in the western part of the market, not in High Point itself.
KINCAID: We were. Well, my first memories – and I think I was maybe 18 years old or 17 ... My father had a small showroom at our factory in Hudson. And I say small. It was 2,000 square feet small. Back then you had showrooms in Hickory, High Point and Lenoir, and we couldn’t afford to be at those buildings. So my father had to show there at the factory, and he would schedule dealers to come from High Point up to Hudson to look at his furniture. And the way we got them there is, my brother and I took my mom’s station wagon, and we drove them back and forth. I think today about letting my 18-year-old son drive our customers 100 miles! And that was before the interstate system. We came down Highway 64. I remember doing that.
INTERVIEWER: And you had to feed them lunch, and you had the parties at night. And then I guess the Hickory Furniture Mart eventually got some of the smaller companies in that showroom building out there. But most of the big companies had their own factory showrooms.
KINCAID: Right. And back then we had premarket, and we wanted to be able to do premarket, and get the key retailers to come to our factories about a month before the actual market. Today, premarket is not nearly what it was designed to be back in the early ’70s. Dealers would come by very leisurely, and they’d spend a lot of time with you, and they’d get to know everybody in your office. And you’d take them to lunch and dinner. It certainly was much more relaxed than it is today. But we never really showed in Hickory. We went from the factory showroom in Hudson to High Point, into the main building down there.
INTERVIEWER: And this would have been in the ’80s?
KINCAID: No, this would have been in the ’70s, probably the early ’70s. I remember one of the first things we did... Leo had a lot of friends in the industry, and of course he was Jewish. At that time, it was very hard to get kosher food in High Point – or any kind of food in the main building. We had the Dogwood Room down on the bottom level, and then the hospital auxiliary groups would sell sandwiches on the bridges between the building sections. Those were your food choices in the building. So Leo decided to bring in these kosher hot dogs from New York, and he said, “I’m gonna figure out some way to feed my Jewish friends a kosher meal.” So we took a closet, and we got two hot plates, and we started cooking these hot dogs back there. And the folks loved them. But the closet had no ventilation, so the entire showroom smelled of this garlicky concoction. Anyway, that became a tradition: the Kincaid Hot Dog. Even today, we still serve the same hot dog that we did back in the early ’70s.
INTERVIEWER: Had you left the Chicago market by this point? Where else were you showing?
KINCAID: We left Chicago when everybody else did, as the Southern manufacturers kind of moved out of Chicago. We came out when everyone else did and came to High Point as the major market. But we had showrooms in New York at that point. We had showrooms later on in Dallas, Atlanta and San Francisco. So we were basically in all of those different markets at various times.
INTERVIEWER: Obviously, Kincaid was growing pretty healthily back in those days. I assume you were adding production capacity constantly through the ’70s and into the ’80s.
KINCAID: We did. We expanded into occasional furniture, and then we expanded into dining room, and that meant we needed more factories. So we were pretty much always at full capacity. In that time period, skilled labor was very hard to come by. So we actually had a guarantee for all of the supervisors and even the skilled people at the factory. We would guarantee them a 50-hour workweek. We would guarantee them 10 hours of overtime to get them to come join us. And I know that in ’83, I think it was, we had a backlog that was 13 months long. I remember going to market, and we brought out one maple corner cabinet. That was the entire market introduction.
INTERVIEWER: Did you depend mostly on rail distribution back in those days?
KINCAID: Rail some, but mostly trucks. We had our own fleet of trucks. We started trucks in the late ’50s, I think. There were not that many train carriers around, and one of my uncles, Jack Robbins, started the trucking division. So we carried almost all of our own freight. And up until the late ’80s, we used to line the trucks up on July 4th and take pictures of them. I think at one time we had 70 tractors and 250 trailers. So hauling freight became a pretty big business in itself.
And then in ’86 they deregulated the trucking industry, which meant that anyone could compete for the same deliveries. Before that it was all regulated. The U.S. Department of Transportation said, “If you go this far, you gotta charge this much.” But if you’re deregulated, all of a sudden you get all of these different people looking for business. One guy could buy a truck, and he could undercut you. And so we stayed with the trucking business up until probably the mid-’90s and then just got out of it altogether. It was a real benefit because we would tell people our own employees would deliver the furniture. We deliver. It was a real benefit to us to have the trucking fleet.
INTERVIEWER: You’ve mentioned huge backlogs at one point. But in general, what kind of delivery times were you talking to retailers about back in those early days – in the ’70s, say? Was it six weeks? Eight weeks?
KINCAID: Well, back then it was 90 days, and as a sales rep, I would tell my dealers, “You gotta buy a 90-day supply.” That was before computers, so we’d go into a store and do a little ledger sheet, and I’d count. “We got three in stock, and the next production is not for six months, so you gotta buy enough to get you through that period.” At that point, the retailers carried the inventory. There was really never a thought that the manufacturer would carry all this inventory as we do today. It was ingrained that they had to carry at least a 90-day supply in their own stores. And that changed when the Thomasville gallery program came into being. I think that must have been in maybe the mid-’80s, I guess. They told the whole world, “You don’t need to carry an inventory. We’ll carry it for you back at our factory warehouses.” And so all of a sudden everyone wanted to shift the burden of the inventory to the manufacturer. That’s kind of how that started.
INTERVIEWER: Did you make any attempts to go into any styles other than Early American/Colonial back in those early days?
KINCAID: We tried. I went through some archives the other day, and my father, back in what must have been the mid-’60s, brought out a beautiful southern walnut contemporary group. But we just were not looked to for that kind of product, to be honest with you. I guess it was in the late ’60s, early ’70s that injected molded plastic came into the industry. And Broyhill had bought a plastic factory and put it in their line, and they were...
INTERVIEWER: That was the so-called Mediterranean style.
KINCAID: Mediterranean, yes. They were taking door fronts and headboards, and they were putting these showy, molded plastic fronts on them. And everyone told us that that’s where all the business was going. They didn’t want any more Early American. They wanted Mediterranean. We actually produced a suite of solid-oak Mediterranean furniture, and it was beautiful, but it didn’t have enough showiness to it. That stuff had to be pretty goopy to...
INTERVIEWER: Had to have a lot of “action,” as they called it.
KINCAID: Solid-wood furniture is good for a lot of things, but not for a lot of action.
INTERVIEWER: You can do some carving and still sell it at a reasonable price, but after that...
KINCAID: Right. Back then, the carving was done locally, so it was very expensive to do the carving. We tried different things, but we always kept going back to the core. The market moved back and forth, and this Mediterranean thing became kind of passé, and contemporary kind of came in. But I remember in 1976, with the bicentennial, all of a sudden everybody wanted Colonial furniture. We brought out this group called Circa 1776. And of course, everything else we made was Colonial too, just under different names. Those were the good old days. Everybody wanted to buy Colonial furniture.
INTERVIEWER: Was your line basically solid oak? Were you using other kinds of woods?
KINCAID: I remember our first sales meeting in ’69, and I was sitting there with Leo Kahn and he was talking about what we would be doing for the market. He said, “Well, things have gone up, and we’re gonna have a price increase.” At that point, we had a solid-oak, four-piece suite, which was a dresser, mirror, chest-on-chest and a full bed. We had a solid-oak version, a solid maple and a solid cherry. That was our product line. Those three groups, with different sizes. And Leo said, “Guys, those suites are going from $299 to $309.” So I took aside this guy who was our first salesman. He was the biggest shipper, and he looked at me, and he said, “Well, that’s it for me. I can’t sell this furniture for that much money in Tennessee.”
INTERVIEWER: Did the retailers in fact pretty much accept the price increase?
KINCAID: Yes. Same way today. We still get hung up on raising prices, and it is what it is. People either accept it or don’t accept it.
So that’s kind of what we were back in the early days. We were always Colonial and traditional. Then Leo, in the late ’70s, felt we needed to change the way we displayed our furniture. So we were the first company to really radically display Colonial furniture in a more contemporary setting. So in our High Point showroom, we put in white tile floors. We brought in black accessories, and pretty contemporary accessories.
INTERVIEWER: But the furniture didn’t change.
KINCAID: The furniture didn’t change, but we said from that point on, we don’t make Early American furniture. Just call it American Traditional.
INTERVIEWER: Also, 18th century became a big term then, I think.
KINCAID: It did. But we said we were going to be American Traditional. We’re not Early American because that was kind of old school, but it became American Traditional manufacturing. Same furniture. We just called it something different.
INTERVIEWER: Let’s continue a little bit in your career. What happened after your days as a sales rep, or how did that evolve?
KINCAID: Well, I had different brothers in the business. They tended to be more on the manufacturing side, except for my partner brother, who was the best salesman we had. So I started spending more time in the office on Saturdays, studying under Leo Kahn. Leo took me under his wing to show me how the other side of the business worked, from the merchandising, marketing and advertising angles. So I gravitated into that role, although I still was paid as a sales rep for probably three or four years. I would spend Fridays and Saturdays with Leo, just working with him in the merchandising and sales part of it.
INTERVIEWER: So you were becoming a kind of sales manager.
KINCAID: Yes, and then Leo moved back to Kentucky, where he was from, and I took a little bit more of an active role in the business in ’78, I guess. He moved back to Louisville in the late ’70s, and I took on more day-to-day responsibility because he was kind of removed at that point.
INTERVIEWER: He had health problems?
KINCAID: No, he just had family back in Louisville, and he was ready to go back home. So I kind of gravitated into that role.
INTERVIEWER: So you got involved in product development and all that?
INTERVIEWER: Describe a little bit of your history in that role. Were you officially named sales manager?
KINCAID: Yes, they called me something just because I had to have a title, and I think I was a sales manager or VP of sales or something like that. At first, Leo was still giving us some direction on what kind of furniture he thought we should be producing. We also did it as a group – my brothers and I, my father and Leo. We all decided the direction to take. It wasn’t just me making these decisions; it was a combination of folks.
But I remember one of the things that we did early on. During premarket we were visited by a famous retailer up in New York/New Jersey. They didn’t like what we were coming out with at market. The buyer said, “Well, this is no good. What you need to do is make a solid cherry, kind of like Crescent.” Crescent was an 18th century manufacturer over in Tennessee.
And I said, “Well, I just don’t think we can compete.” He said, “Well, it’ll be a little bit more money, but as long as you can supply it, we’ll buy it.” So at premarket that day, we changed directions. We scrapped everything we’d been working on for six months, and I went out the next two days and got catalogs around Hickory and Lenoir and came back. We didn’t have a designer back then. We just did it with our plant people.
We whipped out these catalogs, and I sat there, and I said, “We want to make this dresser, and this bed, and this chair, like this guy, and this and this guy.” There were about six different manufacturers. We had all our manufacturing guys together and said, “We want to make a group of furniture that’s solid cherry and with this piece and this piece. And we have to do it in 3 and a half weeks. A full collection: bedroom, dining room and occasional.” And we did it. And that collection we named Cherry Mountain, and it went on to become the best-selling group in the history of the company. We’re still making the fourth version of that same group.
INTERVIEWER: That’s a real example of flexibility and ability to turn on a dime. You were still just doing standard cuttings back in those days, right?
KINCAID: Yes, I did the production planning too. I remember we used to always want to produce as many pieces as possible. If we had less than – I’m trying to think – if we had less than 500 dressers, my father would get upset with me because the larger the cutting, the more efficient you are, of course, so you make more money. So I put in the production runs. Of course, today you make 25s and 50s. In those days, you made 500 and 1,000 pieces.
INTERVIEWER: You were looking for thousands of pieces at a time for the production efficiencies.
KINCAID: Right, and that’s changed too, because we’ve been forced to become more efficient. A lot of that’s technology, computer-aided machinery and just-in-time manufacturing systems. We can make 50 today and be profitable, whereas 30 years ago, we could make 300 and be profitable. So we’ve had to change a lot of the thinking.
INTERVIEWER: Was your dad essentially keeping up with all the new technology back in the plant? Did any of your other brothers or family members get involved in the production end of Kincaid?
KINCAID: My father primarily. I had an uncle, Uncle Ben, who was a lumber buyer for 50 years, and then had a brother who dealt with purchasing for 40-some years. Everyone kind of found what they wanted to do and stayed there. But my father was very savvy – he understood manufacturing. He understood the cutting of the lumber and the gluing of the lumber and how to produce the furniture. So he was the driving force to make the things bigger and more efficient. He enjoyed that.
INTERVIEWER: And he was designing the lines himself? He was able to keep up with the times, so to speak?
KINCAID: Yes, but back then, it was still pretty elementary. If we had three factories, then all three did exactly the same thing. It was basically a capacity issue. With our product, so much of it is processed through the board. That’s what we do. We’re lumber people as much as furniture people, so how to buy, where to buy, how much to pay for the boards, how to dry them – air dry them, kiln dry – is important. Then how you process it through the factory. Solid-wood furniture is difficult to produce. You have a lot of issues with moisture that you have to control, and then the way you join things together, which you don’t have in veneer furniture.
But he understood all that, and understood what you could and couldn’t do to make our product work in the field. So he was a manufacturing guy. We basically were mass producing solid-wood furniture at a really good price. That was our forte. So our finishes were always adequate. They were not great because we ran the line so fast, and we wanted to get the production out.
My father told a story: I guess it was in the late ’60s that a buyer called him from Philadelphia and said, “Wade, I got that bedroom set you sold me, and it’s beautiful. As a matter of fact, I want to reorder it.” He said, “I want two suites on the finish of the dresser and two the finish of the chest, and two the finish of the bed. Those are all three really good finishes.”
INTERVIEWER: You were running them through the finish rooms pretty quickly.
KINCAID: Yes. My dad and I would go down to the end of the line, and he had a watch. He liked to sit there and count the seconds between pieces going into the box. We would run nightstands, and about every 35 seconds we were putting a piece of furniture in a box. That was a different era, of course.
INTERVIEWER: So we’ve gotten up to maybe the mid-’80s, perhaps, when you were in effect the VP of sales or sales manager. Were you moving toward a dedicated sales force at that point, or were you supervising independent reps?
KINCAID: Well, what happened is, the ownership of our company changed in ’79. We were the first leveraged buyout I’d ever heard of in the furniture industry.
INTERVIEWER: I’d forgotten about that. Had you gotten previous offers?
KINCAID: Every year someone tried to buy our company. I talked to Bob Spilman of Bassett about two years ago, and he said, “I can’t tell you how many times I came down to your place.” And I remember Hamp Powell from Lane coming down. Everybody wanted to buy Kincaid because we always had big backlogs. We were a pretty profitable, small, niche company. So Ethan Allen tried to buy us. Everybody wanted to buy us at that point. But my father was 70 years old, and he had 10 children, and he had brothers and sisters working at the business and never paid a dividend. And a lot of them at that point didn’t work in the business. They were just shareholders. So my father was trying to figure out a way to get his estate in better shape, and so he met... I forget that guy’s name, but he put my father in touch with some people who do buyouts, and it was interesting. The gentleman who was negotiating the deal was Erskine Bowles. You know who Erskine Bowles is today?
INTERVIEWER: Indeed. He worked as chief of staff in the Clinton White House, later became president of the University of North Carolina system, and was recently named by President Obama as co-chair of a commission to recommend how to reduce the federal deficit, I believe.
KINCAID: Erskine had just started his own company, Bowles Hollowell, in Charlotte. He was an investment banker, and he’d just come from Wall Street. So he put together a proposal to sell our company to an investment group, but it just didn’t click. So I told my dad, “I’m not going to work for these guys.” Our personalities just didn’t jive. So he said, “Well, let’s just wait on it.” So about six weeks later, we met Ted Forstmann from Forstmann Little. And at that point, they had never done a deal, and they had a bunch of money, and so they were under a little bit of pressure, with some of their investors saying, “When are you guys gonna do a deal?” And they said, “We’re waiting for the right deal to come along.”
So we hooked up with them, and we just liked them. My dad liked it because they didn’t want anything to do with the business directly. They just wanted the family to keep making money. We retained a pretty good portion of the stock, and the people that wanted to stay on with the business stayed, and the ones that didn’t want to stay, they got their money and did something else. But we were the first company that Forstmann Little bought, and they went on to become, about six years later, bigger than KKR back then. They were plotting to buy some other bigger companies. And they’ve done like 15 deals since then.
INTERVIEWER: Were they a New York-based investment bank?
KINCAID: It was a leveraged buyout fund, and they bought and owned Gulfstream Jets, Ziff Davis Publishing, Dr. Pepper…a lot of those kinds of companies. But the deal was good for our company because they gave us the resources we needed to grow after we did the leveraged buyout in 1979.
In ’83, it was time for them to get the equity out of the company. They wanted to go public with the company. At that point my dad was 75. They had promoted me to executive vice president in ’81 or so. My dad, he loved the furniture business, but he didn’t like the Wall Street accounting part of the thing. He just didn’t want to deal with it. So I kind of, by default, was the guy that had to go to New York and talk to the investment people.
INTERVIEWER: You had to become the money man.
KINCAID: I really was. Early on, I said, “I don’t know what I’m doing.” So I went to the University of Virginia for one of those three-week seminars on finance. That helped me a lot to understand kind of what I was doing. I had all these courses in school – in college, but I didn’t pay a lot of attention to them. I had other things on my mind.
INTERVIEWER: Accounting and finance just wasn’t something that excited you at that point.
KINCAID: That’s right.
INTERVIEWER: The company hadn’t had any trouble growing previous to ’79, right? I guess you needed to be larger because of the backlog.
KINCAID: We needed to be larger, but the main thing, the thing that drove the sale of the company, was an exit plan for my father’s family to get out of the business, basically.
INTERVIEWER: That’s what the Broyhills had to do too.
KINCAID: Same thing.
INTERVIEWER: I think it’s typical of family-owned businesses with a lot of kids involved, a lot of cousins, uncles, and aunts. They all have different ideas.
KINCAID: This guy’s got five shares; this guy’s got 10 shares. And so it was just a way ... My dad, at that point, was 70 years old, so he didn’t want to go in debt to buy everybody out. That just wasn’t his way; he didn’t believe in debt. He just wanted to stay and run the business, and other people could move on. So we did that, and that was a good relationship. And I remember... I mean, I’m just a country boy. I still am. But Forstmann had some little folks as investors, people like Roger Penske and Eli Broad and other people that I’d heard of. I had to go up there I guess every quarter and do our meetings. But by this time, we were getting pretty successful, and we would have the Kincaid shareholders meeting at the 21 Club in New York.
INTERVIEWER: That wasn’t a country-boy place.
KINCAID: I know, I know. Anyway, we did that. And then in ’83, they wanted to have an exit plan to get their investment out of the business. So we did an initial public offering. And that’s when they made me president, because at that point my dad was maybe 75, and he just felt like it’d be better for somebody my age to be president, doing the road shows and selling the stock.
INTERVIEWER: So he was chairman then, I assume.
KINCAID: Yes, he was chairman of the board.
INTERVIEWER: Did this completely change your business orientation? You’re no longer just a little niche player, and you’re under pressure to show growth and profits quarter by quarter and things like that. Wasn’t that a complete change for you and for the company as a whole?
KINCAID: It was. And all of it kind of came through me, so a lot of my other family members and employees, they didn’t really realize all that was happening because their world didn’t change. So I was delegated to be the person to communicate with the people at Forstmann, and then all the shareholders after we did the public offering. That was very successful. We were sold, and we developed our own board of directors and built a new factory and continued expanding. Through that whole period of time there, we were growing probably 15 percent per year. We were making 7 percent, 8 percent, 9 percent operating profit every year and being very successful. In ’85, we did a secondary stock offering, and Forstmann Little took their money out of the company completely at that point. They completed their exit strategy. But they were happy. They invested $17 million and sold it for $55 million. So that was pretty good.
INTERVIEWER: In four years, that’s not a bad return. But it worked out from your standpoint, too.
KINCAID: It did. It was good for the folks who stayed in the company, and then we were a public company from ’83 until ’89. And in 1987-88, that was when the industry was really consolidating and people were buying everybody. If you look back at when ...
INTERVIEWER: You constantly had people knocking at your door?
KINCAID: People were buying everybody else all over the place. We kept turning down offers. In 1987, LADD Furniture wanted to buy us, and we fought them off. I met with a gentleman from LADD through an investment banker, and he said, “We’d like to buy your company.” I said, “Our company is not for sale.” About a week later, on a Sunday afternoon, he called me and said, “If you don’t accept our offer, we’re going to make it public Wednesday at some time.” And he wrote me a letter...
INTERVIEWER: So you would be the target of a hostile takeover.
KINCAID: Yes. Kincaid stock was trading at about $7, $8 a share at that point. And we got the board of directors together... At the time it was kind of funny because my father, every year, took all the supervisors and their wives and kids to Myrtle Beach for the weekend – Easter weekend. He’d give them $50 for gas money, and we’d rent a motel down there, and they could do what they wanted to do. And I’d just come back from the Myrtle Beach trip, and I got the board together, and I said, “We’re just not going to sell the company.” And the board was very supportive. They said, “Well, do what you think is best.”
But anyway, LADD made a public offer to buy the company for $15 a share. So the stock went from $9 to $15. It was actually $16 because people thought we’d negotiated something and would sell it. I called my buddy Ted Forstmann up in New York, and I said, “I’ve got these guys that want to buy us, and we don’t want to sell.” And he introduced me to Goldman Sachs. At that point, they were still the premiere investment bank company. They did all the Forstmann Little work. They said, “We’ll do this as a favor to Ted Forstmann. We’ll fight these guys off.”
And so they brought in their attorney. I’ll never forget this. I met with these guys for about two hours, and they said, “We can defend this. We can put poison pills in the company’s by-laws. It’s what we do.” And I said, “OK. How much is it going to cost?” He said, “Well, we need a retainer today for $450,000, and we don’t know how much it will cost, but it will probably be in the millions.” So I said, “Excuse me.” I called my dad, and I said, “Dad, I don’t know about this.” I said, “We can do this, but you need to wire me some money if you want to do it.” And he and I talked for a while, and he said, “Well, let’s do it.” So he wired me the money, and the next day I went over there and gave the guys a check for $450,000. But anyway, through all of that time, LADD went ahead and was buying the stock. But we fought them off, and we had people come in and do different evaluations stating that their offer was not high enough, and the board agreed to all that stuff.
I was going back and forth to New York every week for six months. That’s all I was doing, and it was awful. And at that point, we’d already spent over $2.5 million, I guess, on all this stuff, and it was on the front page of The Wall Street Journal and Furniture/Today a lot. It was almost a daily happening. One time after I’d been to New York and had just gotten off the plane in Charlotte, our CFO called me. He said, “Have you ever heard of a company called Nortek?” I said, “I think so. They own Stanley Furniture.”
So I called my buddy at Stanley, Albert Prillaman. I said, “Albert, what’s up with this deal?” Nortek had made a tender offer for $18 a share. LADD had never made a formal tender offer, but Nortek had made a tender offer for $18 a share. They said, “We think you’d be a good fit to what we do here. Join Stanley, and we can do some great things together.” I said, “I ain’t gonna do any of that.”
The guy that owned Nortek, or maybe he was the CEO, was a guy named Ralph Papitto from Rhode Island. So I called the guy, and I said, “Papitto, I don’t know you from Adam. I’ll tell you one thing. You may buy this company, but I won’t be here. None of my family members will be there, and probably half the reps will go with me. But you’re welcome to buy it if you want to buy it on those terms.” And he called our bluff. He kept going ahead with the deal.
We had a stockholder who had an investment fund in New York, and he was an investor in La-Z-Boy. So he told me one day, “You need to sell this company to La-Z-Boy.” At that time, the stock was still trading at about $18, $19 a share, so all of my family members thought it was great, except me and my dad, because if you had stock, it had doubled. So they were congratulating us, but we said, “We don’t want to do this.”
So anyway, I met with Pat Norton, who I think was La-Z-Boy’s vice president at the time, and I’ll never forget it. I went up to Monroe, Michigan, to La-Z-Boy headquarters, and sat there with Pat and Charles Knabusch, who was president at that time, and Fritz Jackson, the CFO. We sat there, with this big book that Goldman Sachs had put together about the company, and talked. I’d been there for about two hours, and all of a sudden, Charles – Charles was a great guy, but he had his priorities in life – said, “Oh, excuse me. I promised to take my daughter to lunch today.” So he got up and left. And Pat said, “Just keep going. That’s just Charles for you. He loves everything.”
But anyway, we had good meetings there and after I came back, I met with Charles and Pat at the High Point Market in October. Pat had a big suite at the Holiday Inn on Main Street in downtown High Point, right across from the main market building. So I went there on Sunday afternoon; this would have been in 1987. I said, “You’ve got to make a pre-emptive offer. If you make a pre-emptive offer, the board of directors will take it, and we’ll become part of the La-Z-Boy company.” I said, “I’m not going to tell you the company’s worth this, but they think you’ve got to offer $20 a share for the company, and our board will approve it. And Nortek will go away, LADD will go away, and we’ll get back in the furniture business.” I looked at Pat, and I said, “I’ll work as long as you want me to work.” And so we agreed to that.
It was October 18th, and Charles said, “Well, I’m gonna fly back to Michigan in the morning, and we’ll have a board meeting at 10 a.m., and we’ll approve it and announce it.” That was because during market, when people came in our showroom, they didn’t want to talk about the new furniture on display. It was always who were we going to sell to, LADD or Nortek or La-Z-Boy? That’s all they were talking about. We wanted to put an end to this thing.
But by around 1 p.m. the next day, a Monday, nobody had heard anything and we didn’t know what was happening. So I called Charles Knabusch. I said, “Charles, I stayed up all night. I drove to Charlotte, and we worked all night long on press releases and all the SEC reporting. And Charles, I’ve not heard from you.” He said, “You don’t know what’s happening with the stock market?” I said, “I’ve got no idea.” He said, “It’s down 500 points.” And that’s when the Dow was at 2,500. That was Black Monday, if you remember.
And I said, “What does that mean?” He said, “Well, right now, La-Z-Boy’s stock is like $11. Kincaid’s like $7. We’re not going to buy anybody today.” I said, “Oh, no.” Nearly every stock had dropped about 30 to 35 percent.
And all of a sudden I started getting lawsuits because we had turned down $15 from LADD, and we’d turned down $18 from Nortek, and now the stock was like $8. And so the shareholders wanted to sue us. So we got involved in all that. I remember I was at a law firm in Charlotte, and they had guys there that had a class action lawsuit against us, and guys from Nortek and somebody else. Nine lawyers around this table and me. And I’m sitting there thinking, “This is crazy.” Anyway, I called Pat back, and it took us about three more months to finally put the deal together with La-Z-Boy. At that point, all the lawsuits went away. So we’ve been a part of La-Z-Boy since 1989.
INTERVIEWER: Were you the first case goods company that La-Z-Boy acquired? Had they acquired Hammary at that point?
KINCAID: They had just acquired Hammary. As a matter of fact, at Kincaid we were looking to buy Hammary as well because they were our next-door neighbors. So we were looking at buying them, too.
INTERVIEWER: You haven’t mentioned that previously. How did that transpire?
KINCAID: Well, we were just looking at them because we knew they were for sale. They were owned by U.S. Industries. La-Z-Boy had just bought Burris Furniture in Lincolnton, so they were looking for an occasional company. We looked at Hammary. We didn’t make an offer, but we knew that they wanted to sell the company. And La-Z-Boy bought them and us mostly, I think, because Pat came from Ethan Allen. Pat had spent most of his career up to that point at Ethan Allen. He understood solid wood, he understood case goods, and he saw the potential to broaden La-Z-Boy’s distribution. So he was really the main driver for buying the two companies.
So if you look at, we went from being a family-owned private business to a leveraged buyout to a public company to a subsidiary. We’ve been everything at Kincaid – every form of ownership you could have.
INTERVIEWER: But despite all that, it’s been a relatively stable, focused company. There hasn’t been a lot of turmoil in the company in any way, has there?
KINCAID: There really hasn’t. And that goes back, I think, to the fact that we’ve only had two presidents: my father and me. And whether you think that’s good or bad, it’s got some real advantages. It’s also got some disadvantages, but I think the big advantage is that it gives you a certain amount of stability. You don’t have somebody new coming in every four, five years and deciding you need to go in a different direction. The people at Kincaid, they know where we’re going and how we’re going to get there, and what we’re going to be producing and who we’re going to sell it to. So I think that has been a real benefit to the company. Not that I think having more outside people run it probably would have been a disadvantage, but I think our steady focus has been a real advantage for us.
INTERVIEWER: As you said, while you were going through some of these ownership transitions, you were, in effect, out of the furniture business personally. Who was running the company at that point? How did you manage to keep things on a relatively even keel within the company?
KINCAID: We’ve always had really good people. We’ve had really good manufacturing people, and I didn’t need to manage that. We had people that could run the factories and manage that. And luckily, selling the furniture was never a real big issue. The real issue basically was, could we make enough of the furniture?
So we kept growing, and we had really strong growth all the way till the last couple of years. And in 2000, we bought Alexvale Furniture – Kincaid did. And we were probably among the first three or four furniture companies to develop a gallery program. Ethan Allen started in-store galleries. Then Paul Broyhill was the guy who developed moderately priced furniture for Broyhill galleries. And then we were right after them, and then Thomasville came in about the same time we did. So we’ve always had proprietary distribution, and we’ve always felt that our furniture needs to be shown in some kind of a setting that’s different from the rest of the floor, and the gallery enabled us to do that. So the galleries have really fueled the growth over these last 30 years.
INTERVIEWER: Did you meet some resistance to that among retailers? Was it a hard sell?
KINCAID: It was initially. They didn’t want to “give up” the square footage to a manufacturer. The main thing for the first store owners who were willing to try galleries was they saw that the gallery became the most attractive part of the store. That’s because back in the ’70s and ’80s, they mostly just lined it up. If you went in a furniture store, here’s a row of bedrooms, here’s a row of dining rooms. That’s what it was. And what the galleries enabled them to do was to take a portion of the store and decorate it and light it. So it became the centerpiece of the store. Therefore, it was very successful.
So our galleries have driven our growth. And that changed a lot of our merchandising, because if you’re just making suites and selling to everybody, that’s one thing, but when you have a dedicated gallery of 5,000 square feet, then you need to have a broad enough product range to fill those four walls. And so that changed the merchandising. Instead of making 500 of the same thing, we were forced to make more styles so that we had a lot more looks to fill the gallery and attract the consumer.
INTERVIEWER: You had to hire designers and display experts, so it changed the whole approach from a manufacturing standpoint too.
KINCAID: True. Also from an inventory standpoint. All of a sudden we had to give them better support. We have 5,000 square feet; they can’t buy a 90-day supply of everything in there. So we became the warehouse for a lot of the dealers.
INTERVIEWER: Did you pretty much have national distribution by the ’80s?
KINCAID: Yes, we were pretty much national at that point. I think the one thing that we were able to do with the ownership changes, when we did the secondary stock offering, was we raised an additional $15 million that we put back in the company and built another factory – another major case goods factory. So at that point, in the mid-’80s, we had a state-of-the-art dining room chair factory. We were making beautiful Queen Anne chairs and those kinds of chairs – making 1,200 a day. We had a table factory that made dining room tables – solid-wood tables. We had a plant that made occasional furniture and two big bedroom factories as well. So it had grown to be a lot of production, a lot of people at that point.
INTERVIEWER: Were you the person that drove the move toward galleries? How did that come about?
KINCAID: Leo did that. Leo Kahn.
INTERVIEWER: Oh, he was still active.
KINCAID: He was there when we first got them started.
INTERVIEWER: So that would have been the late ’70s.
KINCAID: That’s correct.
INTERVIEWER: You’ve been talking essentially about in-store galleries, correct? You weren’t trying to open Kincaid stores.
KINCAID: Not at that point. We did the galleries, and we put them in our best customers’ stores, so it was not freestanding gallery stores at that point. It was revolutionary in the fact that we had more square footage, but we didn’t necessarily open up a lot of new dealers with it because our people that had success with the line were pretty willing to give us more square footage. So that was really not as difficult a sell as it might have been. So that fueled our growth. And then we did develop our own freestanding stores in 2000. And that’s when we bought Alexvale Furniture as an upholstery source.
INTERVIEWER: You needed the upholstery.
KINCAID: We needed upholstery, and we decided that acquiring a good company was a lot easier than launching something we had no experience with.
INTERVIEWER: Outline what’s happened to the business since then.
KINCAID: Well, what’s happened, basically since 2002, is that imports certainly have affected the case goods business. In 2001, we had 2,200 employees at Kincaid. Today we have one-fourth of that. I think what’s happened is that imports changed the whole value proposition for how much a consumer is willing to pay for furniture. That same chair that we were producing – that Queen Anne chair we were selling for $225 ... I remember it like it was yesterday. I recently saw a chair, I think it was from Universal, that was $75. And it had carvings on it, same kind of stuff. And so it just changed the whole world we live in today.
So what’s happened over the last eight years, as we’ve had deflation in the industry, it’s been tougher to distribute our goods. And what’s happened to the Kincaid line is we have become almost a high-end line in a lot of stores. We used to be below Thomasville in price, or if the store had Drexel, we were below that. But today, there’s a lot more below us than above us, so we’ve had to change the philosophy of the company. We’ve had to develop more fashionable styles and finishes. If we’re going to be considered high-end, which we’re really not, but if somebody’s going to spend $3,000 for a bedroom set, it’s got to be pretty darn nice today. So that’s
INTERVIEWER: Have you actually gone into some veneer work?
KINCAID: Not at Kincaid. We have not.
INTERVIEWER: But La-Z-Boy case goods are a different story.
KINCAID: Right. It’s kind of ironic. We fought off LADD back in the ’80s, and in 2000, La-Z-Boy bought LADD, and with that they bought Pennsylvania House, American Drew, Lea and some other companies. Pat Norton flew down and wanted me to run all the case goods companies. I said, “Pat, I’m happy doing what I’m doing at Kincaid. I don’t have any aspirations to do anything other than just this.” He explained to me why he wanted me to do it, and I said, “OK, I’ll do it.” I came down to High Point; at that point, the La-Z-Boy offices were over on the Grandover resort property.
INTERVIEWER: LADD used to be there.
KINCAID: Yes. So all those LADD companies now became La-Z-Boy companies, and they put me over most of them. So I had the first meeting up there, and I said, “How many people here were working here in 1987?” And I think eight people raised their hands. I said, “Do you all remember what happened? That’s when LADD tried to buy Kincaid Furniture, and we fought it off. I’m here for revenge. You eight people, stand up and get the hell out of here … No, I’m just kidding.”
INTERVIEWER: That was a great ice-breaker!
KINCAID: It was great at that point.
INTERVIEWER: What did Pat say to convince you that you should run La-Z-Boy case goods? What was his argument?
KINCAID: He just had a plan to create different groups within the overall company. He wanted me to run the case goods companies, and Rod England – they had bought England, a big upholstery company – would run the upholstery companies, and Kurt Darrow, our CEO today, would run the La-Z-Boy part of the company, essentially the recliner business. So that was kind of a three-tiered approach to running La-Z-Boy.
INTERVIEWER: So you moved up into a different level of management, although you were still president of Kincaid.
KINCAID: Still am. Yes.
INTERVIEWER: What percent of your time can you actually spend now running Kincaid, since you’ve got all these other companies?
KINCAID: Well, we have fewer companies now than we did back then. We realized several years ago that we had too many companies, and we could not efficiently run all of these and do a good job. So we started a process, about three years ago, of selling companies or merging them or closing them down. So when you look at the companies we bought that were LADD companies, there are only two left, American Drew and Lea. We sold American of Martinsville, we sold Pennsylvania House we sold Clayton Marcus, and we sold Pilliod.
INTERVIEWER: And Daystrom, I believe, was closed down.
KINCAID: Daystrom was closed down about that same time. So what we’ve ended up with is kind of a core of companies that complement each other. It didn’t make sense to have both Pennsylvania House and Kincaid.
INTERVIEWER: Just too similar, with both companies doing solid cherry?
KINCAID: Yes. I’d go to the sales meetings, and it just got confusing because you went after the same consumer. You may have different dealers, but you go after the same consumer. So we realized that we needed to get the companies down and keep the companies that complement each other, and that’s what we’ve done. If you look at the La-Z-Boy companies today, there’s only I think maybe six or seven brands, but everybody’s pretty much got their own little niche, and it’s been much better to manage.
INTERVIEWER: Do a brief review of the companies that you’re now managing, and what their niche is and how you’re approaching the market.
KINCAID: Well, Kincaid still is the solid-wood specialist. It’s still the largest solid- wood company in the industry. We still make about half of our products domestically. We import the other half. But we’ve still got two case goods factories operating here in North Carolina. I think more than ever that was a good strategy. It would have been very easy in the last seven or eight years to close the factories and move everything to Asia.
Manufacturing is very difficult in general. We have issues with all the things you do with manufacturing in the U.S., but we think with all the uncertainty out there today, and particularly since solid wood is a little different animal, we need domestic manufacturing. There are hundreds of people that can make veneer furniture. There are very few that can make good solid-wood furniture, in this country or anywhere else. So Kincaid is still the solid-wood specialist, and mainly in the upper-medium price points.
American Drew is the more fashion-forward company. They’ll do Jessica McClintock, Bob Mackie, and a little bit more of the moderate-priced veneer furniture with a lot more of a look about it.
Lea, when I first took them over, had master bedrooms. It didn’t make sense to have master bedrooms at Lea and master bedrooms at American Drew, so today Lea is nothing but youth furniture. It’s a great product line; we just launched Nickelodeon (licensed line) last year, and that’s doing really well for us.
Hammary is an occasional line today, and we’ve just worked them in with American Drew and Lea, and we have one big case goods company that’s got master bedroom, youth and occasional, so we’re well-positioned to compete with anybody out there today.
Then we have a new division we started two years ago called La-Z-Boy Hospitality, and that’s basically going after the contract market today. Also, at this office, we run La-Z-Boy Global, and that’s our sourcing and logistics arm in Asia that manages imports for all the companies
INTERVIEWER: Kincaid itself has never allied with any well-known designer or anything like that, has it? You haven’t seen the need to do that because your niche is so unique, perhaps?
KINCAID: Well, we’ve done a few. The first one and the best one – well, I wouldn’t say the best one. The first and the most fun was Ducks Unlimited. You remember Ducks Unlimited?
INTERVIEWER: Yes, but I hadn’t heard of it in recent years, so I thought it went away.
KINCAID: It did go away.
INTERVIEWER: How did that happen? Give us a brief history.
KINCAID: I met a guy, and he’d just come from Sara Lee. He was involved in marketing, and had the contacts with Ducks Unlimited. And they were licensing products at that point like duck calls and hunting jackets. And they had just launched a Ducks Unlimited Chevrolet. I think it was a truck or something. And they were exploring getting into home furnishings. So we met with the folks, and it just sounded good to me. It just sounded like a conservation story. They were buying wetlands, and it just kind of fit with solid wood and nature.
I’ll never forget, we were strategizing one day about how to launch it, and it was probably the most fun launch in the industry, I think, probably until SpongeBob SquarePants. One of my brothers said, “You should get the Peabody ducks from Memphis to come for the grand opening.” And so I called out there and talked to a guy, and I’d never been to the Peabody Hotel, but every day they have these mallard ducks that come on the elevator, and they roll out a red carpet and they play John Philip Sousa marches. These ducks waddle down to this big fountain in the lobby of the Peabody Hotel, and they stay there all day. And hundreds of people come to watch these ducks do this every morning. In the afternoon, they go back. And so it’s become a real draw.
INTERVIEWER: Kind of like the changing of the guard at Buckingham Palace.
KINCAID: It is. So I called the guy at the Peabody. He said, “We’d love to come to the introduction of the line at the High Point Market.” So they flew these ducks to High Point, and they put them up in first class in this airplane in these cages.
And we bought this big fountain and put it in our showroom. And for our opening day, we marched these ducks in there, and it was just wild. We had hundreds of people lined up. We also had duck decoy carvers and wildlife artists in the showroom. It was a big deal.
We also did another collection with Thomas Kinkade, the painter, and we got La-Z-Boy also involved with that. So La-Z-Boy and Kincaid did that in conjunction, and that was pretty good.
And then the last one we did was Laura Ashley, and we’ve had that for 11 years. But we don’t do a lot of licensed lines today. We just don’t.
INTERVIEWER: So the case goods segment of La-Z-Boy is about what percentage of total sales now?
KINCAID: Well, we’re a public company. We released earnings about two months ago, and we’re probably 20 to 24 percent. Less than 25 percent of the total sales.
INTERVIEWER: And has that held relatively stable?
KINCAID: No, it’s actually shrunk some. By design, the upholstery business has actually grown and the case goods have shrunk. As I’ve noted, we’ve sold a lot of companies. When we had Pennsylvania House, they certainly added to the case goods total. American of Martinsville certainly added to it. But by design, we shrunk the case goods business at La-Z-Boy.
INTERVIEWER: I think it was often said in the industry that La-Z-Boy was smart to buy good case goods companies like Kincaid and Hammary, but that they bought the LADD companies at about the worst possible time, just before imports were about ready to really slam bang into the industry.
KINCAID: The timing was OK on Hammary and Kincaid. The purchase of LADD in 2000 ...
INTERVIEWER: That was not the best time to do that.
KINCAID: And they admit that today. They admit that that was not a very good decision on their part. So it’s taken us six or seven years to unwind that and figure out the companies we wanted to go forward with and the ones we didn’t want to go forward with. It’s been an expensive proposition for La-Z-Boy to go through all that, the write-downs and the closing of factories. But it was something we had to do.
INTERVIEWER: So you’re comfortable with being part of a publicly owned company, even though you began as a family-owned company and you’re now running a large segment of a public company. Do you still feel like you’re a furniture manufacturer?
KINCAID: Yes, we do. We really do. I still enjoy the product development side of it. I enjoy looking at the opportunities out there and where we can do some business. Each one of the brands might have the opportunity. I enjoy that more than anything, as long as I’ve got the product development and sales side of it. I was forced to do all the other things, to be honest with you. Manufacturing and the financing and all that was just something I had to do. But yes, I still enjoy it.
INTERVIEWER: Let’s get into the whole global aspect of the business. You mentioned the La-Z-Boy Global division, which is involved with offshore sourcing. What has been your thinking and your strategies as furniture imports have surged over the past decade or so?
KINCAID: Well, most of my thinking was wrong, I guess. I never thought that they could produce furniture over there and compete with us over here. Then I started seeing what they were doing with dining chairs that were shipped knocked down. That’s OK. I got that. But I still thought they never could make full-blown case goods because it costs too much to ship them over here. I was wrong about that. Then I said, “Well, they can do that, but they never can make quality furniture. It’s always going to be cheap-looking furniture.” And I was wrong about that. So I wasn’t right about a lot of that, to be honest with you.
INTERVIEWER: So you’ve had to make some major adjustments in your thinking and in your practice of making and selling furniture.
KINCAID: Yes. So what we’ve done, I think, to this point, is we still believe in domestic manufacturing. We think having that as part of our strategy is good for a number of reasons. So as we look at wood furniture product, we ask, number 1, should it be made out of solid wood or not? And you pretty much can tell right off if it should or shouldn’t. And, number 2, should that be made domestically or is that something you should import?
And we’ve done this long enough to know. We know that if we’re doing a dining room chair or table, we need to import something that’s very labor-intensive, and that can be disassembled and shipped. We can’t compete in this country. We can compete if you’re shipping a 60-inch dresser that’s got pretty much straight lines. We can do that and be very competitive in this country. So a lot of it depends upon what the product is. And styles tell you what to do. You’d import it if you want any kind of carvings on the furniture. So it’s just looking at what needs to be done.
INTERVIEWER: Some people say they think some of the production that’s gone offshore might be tending to come back into the U.S. or at least into North America. Do you see that? Has it happened? Might it happen?
KINCAID: You know, I think it’s tried to happen, and I think it’s really happened to some extent. It started trying to happen when container rates jumped to $5,000 per container. That changed the value of imports. If a container’s $2,500, that’s one thing. When it’s $5,000 or $4,000, it changes the equation. But I think what happened is people tried to do more domestically. That’s when business got really lousy. If you look at two years ago, that’s when all of a sudden furniture sales just started taking a dive. I think if business had stayed good, you’d have seen more domestic manufacturing happen at that point.
And today, you do hear stories about people wanting to do more domestically. And the issue is how you do that. Most furniture factories have been closed over the last 10 years. They’ve sold the equipment off. They’ve auctioned it off. Those buildings or warehouses are now something else. I don’t know how many people would be willing to invest in a brand new case goods factory in the U.S. today. Very few, I would think.
INTERVIEWER: And you’d have workforce issues too, I think.
KINCAID: Yes, workforce and just getting the permits. I know what we deal with. That’s another thing that’s really changed – government compliance. We’ve got two people at just Kincaid, and all they do is basically respond to regulations and rules from EPA to OSHA to do this and do that, and all the things coming out of Washington today. It’s phenomenal the amount of work you’ve got to do to satisfy the government regulations. Today we test every container that comes in; we have to test for lead paint. The Lacey Act just got enacted, and we have to have a chain of custody and supply for all the lumber we use, whether we import it or make it domestically. There are clean-air compliance issues, formaldehyde emissions, and there are new rules coming in this week on boiler emissions. So just every time you turn around, it’s almost like the government is trying to ... not exactly hinder you, but there’s a lot of regulation in this country that they don’t have in other countries.
INTERVIEWER: Well, just having supply chains stretching thousands of miles, with all the possible disruptions, unforeseeable price hikes, port issues and all those kinds of things leaves the industry in a very vulnerable situation.
KINCAID: Yes, I agree with that.
INTERVIEWER: Did Kincaid itself ever consider opening a West Coast plant or anything like that?
KINCAID: Another one of my ill-conceived ideas was when we realized we were not competitive on chair manufacturing. My brother and I went to Portugal for three weeks to open up a chair manufacturing company in Portugal. They had raw materials and labor supply, and so I went over there and watched these people, and we invested some money in it. The chairs were beautiful, but after we got back home, they had some issues with the way they dried the lumber, which they had assured me was dried properly. Anyway, that didn’t work. So we tried to do things around the country that made some sense, but mostly we’ve been located just in western North Carolina.
INTERVIEWER: Let me ask you a few more questions about your own career. Are you at the stage where you’re beginning to think about retirement?
KINCAID: Yes, I’m thinking about it, but I don’t want to leave in a valley. Our industry is nothing but peaks and valleys, if you look back. My father always told me – I’d always get very upset when times got tough – “Son, don’t worry about it. You’re gonna have six or seven good years. Then you’re gonna have two bad years. Then you’re gonna have six or seven more good years.” And if you look back over his career, that’s what had happened. Everything would build up to a certain point, and then it got corrected, then it came back. I’m 61, so I’m not ready to hang it up at this point, but I’d like for the industry to get a little more solid footing, and our companies to really do better than we’re doing. We’re doing pretty good. La-Z-Boy’s been the most profitable company the last year in the industry. So we’re proud of that. But it’s still very challenging.
INTERVIEWER: When you were strictly with Kincaid, there must have been some periods when you had to layoff some of your people, even though you mentioned a 50-hour work week guarantee at one point.
KINCAID: We never laid off anyone until 2001 when the imports really flooded in.
INTERVIEWER: That’s a long run.
KINCAID: I remember in ’73 ... We always had the philosophy that we could develop a good enough value that people would buy it. And it’s hard to do that today because with the imports, there’s no solid way to determine how much something really costs. If you spend $200 for a five-piece bedroom suite, there’s no rhyme or reason to that cost. But in 1973, we had a little recession, and we worked on a pine group. I’ll never forget this. We brought it to market. It was honey pine. Williams Furniture had a big pine suite, but we brought one a little bit smaller. And we had a dresser, a hutch mirror, a chest and a headboard. Solid pine. We sold it for $199, and we sold 3,000 suites. So I went back home, and my dad was in his office. I have an old photograph, and it shows a foot-tall pile of orders that I put on my dad’s desk. So we had production to do. The lumber suppliers loved us. Everybody loved us. Our employees loved us. And we ran that for probably a year until business came back. But here’s the thing: We made no money on it. We’ve always been able to create outstanding value to drive business, but it’s hard to do that today because there’s so much furniture, so many different people. There’s just more people to compete with today.
INTERVIEWER: Plus there are fewer retailers to sell to.
KINCAID: Exactly right. If you look at the top 25 retailers, there’s only about six or seven that we can sell. There’s Ashley, Wal-Mart, Ethan Allen, and Kincaid can’t sell those folks.
INTERVIEWER: But back in your Kincaid days, when you were looking at a downturn, you specifically designed furniture to keep things going, and you were willing to take little or no profit on it, but the plant was continuing to run. So that was your strategy.
KINCAID: Every dip we had until 2001, we did exactly the same thing. And it always worked for us.
INTERVIEWER: I guess most companies wouldn’t be willing to run a collection without making any money on it nowadays.
KINCAID: Probably not. It’s a lot easier being a private company.
INTERVIEWER: If you proposed that to the La-Z-Boy board, somehow I don’t think the reaction would be enthusiastic. It would keep the plant open, maybe, but it wouldn’t get any enthusiasm.
KINCAID: Well, we’ve always wanted to do what was best for the employees. We wanted to be sure that they had a full paycheck every week, and so we’ve always had a really good relationship with our employees. Today we’ve got third- and fourth-generation people working in the factory. I go through there and see people where I knew their grandfather. That’s something special.
INTERVIEWER: You spend most of your time here in High Point rather than up in Hudson?
KINCAID: It’s about half and half, typically. I still try to travel a little bit and I do call on customers, but I don’t do that as much as I’d like. I still have to go to Michigan to La-Z-Boy’s headquarters in Monroe. I was up there two days last week.
INTERVIEWER: You don’t feel like you’re too scattered or spread out? You can still focus and be a furniture man?
KINCAID: Well, I try.
INTERVIEWER: Let’s talk about some of the people that have been important to you. Of course, you’ve talked about your father and Leo Kahn. Tell me a little bit about Pat Norton. He’s an industry legend. You must have known him long before he tried to convince you to become a La-Z-Boy company.
KINCAID: I knew of him, and I had met him at markets and things. I didn’t really know him. I was very much in awe of him, but he became a real close personal friend of mine. He understood the issues you have in family businesses. I believe now that they had some families there at La-Z-Boy that he had to work around, so he could empathize with me when I had to deal with family issues at Kincaid. He was very supportive. He understood the solid-wood story, the styling and the customer base. He was just a great supporter.
INTERVIEWER: So he was able to mentor you effectively as you were entering the public arena, I assume.
INTERVIEWER: Describe some of the sea of changes that were involved in moving from a relatively small family-owned company to now being part of a relatively huge furniture conglomerate? That’s a heck of a change. I assume everything has changed as far as your management style.
KINCAID: It has. I guess we’ve just been lucky to have a lot of good people around us. Some things are basic. We’re still making and selling furniture, and that’s pretty basic. That really has not changed a lot. It’s a lot of fluff that’s changed, to be honest with you. So if you do those fundamental things right, the rest of it takes care of itself. If you’re making money, your stockholders, they think you’re pretty smart. They don’t bother you too much. But since imports, it’s certainly been more challenging.
But La-Z-Boy’s philosophy even today is very much like ours always was at Kincaid. Unlike other large companies – this is one thing that I talked to Pat about at the beginning – La-Z-Boy has furniture people running a furniture company. You don’t have an exit strategy – you’re not looking to sell La-Z-Boy in order to recoup your investment – and you’re not trying to do something other than just make furniture and sell furniture every day of the week. A lot of companies that have come in – I won’t mention them by name – but they’re not furniture people. They’re people that come in to make a lot of money and then go on to do something else. That’s just not the philosophy of La-Z-Boy. So that’s why we had such a good relationship, I guess.
INTERVIEWER: I think furniture must have looked like pretty easy pickings to a lot of outsiders over the decades. Many have tried to come into the industry, but very few have stayed because it’s a lot more difficult than it looks.
KINCAID: It is. It’s still a people business, and you have to have a good relationship with your dealer base because a lot of things you bring out are not going to be very successful. You need to have a partner out there who’s going to try it, and when it doesn’t work, he’s going to buy something else from you. So I think it’s still a people business, and there’s still so much furniture and so many furniture companies out there that a retailer can buy from. So you’ve got to give him a reason to buy from you, whether it’s a solid-wood niche or your quality or your service or whatever it is. You’d better have a niche or you don’t have a place today.
INTERVIEWER: Have you ever gotten involved with the La-Z-Boy stores to any great extent? It’s always seemed to me that it’s very hard to be both a manufacturer and a retailer. You’ve been very successful as a manufacturer, but you’ve realized the retailer has to be a part of that success, or you aren’t likely to have any.
KINCAID: That’s right. At Kincaid, we still have about 17 stores – Kincaid freestanding stores. But the La-Z-Boy store network, we do supply them with most of their occasional furniture, so that’s a good customer for Hammary and Kincaid.
INTERVIEWER: Whenever you have a large group of stores, you always have some that aren’t doing very well. La-Z-Boy has had to buy back some of the stores where the individual owners weren’t particularly adept, perhaps. And that’s got to be a headache.
KINCAID: Well, it has been. If you read the financial statements, you can certainly see that. Today we own 70 stores – corporately owned stores. They originally were stores we bought from the Reliable chain up in Baltimore and Washington. Those were really good stores, and still are today. From the Virginia Tidewater to Baltimore and all the way up into New York and Boston – we own pretty much the East Coast today, the stores up there. We have taken over other stores in different markets for various reasons. Maybe the owner was unable to relocate the stores or whatever. But we’ve got an individual running the stores now, and he’s cut the losses in half. He’s done a great job.
INTERVIEWER: Let’s focus a little more on the Kincaid stores you were talking about. You said there were currently 17. Have there been substantially more than that in the past?
KINCAID: No. We got up to about 22 or 23. We realized about three years ago that some of these stores did really, really good when business was really, really good. When business slowed down, they didn’t have the capital structure to withstand a slow time. We made a decision that we were not going to be their bank. Other manufacturers shipped a lot of furniture to their weaker stores and built up big receivables. We elected not to do that.
INTERVIEWER: You decided you’re not in the credit business.
KINCAID: We’re not in the credit business. We’re not in the store business. I didn’t want to take them over because I figured that if the guy who owns the store and is working 60 hours a week can’t run it successfully, how are we going to run it from North Carolina? So we just basically said if you can’t be in the business, you can’t be in the business. We’re not here to bail you out, to give you financial support. So because of that, we lost about seven or eight of stores. But the ones today are doing very good and are successful.
INTERVIEWER: Are they clustered? Where are they?
KINCAID: We do well in Canada, so several are in Canada. We have stores in Alabama and upstate New York. So they’re scattered around. Kentucky’s got a couple of them.
INTERVIEWER: How do you service them? From distribution centers?
KINCAID: We do all of that out of the North Carolina distribution centers. Service has not been an issue.
INTERVIEWER: Have their sales held up fairly well over the past two years?
KINCAID: They have.
INTERVIEWER: So you’re down to the people who really know what they’re doing.
KINCAID: And that’s what it comes down to – the owner/operator. If you’ve got good ones, they can weather the storm. Even some of the ones that were really good were undercapitalized. When money was easy, the banks would lend them a lot of money, but when business started tightening up, credit tightened. And so they got squeezed out.
INTERVIEWER: Do you get into these stores much yourself these days?
KINCAID: No, not really.
INTERVIEWER: Have they changed significantly over the years? Gotten smaller or larger?
INTERVIEWER: They still have both upholstery and case goods?
KINCAID: Yes, they do. We started out with a 15,000-square-foot prototype, and today we have an 8,000- to 10,000-square-foot model.
The thing that we’re really excited about today is the latest generation, which we call a Kincaid Shoppe. It’s basically an in-store gallery. My nephew Max has been really good at developing a new system that makes special-order easy for consumers. We did it with touch-screen computers. If you look at a customer coming into a typical retail store today, if they don’t have what the customer wants on the floor – which most of them don’t today – you have to go get a catalog. And you come back and let them look through the catalog, but you often aren’t sure if the catalog is current or discontinued. So if they find something they want in the catalog and ask, “How much is it?” you have to go back to the office and get a price list, and you’ve got to figure out if it’s up this much or down that much from a wholesale or retail price list. And finally, if you get that far and they ask, “When can I get it?” then you have to go call a rep, and most of them will say eight to 10 weeks.
So if you get through all that, you’re lucky if you can get an order, but that’s what happens today. So we developed this system that’s basically a touch-screen computer. We put it in the stores, and you hit the button for the icon for each collection, and it comes up automatically, and it does two things. We put in the computer the margin the store wants to work on, whether it’s 48 percent or 55 percent or whatever, and all 1,200 case goods pieces are priced quickly and automatically by the computer. And at the same time, it accesses our inventory at the factory. So you tell the consumer, “Here’s a piece. Here’s your price. And it’s in stock.” That's pretty good.
So that’s called a Kincaid Shoppe, and we build that around a smaller footprint of 2,000 square feet. That’s been really successful. We just now had our second market after launching that, and we’ve got about 24 of those in the works. So over the years, Kincaid has evolved from just selling furniture to retailers, to focusing on in-store galleries, to opening freestanding Kincaid stores, and now back to a smaller-footprint, in-store gallery called a Kincaid Shoppe.
INTERVIEWER: So you see more of a future, for now at least, in the in-store galleries rather than in the freestanding stores.
KINCAID: We do. We think the capital requirements and the complexity of running a store are a lot more difficult, so we think we’d much rather be a gallery within a store. It lessens your exposure. Financially, you’re a lot better.
INTERVIEWER: What sort of advertising has Kincaid done over the years?
KINCAID: Well, we go way back. My father was very close friends with Sandy Bienenstock, the founder and publisher of Furniture World South, a long-time trade magazine. They went back into the early ’60s. And so for probably, I don’t know, for 25 or 30 years, we ran a page of advertising in every issue of Furniture World and Furniture World South. So that was my dad’s advertising.
Today, with the galleries and stores, we do a lot of co-op advertising. We’re funneling all of our other available monies into Google ads. We’ve found that with the demise of newspapers and the number of channels on television, it’s hard to reach the consumer. There’s just too much information. Young people don’t read the paper. Newspapers are not very healthy today. What people do today is they search on the Internet for furniture. So we partnered with Google, and we go into the markets where we have galleries and stores, and we spend a lot of our money on sponsored ads that link shoppers to our websites. That’s been very successful.
INTERVIEWER: And that’s been true of La-Z-Boy?
KINCAID: Just Kincaid. La-Z-Boy, and probably Ashley, they’ll buy those Google ad links for all of North America. It’s nothing new. What Kincaid does is, we only go into certain markets, and we just cut and slice that market. We can go into High Point through Google, and we can say, “Well, we don’t want anything on this side of Main Street, but we want to pick up Grandover. And we don’t want anything between Grandover and Emerywood.” So you can actually cut and slice your markets any way you want to pay for. Then, when somebody in those defined areas Googles “furniture,” you want to be one of the top three or four people that come up on the page.
INTERVIEWER: Of course, La-Z-Boy itself still does TV and print ads to the consumer.
KINCAID: Right. La-Z-Boy has the budget to do that.
INTERVIEWER: But Kincaid has found the Google approach fairly cost-effective.
KINCAID: It is, because we don’t have the national distribution La-Z-Boy does. La-Z-Boy has got some 500 Comfort Studios, their in-store galleries, and they’ve got some 350 stores. So almost any good-size town is going to have an outlet for La-Z-Boy. We don’t have that at Kincaid. So we’re better off targeting our monies where our customer is.
I used to teach a course at Appalachian State University, just as a guest lecturer, and I’d come in and I’d talk about marketing. I’d say I started in 1969 in marketing, and at that point I gave out these Kincaid pencils. That was the way we marketed our product and our name.
INTERVIEWER: You gave them out to retailers?
KINCAID: To retailers. That was our deal. And then today, we give out mouse pads. I say to the students, “Just think what evolution there’s been over the last 40 years on how to reach customers.” So there’s been a lot of changes and that’s been challenging.
INTERVIEWER: I’d like to go through some of the questions we ask all interviewees, and that we really haven’t had much of a chance to touch on yet. You’ve talked about some of the changes in production. Was Kincaid among the first to go with computerized production?
KINCAID: Well, we weren’t among the very first. I think our product was probably simpler than a lot of other case goods, so we waited until we were ready for mass production. For the higher-end people making onesies and twosies and smaller quantities, it made more sense for them up front, especially with carvings and intimate stuff like that. Where we’ve taken advantage of computerized controls, it’s been more for capacity than design. So from cutting the boards to gluing them to machining them, that’s where we’ve spent our money on technology. It’s more about efficiencies.
INTERVIEWER: And so you’ve reorganized the plants continuously, I assume.
INTERVIEWER: And of course you’ve had to put in dust controls and devices like that. What about finishes? Has Kincaid ever gone for water-based finishes?
KINCAID: No, we really haven’t. We were really never able to get the quality from water-based finishes that you do with oil-based finish for our production, at least. So we do nitrocellulose lacquers and still use oil-based finishes. We were one of the first companies to use high solids in our top coats. That reduced the emissions of what they call VOCs, volatile organic compounds, by about a half.
If you look back at the history of the company, we’ve been very proactive on the environment. We were the first case goods company to be accredited as Sustainable by Design last year in all of our facilities, not only Kincaid but at La-Z-Boy case goods and all La-Z-Boy plants. We were the first case goods company to be Sustainable by Design. So it’s been good for the environment and the employees. We have a real proactive program, and we have teams that meet every month, and they bring us ideas that you look at and say, “Golly, why didn’t we do that years ago?” It’s all sorts of things – a leaky water fountain, recycling something that we’re throwing away. Those are the types of things that we really do focus on today.
INTERVIEWER: What about purchasing? Is Kincaid still purchasing pretty much the same lumber from the same suppliers that you were in the early days?
KINCAID: No, that’s changed a lot. At one time, we were primarily American lumbers – oak, cherry, pine. Today, to be more cost-competitive, we import lumber. We bring in lumber from South America. We bring in lumber from the West Coast. We use a lot of alder today. My father would have never thought about buying lumber outside the mountains in North Carolina, Virginia, and Tennessee. You have to pick and choose where you get the lumber today. Today, we bring in a lot of dimension stock from China and Vietnam.
INTERVIEWER: Do you dry it yourself at your facilities?
KINCAID: Well, not usually. When we bring it in from other countries, typically it’s already dried, and it’s often in a panel form. You don’t want to pay to ship raw lumber where you can only get maybe a 50 percent, 40 percent yield. So you have some value added to the boards, and they glue them up into panels for us.
INTERVIEWER: That’s kind of like cut-and-sew covers in upholstery, perhaps.
KINCAID: Yes. I remember, it’s some 10 years ago now, when we had our first shipment of furniture from China come in. I was at the warehouse, and I said, “I’m glad my dad’s not here to see this. Kincaid Furniture made in China and unloaded in our warehouse by Hispanics. He’d have never believed it.” And in the 10 years since he passed away, it’s changed even more.
INTERVIEWER: But it makes sense. And you don’t think quality suffers noticeably?
KINCAID: I think there are always issues with it. I think any time somebody’s producing furniture for you thousands of miles away, there’s more opportunity to have issues with it. We have our own team over there inspecting our furniture, but still, the interpretation is different over there on account of what they expect you to do. But the quality certainly has gotten much better. We’ve taught them how to make pretty good furniture, from finishing companies to the engineers. The industry sent people to Asia, so we taught them how to do it.
INTERVIEWER: But your dad never got involved in anything like that. That’s a completely different world from what he operated in.
INTERVIEWER: Let me ask you about the changes in management that you’ve seen over your career. From family-owned to being part of a big conglomerate, it’s obviously changed quite a bit.
KINCAID: Yes, it has.
INTERVIEWER: And you had to take a crash course in finance.
INTERVIEWER: Have you felt a need to have so-called crash courses in any other aspects of management over your career?
KINCAID: Learning to speak Chinese would have been a benefit for me.
INTERVIEWER: Good luck with that! How much time have you actually been overseas yourself?
KINCAID: I was going twice a year for probably 12 years, but I’ve not gone the last two years. We have now pretty much chosen our partners over there. Initially, when I’d gotten the job at La-Z-Boy Case Goods, we had 46 different people in China we were buying from. So I spent the first trip visiting all these people, and I came home, and I said, “We can’t control this.” Today we’ve narrowed that down to probably a third of that over all of Asia, so we’ve partnered up with different people over there and we’ve gotten better control.
INTERVIEWER: Initially you probably had different plants making the same furniture, right?
KINCAID: We did.
INTERVIEWER: And you just had to do that to get production?
KINCAID: I guess so. I think a lot of companies make the same mistake. They chase a cheap price. The first time I went over to China, I went with a guy named Don Lewis. Don had been over there for 20-some years. And he said, “When you import from China, there are three things: there’s quality, there’s service, and there’s price. You can get any two of those, but you can’t get all three from the same guy. You’ve got to figure out what’s most important to you.” And I think he’s right. So what we try to do – we don’t want to be the cheapest guy. We want good quality and consistent service and good value. So we pick people that fit into that mold, and we don’t change much.
INTERVIEWER: So the production situation in Asia is relatively stable? There aren’t a lot of people going in and out of business?
KINCAID: There are more going out than coming in. In the last couple of years, you’ve seen a lot of people go out, a lot of the smaller manufacturers. And we’ve had a number of those. We’ve had probably six or eight, and they’ve primarily worked with occasional products for the Hammary division, and a couple for Kincaid and American Drew. But the undercapitalized ones just didn’t make it. So we think the big ones will get bigger, and the small ones will be less important over there.
INTERVIEWER: Much the same story as in our country, perhaps.
KINCAID: Right. Same as over here.
INTERVIEWER: What about shipping? That, of course, can be a real a headache. You’ve touched on the fact that container prices have recently jumped way, way up. How has La-Z-Boy dealt with that?
KINCAID: Well, we’ve just had some negotiations today. We negotiate with the distributors’ shipping lines and freight services. We do annual contracts, and those were due in yesterday, as a matter of fact. And we combine all the containers across the corporation. That’s about 7,000 a year. And so we negotiate on behalf of all of our companies, and that volume gets you a lower rate. But just as importantly, it gets you a place on the ships if it ever becomes tight. So there are really some advantages to having volume in a freight and shipping business. But it’s still volatile. They still have peak charges and surcharges and things like that.
INTERVIEWER: So you can only get a certain amount of stability and assurance built in, and then you deal with whatever comes up as best you can.
KINCAID: That’s exactly right.
INTERVIEWER: Port strikes, bad weather, government problems. It looks like a can of worms to me.
KINCAID: It is a can of worms. It certainly is. I think initially, particularly the Chinese government, they were very proactive in supporting the furniture industry. Back in the early 2000s, they would give these Taiwanese business people land, basically. They’d give them financing, these 40-year notes at no interest, to build furniture factories. They liked furniture factories because they were low skill and employed a lot of people, and that’s what the government wanted. They did the same thing with footwear and textiles. Those are three industries that I think kind of gravitated to China.
Today, they don’t necessarily want furniture. They want higher-paying jobs. That’s why you see automobiles and computers being made in China today. Furniture also uses up raw materials. It uses up timber, and it pollutes their air and their rivers. So all of a sudden they’re telling these furniture factory owners, “If you want to be in China, we’d love to have you, but you’ve got to move 400 miles inland where the people are.” We said we don’t think we’re ever going to do that.
INTERVIEWER: Is that why some production seems to be gravitating to Vietnam and to other Southeast Asian nations?
KINCAID: That’s correct. The wages have certainly gone up in China. But as in China, they go up in Vietnam as well. There’s not a big difference in total cost between the two today.
The other wild card, of course, is the anti-dumping duties imposed by the U.S. government on some wooden bedroom furniture imported from China. Kincaid and Lea were part of the original group of petitioners that asked the government to investigate the alleged dumping, and that has really changed the dynamics of importing, it has strained relationships with a lot of our customers, too. It’s been the most divisive thing the industry’s ever had. And I went and I testified, I guess five or six years ago, before the Interstate Commerce Commission. I was testifying in favor of protection against dumping, but at the same time I was in effect testifying against some of my retail customers, who were for “free trade” and didn’t want any duties on imports. Our industry’s not like a lot of industries. We’re really close to our customers, the retailers. For the first time ever, a wedge was almost driven down between us. Which side are you on? That’s been a real divisive issue
INTERVIEWER: Why did Kincaid and Lea decide to engage in that anti-dumping effort? What were your thoughts?
KINCAID: Well, we just wanted to…number 1, we wanted free legal trade, or fair trade is what we basically deemed it. We saw some of the prices coming out of China, and we knew they were selling furniture in this country below the cost of manufacturing it. That was because they were getting subsidies from the Chinese government. That still happens today, but to a lesser extent because of some of the tariffs that have been put on the furniture. But we did it to protect our own company, the livelihoods of our employees. We were very vocal about that. That’s what we said. We said we would compete with anybody, but if the government’s subsidizing them, then we don’t think that’s fair.
INTERVIEWER: But as far as Kincaid itself was concerned, there wasn’t much solid-wood bedroom furniture coming in from overseas, was there?
KINCAID: No, there was not. I think the consumer will pay a certain premium for solid wood. They may pay 10 percent or 15 percent or even 20 percent, but they won’t pay 50 percent more for solid wood. So all of a sudden, the furniture coming over from China was 40, 50 percent cheaper than anything you could make in this country. That hurt us indirectly.
INTERVIEWER: Has any of the acrimony that came about because of the anti-dumping duties been lessening?
KINCAID: It has, but right now they’re starting the so-called sunset review of the anti-dumping duties. That’s starting up this year. So I’m afraid it’s going to start all over again. We still have a number of retailers today that won’t buy from us because we were petitioners. Five years later.
INTERVIEWER: But some retailers have publicly stuck with you, correct?
KINCAID: Yes, they have.
INTERVIEWER: What do you think was the difference between those who weren’t willing to stay with you and those who did?
KINCAID: I think the ones that didn’t stay with us were the larger retailers who were importing on their own anyway. Most of them had already left us, to be honest with you. So they didn’t really need us to start with. But there are still people out there who really do want to support American jobs. Even at the just-concluded April market, I had people come up to me and say, “Which of these groups are you making in North Carolina?” Because there’s a little bit of a renewed desire to buy American-made products, we think.
I guess when you look back on this 20 years from now, it will seem like a short episode in history. But I think it served its purpose, because I think that if you’ve made it this far with a domestic case goods factory, you’ve made it. I think if you’ve survived the onslaught of cheap imports, then I think you’re going to be OK going forward. That’s kind of what the petition was designed to do – to equalize the playing field a little bit and give us a better chance to compete, without imports having an unfair advantage.
INTERVIEWER: Would it be accurate to say that for the mass market, the broad medium- price market, it’s going to be basically import-based? But towards the upper end, that’s where domestic producers can really have their niche. Is that too broad a statement?
KINCAID: Yes, I would have said that was about right a year ago, but today I don’t think that’s right. I think that prices and labor costs have really gone up in China, and I think if you look at it today, if you have an efficient factory in the U.S., instead of there being a 40 percent price gap between imports and domestically made furniture, I think it’s more like a 10 percent gap. And as the standard of living rises in China, the factories in China today, every one of them, will shift toward making furniture for their domestic market. So at some point, they may be making more furniture for their own people than they make for shipping over here.
INTERVIEWER: Aren’t your plants here facing some pretty severe cost pressures at the moment from suppliers? Aren’t they having problems with the higher cost of lumber and other supplies?
KINCAID: Yes, but no more so than they are in Asia. It’s the same lumber, to be honest with you. It’s the same lumber they use in Asia. If it’s hardwood, it comes from here, like oaks and cherries. A lot of that they send over to Asia for furniture that’s then sent over here – back and forth. They say this year labor costs in China have gone up 40 percent. It hasn’t gone up at all in the U.S. All of a sudden in China, the companies have got to pay severance. They’ve got to account for social security. So the labor costs have really changed a lot over there. So we see the costing getting closer together as we move forward.
INTERVIEWER: So, because of various factors in play here, such as a developing economy in China and a recession in the U.S., the playing field is leveling, isn’t it?
KINCAID: It is getting closer. It sure is. So, again, I think if you have a factory here today, if you’re efficient, then you’re pretty much home free.
INTERVIEWER: Well, we’re still making maybe 35, 40 percent of the furniture sold in the United States, right? Of course it used to be 98 percent, so it’s obvious what the trend has been, but we’re still making furniture in the U.S.
KINCAID: A lot of that is upholstery. Case goods is even more skewed. But yes, you’re right.
INTERVIEWER: Let’s get to some of these other questions, some of which you’ve already touched on to some extent. How would you describe your management techniques? And since your situation has changed over the years, has your approach had to change?
KINCAID: I don’t think so. I guess ...
INTERVIEWER: Did you have a lot of management theory at ASU?
KINCAID: No. I think I just kind of followed in my father’s footsteps. He was about finding the right people and then empowering them to do the job. Don’t micromanage. That’s what I’ve always done too: just try to get the right people in place and tell them where we’re going and how we want to get there, and they’ll figure out a way to do that. So we don’t do a lot of anything other than just basic common-sense approaches. Some companies bring in consultants and do this and do that. My dad had a saying: If you want to find the best way to get something done, put a lazy man on it, because a lazy man will figure out the easiest way to do it.
INTERVIEWER: So you’ve never hired a consultant?
INTERVIEWER: Did your dad listen to his sons? Was he open to new ideas?
KINCAID: Yes, he was. One of the things that happened to me early on is, I think I was maybe 16 or 17 years old, and I was working in the lumberyard in the summer, and I and another guy were stacking lumber in the middle of the summer. It was hot, and these were 16-foot oak boards. This would have been back in the mid-’60s. I talked to a buddy of mine, and he had gotten a job at Broyhill, and Broyhill had a stacking shed, so the lumber would be put up on a platform under a roof, and you’d hand the boards up or down to somebody instead of doing layers out in the sun.
So I told that to my supervisor. I said, “We need to put a stacking shed up and get us out of the sun. We’d be more productive.” He said, “We’re not gonna do that. Just keep working.” So at lunchtime, I went down to a boiler in the plant. I used to feed the boiler with a sawdust shovel. It basically was a stick with a piece of plywood on it. So I got two or three of these shovels, and I wrote on them, “No shade, no work.” And I got two other guys, and I said, “OK, guys. When I come back after lunch, you guys just follow me and walk around the lumberyard. We’re gonna go on strike till they build us a shed.”
Of course, that lasted about five minutes. Anyway, the plant manager sent me home and told the other guys to get back to work. My dad came home that afternoon, and he said, “What’d you do? I can’t believe you got fired.” I said, “I didn’t get fired. He told me to go home.” I said, “He was crazy.” So we got in the car that same night and rode up to the Broyhill place and saw what they were doing. And so in two weeks, he built a shed down there. So he was certainly willing to listen to other ideas.
And that was the only strike we’ve ever had in the history of Kincaid Furniture, and I led it!
INTERVIEWER: All in the family, indeed. What sort of industry involvement have you had? Was Kincaid in the Southern Furniture Manufacturers Association (SFMA)?
KINCAID: Yes, we were. We’ve always been in the SFMA before it was the AFMA (American Furniture Manufacturers Association, now the American Home Furnishings Alliance). My father was very involved in the National Wholesale Furniture Association. His customers were the wholesalers that started out with my father. That association is now gone.
INTERVIEWER: Back in the ’60s and ’70s, I guess, wholesalers were a significant force.
KINCAID: They were.
INTERVIEWER: So what was the wholesale association like? What did it do and how did it do it?
KINCAID: That was a little before my time, but I know that in West Virginia, this wholesaler out of Charleston, he had like 30 sales reps going into all these little towns all over West Virginia. So my father would pick people like that to do business with and distribute our line.
INTERVIEWER: Did they have conventions that he would go to?
KINCAID: Yes, they did have a convention. He and my mom would go to all those conventions.
INTERVIEWER: Did you ever tag along as a youngster?
KINCAID: I did. I sure did.
INTERVIEWER: You did a lot of traveling as a youngster to places like Chicago and...
KINCAID: I even started to meet customers, I guess, when I was like 10 years old. I’ve got pictures of people in my parent’s house, people that we’ve done business with forever and ever. So I really did grow up in the business.
INTERVIEWER: You sure did.
KINCAID: But we’ve been very active in AFMA, and I was president of the AFMA before it became the AHFA
INTERVIEWER: Were you and your father involved at the time when the northern and the southern manufacturing groups were merging into the AFMA? Did you play any role in that?
KINCAID: We voted for it; we were at the meeting to do that. My father supported that strongly; he thought it was a good move to merge the two associations.
INTERVIEWER: Are you’re still active in the AHFA?
INTERVIEWER: Are there any other groups or associations that have been important to Kincaid, or to you or your father, over the years?
KINCAID: Well, the thing that I got involved with early on was the High Point Market. I guess this would have been back in the early to mid-’80s. At that time we had a thing called the International Home Furnishing Marketing Association. Remember Rick Barentine?
KINCAID: Fred Starr, who was with Thomasville then, called me back in the early ’80s and said, “Won’t you be a member of the board?” I said, “I don’t have time, Fred.” He said, “Well, here’s the deal. All that we really do is done by Rick Barentine; he does all of the day-to-day stuff. The board would be you, me, Scott Tyler and Jeff Young. You’d be the third vice president, so you’d be six, eight years away from doing anything.” I said, “Well, whatever. That’s fine.” So I attended my first board meeting, and between the first and second meeting, Fred retired, the other two guys quit their jobs, so it was just me and Rick Barentine. But Rick did all of it. Basically, it was pretty simple. We had a budget of – let’s see – $145,000 a year. That was the budget for the market.
INTERVIEWER: You essentially were just sending out publicity for the market, right?
KINCAID: Pretty much. We did a great big poster. We did publicity. But Rick’s main job was to keep tabs on various groups and organizations to find out what events might conflict with the dates of the High Point Market. He’d find out about religious holidays or when the GGO (a Greensboro pro golf tournament) was going to be held, or when this or that was going to happen. Then we’d sit there and plan market dates 20 years in advance. That’s all we did. I soon realized that we had to get more people to come help us, and we needed to do something better to promote the market. Nancy High, who was with the AFMA, came to me one day and said, “We ought to figure out some way to improve market.” And I said, “That’s a really good idea.”
So we had a meeting – this was in 2000, I guess. I sent everybody a letter, including the mayors of Thomasville, Greensboro and High Point, and the various Chambers of Commerce. There were 25 people in the room at Grandover. And I got up and said, “I don’t know what’s going to come of this, but everybody here has a vested interest in the furniture market. And today, our customers come in, and we charge them to park in a mud hole. They pay too much for hotel rooms. We have to put a lot of them up in private homes. The restaurants have two different menus, and their ‘market menu’ has much higher prices. There are a lot of issues, and we need to take a look at this.” And this was before the Las Vegas Market had even come into being.
INTERVIEWER: I think the Vegas Market folks announced their plans in about 2000, right?
KINCAID: Yes, but it hadn’t come into being at that point. So at that meeting, we developed a task force. And the task force came back with recommendations, and that’s ultimately how the High Point Market Authority came into being, with the support of Bruce Miller and Tom Mitchell and other executives of the market buildings, and a bunch of other key folks. That was something the industry needed. The threat the Las Vegas Market seemed to pose to High Point certainly made it go even further faster.
We ended up hiring Judy Mendenhall to head the effort. Actually, we had hired somebody else who’d already committed to it. But then Bruce Miller called me. He said, “I just heard Judy Mendenhall on the radio, and she was talking about market.” She was the ex-mayor of High Point. So we interviewed her two days later and offered her the job the next day. She was great. She was the perfect person to get the Market Authority going. She knew how to get money out of the state government in Raleigh and how to work all the different people around the Triad area. So that’s worked out pretty good. You look at where it went, from me and Rick Barentine and a $145,000 budget, to a $2.5 million budget today, and all the parking and transportation services and parties and all that. It’s just amazing how far it’s gone.
INTERVIEWER: Well, it was amazing to me that High Point was ever able to establish itself as the so-called Furniture Capital of the World when you consider what a small town it was. I think the furniture market is the largest trade event that’s ever been held in such a small place. Of course, that posed big challenges for housing and infrastructure, but the market was able to deal with these things over the years, although it did leave many market goers with the feeling they were being gouged for hotels, car rentals, meals and all that. And when Vegas came along as a potential threat, I think it played a big role in shaping things up. La-Z-Boy doesn’t show in Las Vegas, right?
KINCAID: No, we do not.
INTERVIEWER: How would you evaluate Vegas versus High Point as a marketing tool for furniture companies?
KINCAID: Well, I guess our stance has always been that we don’t need two major marketplaces a year. With the costs to develop new products and introduce them and all the things associated with that, we just don’t think that we can justify that. So our stance early on was that if the market goes to Vegas, we go to Vegas with the market. We’ve only stayed in High Point because we had the investment here, but we don’t really care to have two big showrooms in two different places. We are today still probably the largest tenant, the largest customer in High Point for the market buildings. We rent hundreds of thousands of square feet down there. So to duplicate that – even to do a quarter of that – is a big investment on our part. And so we, at this point, don’t really want to make a change. Early on, we had a lot of pressure from our retailers to go to Las Vegas, but we don’t feel that today. We think that it’s become a regional market, and we just basically don’t need a regional market.
INTERVIEWER: Well, back in the old days, it was quite acceptable to most manufacturers to have pretty good-sized High Point showrooms but also have a presence in Atlanta, Dallas, San Francisco. That must have cost at least as much from the manufacturer’s standpoint as it would be to show at both High Point and Vegas, no?
KINCAID: No, I think Vegas is much more expensive than those old regional markets. We had showrooms in High Point, Atlanta and Dallas.
INTERVIEWER: You mean Kincaid?
INTERVIEWER: And those market costs were reasonable?
KINCAID: Yes, because you could generate enough business to offset your costs. The cost of doing business and having a showroom in Vegas is a lot higher than it was in Dallas or Atlanta.
INTERVIEWER: Did Kincaid gradually pull out of the regional markets?
KINCAID: We did, yes.
INTERVIEWER: Simply because you weren’t doing enough business there?
KINCAID: That’s right. And we just kind of went with everybody else. Everybody else was doing the same thing. The industry’s kind of funny. The reason it came out of Chicago is that the Southern furniture guys decided it shouldn’t be in Chicago because of the labor unions. They got together. My father was part of the group. They said, “Well, we’ll just have all new introductions in High Point.” That’s what did it. They said, “OK, from now on we just won’t introduce anything new at Chicago, so therefore that will kill the market.” So I think that where the new product is introduced, that will be the major market. Everything other than that will be a regional market, I think. You’re going to get people on the West Coast who don’t come to High Point anymore, and we understand that. But I guess our thought process is, if you pick them up by showing in Las Vegas, how much business do you have to do with that group of people to justify the expense of showing there? And that’s where we are right now.
INTERVIEWER: Do you see a possibility that any of the Asian markets could become major furniture markets that you might need to show at? Do you show in China? You talked about the domestic market over there.
KINCAID: From Kincaid’s standpoint, I don’t think so. But from La-Z-Boy’s, I do, because we have a joint venture now in Thailand, and we make La-Z-Boy products for the whole Pacific Rim as well as for mainland China. So we’re actually selling product there today, primarily La-Z-Boy. La-Z-Boy’s got a brand name that more or less transcends languages. The logo is so distinctive, and it’s so tied into a product that people pretty much know it around the world as La-Z-Boy.
INTERVIEWER: So you can sell recliners almost anywhere?
KINCAID: You have to re-scale and re-design them a little bit, but yes.
INTERVIEWER: So you do see a future in Asia as a market.
KINCAID: We do, yes.
I guess our company and La-Z-Boy and my family, we’re just trying to give back to the industry. It’s been good to us. My father started with nothing, and he became very successful with hard work, and his family has made a living in the furniture industry for at least 60-some years. I guess we’ve always felt like whatever we could do to help the industry, we should do that.
INTERVIEWER: Who’s the next generation at Kincaid?
KINCAID: Well, like I said, I have three nephews and a niece in the business. I think there’s some potential there to follow in my footsteps
INTERVIEWER: What sort of civic and charitable organizations and activities have you been involved in?
KINCAID: Well, being a large employer in a small community, we’ve been involved in about everything, to be honest with you. From United Way to Red Cross to Boy Scouts, hospital boards, and community colleges ... I’ve been involved in all of that. I have a real affinity for the Children’s Home Society of North Carolina. I have two adopted children. I’ve always been a supporter of theirs.
INTERVIEWER: They have several homes around the state, right?
KINCAID: They do, and the headquarters is here in Greensboro. They have one in Asheville and I think one in Jacksonville, or there used to be. I’m not sure about today.
INTERVIEWER: So you’ve served on various boards and committees for the Children’s Home Society?
INTERVIEWER: Have you been personally involved with the City of Hope?
KINCAID: I have, yes. In 2001, I received their Spirit of Life award, which was a real honor. I went out to the City of Hope in Los Angeles. That was a real meaningful experience to see the work they’re doing out there.
INTERVIEWER: It’s a huge medical complex, is it not?
KINCAID: It is. The thing at City of Hope that really first got my attention was that I had a brother who died early on – the one who was my partner when I first started as a rep. He had brain cancer. So I found this guy out there who was studying brain tumors. And at that point – this was 20 years ago – he only had an eight-month life expectancy. Today, it’s 12 months. So, in 20 years, they’ve only added four months to the life expectancy of that particular kind of cancer. But this doctor told me that with further research, there’s real hope. He said to me that what’s happening now with these cells they call T cells, is that they’re kind of converting these T cells into little Pacmans that will eat the bad cells. So at some point, he said, we’ll cure it.
INTERVIEWER: You’re talking about your brother that you worked with in sales? He had a form of brain cancer?
KINCAID: He did. He passed away in 1988.
INTERVIEWER: I can see why you’d be interested in the City of Hope. Have you personally been involved in any other kinds of businesses or joint ventures outside the furniture industry?
KINCAID: Not really. I’ve made a few investments in things, but not really involvement. I don’t have the time.
INTERVIEWER: What do you see as the most serious problem facing the furniture industry today?
KINCAID: I think it’s the lack of desire among young consumers, the younger generation, to buy quality furniture. I think furniture in my day was looked upon as something to have a lot of pride of ownership in. It was something that you bought, kept for 20, 30 years, and then passed down to your kids. It was heirloom quality, fine furniture. Today, I think the younger people don’t think of furniture that way. They think of it as just something to use and get rid of after a short period of time. I think if you look at Ikea and a lot of the promotional lines, that’s how they are perceived by the young consumer. They just don’t put as much value on furniture as previous generations.
INTERVIEWER: What strategies are there to deal with that problem? What do you see the industry doing? Society today is so mobile and, as you say, we have such a disposable mentality. Families don’t have homesteads anymore, and people don’t stay in the same house for several generations. So there’s a lot of things that make it difficult to look at furniture in that kind of family-oriented, quality-oriented way.
KINCAID: Yes, you’re right. I don’t know. I guess what we’ve tried to do through the Google advertising is to reach the younger consumer with quality product. We’re trying to sell them nice furniture that’s going to last a long time. But it’s a real challenge, and a real concern that I have. I think as baby boomers age out, the people taking their place as the primary target for furniture marketing don’t want to buy a $5,000 dining room suite. My children are not going to do that. They’ll buy a computer or they’ll buy a big television, but buying a nice new set of furniture is pretty low on their list of things they want to buy.
INTERVIEWER: You don’t think that’ll change, though, as they get into their 30s and 40s, perhaps?
KINCAID: I hope so.
INTERVIEWER: I think it’s a natural evolution.
KINCAID: I hope it is. I don’t know.
INTERVIEWER: So you think the industry essentially has weathered the onslaught of imports. Two years ago, or even five years ago, I think most people would have said the biggest issue facing our industry is imports.
KINCAID: I think we have. I think certainly on the upholstery side, I think we’ve proven that we can compete. Leather has gone offshore, of course, but we make a lot of the fabric upholstery here. What we’ve had to do is develop more customization, and that’s true also in the case goods arena. If you look at what’s been successful in case goods at Kincaid, it’s the alternate finishes we offer. We’ve got some groups that have a choice of six finishes. It’s hard to do that from China, so we try to figure out what we can compete with, and what we cannot compete with. When you look at textiles, even some fabric production is coming back to the U.S. because people want more choices, more customization, especially as prices, even of the cheap imports, rise.
Production may still move more to India, say, and it may go to Africa. There’s always the search for cheap labor, I guess. But I think at this point, if you’ve weathered the storm, I think you’re probably OK to stay in business. But we think that as business improves, you’ll see more people going out of business. You can start to see it now. In the past couple of weeks we lost two or three big upholstery companies. American of Martinsville closed along with Barcalounger, and Stratford closed. I think in the last year, some people have existed because they’ve sold off the inventory, collected the receivables. There’s been a lot of stuff sold the last two years at discounted prices – the inventory. But as you start trying to gear back up to do business, it’s going to be hard to get financing from the banks. So we think in the next six months you’ll see a lot more people go out of business.
INTERVIEWER: So the industry will shrink a little more now, is what I hear you saying.
KINCAID: Yes. I think that the demand for furniture will stay the same, but I think the number of players is going to shrink. Yes, I think so.
INTERVIEWER: Let me ask a few questions about outside factors and how they’ve affected the industry and your companies. What about racial attitudes? Did you have any racial problems at Kincaid over the years?
KINCAID: You know, we did not. It’s funny. In Caldwell County, most of the African-Americans lived in Lenoir, and we were in Hudson, just six miles away. But basically, we had very few African-Americans that worked in our factories because there were so many factories around Lenoir, and that’s where they worked. They didn’t come to Hudson. I guess the thing I really saw – this started back in the ’90s – was an influx of Hispanics. I know at one time probably 20 percent of our workforce was Hispanic. It still is today, I think.
It’s kind of funny how that happened. A lot of the poultry businesses in Caldwell County and western North Carolina actually went to Guatemala and places like that, and recruited these people to come work in the poultry business. They brought them up there, but it was terrible working conditions. Working in a poultry factory is pretty bad. So we ended up with a lot of Guatemalans in our factories, and they were great people – great workers. So that’s been a real change. We even started English as a second language programs for these employees, and we set up GED classes with the state. So we’ve been very supportive of whoever our employees are and what their needs are.
INTERVIEWER: What about women’s issues? You often hear it said that women are the furniture industry’s major customers, but that up until very recently, very few women were represented on the manufacturing side, and relatively few at the retail level.
KINCAID: That’s true. But it has changed. If you look at management today across all of La-Z-Boy, we’ve got a lot of women in pretty high positions.
INTERVIEWER: Has that been deliberate?
KINCAID: It has been deliberate because, like you say, we realize that’s our customer base, and they’ve got different ideas that we need to incorporate. I look back on the companies I’ve been involved with, and most of the management teams – except for the factory people, and there were very few women in manufacturing – most of the managers that had anything to do with sales, marketing or merchandising came up through the sales force. And those typically were men. Most of the time, women didn’t want to be traveling salespersons, for whatever reasons. So you didn’t have many women in that pool of salesmen to choose from, to pull them off the road and say, “Why don’t you be in charge of this or that?” So they were pretty much at a disadvantage because they didn’t get into the food chain and have a chance to move up into administration. But that’s changing a lot today, I think.
INTERVIEWER: Is there a concentration of women on the retailing side of La-Z-Boy?
KINCAID: Yes, there is. If you look at the market managers we have today for La-Z-Boy’s company-owned stores, over half of them are female. And of that, we have one Indian, and Mexicans and African-Americans. So we’re pretty diversified today.
INTERVIEWER: You’ve spoken a little bit about environmental regulations and government regulations. Has any of that been harmful to Kincaid’s growth over the years?
KINCAID: I don’t think it’s been harmful. If it’s good for the environment, we certainly are all for that. I guess sometimes these government agencies have put people in charge who don’t know much about the industry. They come in and you’ve got to educate them on what you’re doing and why you’re doing it. And that’s been a challenge. But no, we certainly are all for things that make sense.
But we’ve had to deal with new laws and regulations recently, particularly the Consumer Product Safety Commission’s new rules on lead paint in furniture. We just had our first recall with Hammary. We announced that two weeks ago.
INTERVIEWER: I’m not familiar with it. Tell me a little bit about that.
KINCAID: We’ve always had “guidelines” that lead shouldn’t exceed 600 parts per million in paint. That’s been our guideline for generations. And it started when lead paint would flake off the walls of older homes and children would eat it and get sick. They’ve yet to prove that anybody ever died, but they certainly got sick. Then they passed this new regulation dropping permissible lead in paint from 600 to 90 parts per million. That came into effect last year. What they didn’t do was give us enough time to sell through the existing inventories. At least with the recent new rules on formaldehyde emissions from plywood, they gave us a year to quit producing it, to use up the inventory. And they gave the retailer a year, and then they extended that so the old plywood would get used up and out of the system. But they didn’t do that with lead paint. They just said, “OK, as of August 14, you can’t have any furniture that’s got this much lead in the paint.” So we found out we had some pieces that exceeded those limits, and sometimes it was like just one flower on one chest or drawer.
INTERVIEWER: This would be painted furniture that’s probably mostly imports, right?
KINCAID: It’s all imported. And we had documentation that it had passed their testing in Asia, but here it didn’t pass. So we’re going through the process now of having to destroy that furniture, to burn it. And there’s absolutely no risk that a child is going to eat the paint off that piece of furniture. That’s what I’m talking about when I talk about unnecessary regulations. It’s just silly things like that that you have to deal with, that if people had any common sense, you wouldn’t have to do it. So we’ve been destroying hundreds of thousands of dollars worth of furniture for a two-inch piece of a flower on a chest that nobody’s going to eat. But it’s the law.
INTERVIEWER: It seems out of proportion, doesn’t it?
KINCAID: It does to me.
INTERVIEWER: I guess a good portion of the efforts of the manufacturers’ groups is to fend off some of the more ridiculous regulations out of Washington.
KINCAID: I think when the government passes laws, they’re well-meaning. We certainly don’t want one of our cribs, or anything a baby comes in contact with, to be potentially harmful or dangerous. But I think sometimes they don’t think through the way the law is going to be interpreted when you get further down the food chain.
INTERVIEWER: Do you have any leisure activities at all with all the responsibilities you have? What do you do for relaxation?
KINCAID: What do I do? I play golf. I love to play golf.
INTERVIEWER: A good industry sport.
KINCAID: Yes, a good industry sport. I do that. And I like to spend time with my children. They’re grown and gone from the home, of course, but I still like to spend time with them.
INTERVIEWER: You have two adopted children. Are they directly involved in the furniture industry?
KINCAID: Neither one of them. Nope. And I didn’t push them into anything. With my dad, I just never had a career discussion. He just said, “Go to Plant 8,” or “Go here.”
INTERVIEWER: It was just assumed you were part of the family and you’d be in the family business.
KINCAID: Pretty much. We certainly never sat down and talked about it. But with my children, I just didn’t push them. I didn’t encourage them. I didn’t discourage them either. I told both of them, “If you want to work in the business, if you find something you want to do, we’ll talk about it and see if it works out for you.” But neither one of them had an interest in doing something in furniture.
With my nephews, though, it’s a different story. All three of them wanted to join a furniture company. They wanted to be sales reps or they wanted to be managers. I said, “OK, I’ve got one requirement. You’ve got to get a job and work on a retail floor for a year, and then come see me.” I thought that would do two things. Number 1, if they really wanted to be in furniture, they would do that. Number 2, it would give them an understanding of what the furniture business was all about. All three of them did that, and all three of them are really good furniture people. Two are reps, and one of them is a VP of sales.
INTERVIEWER: Are any other members of your family in furniture?
KINCAID: I have a niece who’s a sales rep, but that’s all today. At some point, of course, we all were in it – all my dad’s children.
INTERVIEWER: We’ve covered a lot of ground, and I appreciate your time. Is there anything you’d like to add about something we haven’t covered regarding your career?
KINCAID: I don’t think so. I think the one thing that we try to do at Kincaid and La-Z-Boy is build our business on good relationships with our customers. If you asked our customers today, I think they’d say that they like to do business with us. They’d say we’re friendly people, and that we try to be as honest as we can, and have high integrity. And that’s kind of the motto of the company.
INTERVIEWER: Is it getting harder to do?
KINCAID: I don’t think so. I think if you’re honest, you’re honest. I think sticking to your principles is what we’ve always done, whether it be the way we make our furniture or the way we treat everybody.
INTERVIEWER: You don’t think people are more fickle these days and are willing to change resources at the drop of a hat?
KINCAID: I think they are – at least some are. But I think a certain percentage of them are not. We’re seeing lately that retailers are coming to us and wanting to know how they can sell better goods. I think almost everybody realizes that just selling the cheapest furniture you can, in the long term, is not a successful business model. So I think everybody’s trying to figure out the ingredients that will make us successful merchants, and at the same time do the consumer justice. I don’t think a consumer walks into a store and says, “I wanna see all your $499 sofas. I wanna see all your $799 bedroom sets.” They come in because they want and need furniture, and it’s our job to give them the best value, not the cheapest price.
INTERVIEWER: Of course, the industry almost always advertises on price.
KINCAID: They do, but I don’t think a low price is the be-all and end-all. I’ve been in the furniture business my whole life, and if I was working today on a furniture store floor, I really couldn’t tell you exactly how much that piece of furniture should cost. It would be a guess. So how do we expect a consumer to know that? The main thing is to do the consumer justice. And I think we’ve done that. That’s a lot.
INTERVIEWER: Again, thank you for your time. We appreciate it.