W.G. "mickey" holliman, jr.; furniture brands international
AMERICAN FURNITURE HALL OF FAME
ORAL HISTORY INTERVIEW
MARCH 30, 2009
OFFICE OF MICKEY HOLLIMAN
Tony Bengel, Interviewer
INTERVIEWER: This is Tony Bengel. I’m interviewing Mickey Holliman in his office in Tupelo, Mississippi, on March 30, 2009. Let’s start at the beginning: When were you born and where?
HOLLIMAN: I was born in Columbus, Mississippi, in 1937. Columbus is in the east-central part of the state, a town of about, today, probably 20,000 people. I grew up south of Columbus, 30 minutes, in a little town called Shuqualak.
HOLLIMAN: Pronounced Sugarlock, spelled S-H-U-Q-U-A-L-A-K, which is an Indian name, a Choctaw Indian name. Around that area are a lot of communities that have Indian names. I grew up in that community, and it was a very rural little farming community, basically.
INTERVIEWER: So, your mother and father were in farming?
HOLLIMAN: My mother and my dad — and incidentally, both of them were from western Alabama. They came to Mississippi in 1933, and my dad started to work for a big plantation owner that had a general merchandise store. So, he ran a general merchandise store from 1933 until he started to have some health problems in the ’60s, but a long run there. My mother was a housewife. They had two children. I had one sister who was three years younger than I am.
INTERVIEWER: It sounds like you had no family in furniture.
HOLLIMAN: There was no family in furniture. We were all involved in cotton and corn and working in hay fields, or at least I was, and working for my dad on weekends. Then in the summertime in the store. The store was very large, and they sold everything because the plantation owner had a lot of sharecroppers that worked on the plantation. So, at times, particularly on Saturdays, they were very, very busy. So, I helped there in the early years, I guess probably anywhere from 12 to 16 years old, I was working for my dad some, and then working out on the plantations in various, sundry jobs.
INTERVIEWER: So, you had no in-laws, no family in furniture at all as a youngster?
INTERVIEWER: When you were born, the Depression must have had a pretty good grip on Mississippi at that point.
HOLLIMAN: It had a tremendous grip. I was born in ’37, and lived in a house with a tin-type roof. Never lacked for anything that was essential, but basically just lived on the essentials. I had a dad who was not, I would say, a great risk-taker — pretty settled into just the job he had — and a mother who, during all my years of growing up, was a strong encourager to me to, to get out and reach beyond the norm. And I think that led to a lot of things that happened in my life, in my career.
INTERVIEWER: At least your dad had a steady job.
HOLLIMAN: He had a steady job, and it provided a place for us to live and clothed us and we had food. As I said, all of the essentials were covered, but that was about it. And all through my grammar school and high school years, it was pretty much that way.
INTERVIEWER: Did you have a pretty good education in grammar and high school?
HOLLIMAN: I did.
INTERVIEWER: This was in Columbus?
HOLLIMAN: No, this was in the little town of Shuqualak.
INTERVIEWER: They had a complete school system?
HOLLIMAN: Yeah, we did. There were 23 kids in my graduating class, so it wasn’t a big school. We had sports activities and a lot of the things that schools have today — not everything but a lot of things: the basic math and English and the sciences and things of that nature. Then when I got out of high school, I went to Mississippi State and got my degree in industrial management at Mississippi State.
INTERVIEWER: I take it you were the first person in your family to go to college.
HOLLIMAN: That’s correct.
INTERVIEWER: What drew you to Mississippi State and your major? How did you decide on the direction of your college education?
HOLLIMAN: Well, it was fairly vague at first. The university was an hour away from where I lived, so that was a factor in going to Mississippi State. I knew I wanted to be in industry, or I thought I did, but not anything specific. So, at the time it was just a desire to have some role in the industrial area but without singling in on anything specific.
INTERVIEWER: Didn’t industrial engineering require a fairly good foundation in the sciences? You must have had some predilection toward math, perhaps?
HOLLIMAN: My father always said that math was his strength. So, industrial engineering, when you look at it, it’s quite different from, for example, chemical engineering or aeronautical engineering. You deal in a lot of the basic areas of education and then you’re looking at time studies and things of that nature. Once again, I say I just felt like I wanted to have some kind of role in industry, but not specifically in the furniture industry. My interest was fairly broad.
INTERVIEWER: Were there any major plants or factories in the area where you grew up?
HOLLIMAN: No, and that probably led to my decision because I didn’t want to be bailing hay or working in farming all my life.
INTERVIEWER: That’s hard work and you had a taste of that, obviously.
HOLLIMAN: Oh, my goodness, I lived on it for all those years I was growing up. Then you read about things like automobiles and everything else that was being made and manufactured, so it was just the interest in something that I knew very little about, but just feeling I wanted to be a part of it.
INTERVIEWER: Did you spend the standard four years in college?
HOLLIMAN: Yes, I did, while working in the summer and whenever I had time helping the family in the store. There was a company that had product in my dad’s store that was big in farming, of course, and had a lot of tractor equipment. But they also made and sold refrigerators and stoves, things of that nature. So, while I was in school, in the wintertime, I would sell refrigerators and stoves when I had time. Then in the summertime, I’d work in the store and I’d work out on the plantation earning money. Then I would hitchhike ... I didn’t have a car, but I would hitchhike on some weekends back home on Friday nights and I would work all day Saturday and then hitchhike back to school on Sunday. So, I did that off and on all the way through college.
INTERVIEWER: In what year did you graduate?
INTERVIEWER: And you never served in the military?
HOLLIMAN: I was in the Air Force ROTC in college, but I got married my senior year in college and we had a child a little earlier than 10 months after I married. So, I never went through the military.
INTERVIEWER: During your college career, did your goals, your ambitions begin to come into focus, perhaps?
HOLLIMAN: More so than prior to that by the exposure that I had. I spent a lot of time in the placement office at the university, looking at companies that were recruiting on campus, and there were a lot in the oil industry, companies like Exxon and Shell. And then pharmaceutical companies, and a lot of other firms that did interviewing on campus.
And you just learn things through your associates — the faculty and the people that are teaching you, and friends that you get exposed to. You develop new relationships in college and then you learn about their experiences and their family experiences. There was a relationship that I had with one individual that led me to look at a paper company down in Mobile, Alabama, Scott Paper Company. And there was another situation that involved an ice cream producing operation over in Birmingham, Alabama.
So, it was exposures like that that continued to feed that ambition to be a success in some industry. I knew nothing about furniture whatsoever until I got a call through the university from a little company in New Albany, Mississippi, that was in its first years. It was hiring some industrial engineering trainees. They were hiring three at the time. This was a company that was founded by a man by the name of Morris Futorian from Chicago.
INTERVIEWER: A legend in the industry indeed.
HOLLIMAN: A legend in the industry. And I graduated in January of ’60 and I went to work for him in February of 1960.
INTERVIEWER: But you’d never run into any other furniture company in your placement office activities?
HOLLIMAN: Not one. I went up and interviewed with the company and spent a good deal of time, I guess over the course of about a week, looking at that company. I had interviewed with a couple of other companies, maybe three, during that interim period from the time I graduated. I had to go to work because I was married and had a child. There was no time to waste. So they offered me the job and I went to work for the Futorian Company.
INTERVIEWER: Was there anything in particular that attracted you to Futorian? Anything you saw there in the plant or the people you met?
HOLLIMAN: Well, I think a combination of all of that. I was intrigued with the leader, the engineering leader and some of his associates. I spent a good deal of time talking with him about the kinds of things that, if I went to work for him, he would want me to do. I saw product being made, sofas that were being made in one plant and another plant that was making reclining chairs that had mechanical systems underneath them to make them operate. I was sort of fascinated by that. I think the process took about three weeks from the time I first got exposed to the company until they hired me. But yes, I was sort of fascinated by some of the things I saw there.
INTERVIEWER: So, your first furniture job was as an industrial engineer trainee with Futorian.
HOLLIMAN: And right after they hired me, I guess I stayed on the job about two weeks, they sent me to Louisville, Kentucky, to a methods and time study engineering training course for three weeks, along with the other two guys that were hired along with me. Then when we got back, we would do engineering time studies in the factories for various jobs — sewing jobs, jobs where they were cutting fabrics and cutting vinyl. There was no leather then, you know; back then it was only vinyl. And upholstery jobs, frame assembly jobs. We would do time study work, do plant layout, material flow, all those kinds of things. And I did that for maybe about three years, maybe a little short of four years.
After that, I moved into a production and inventory control role, where I was responsible for procurement of things like some of the major raw materials, and doing some production scheduling on a broader scope for three plant operations. One was a company factory that made frame parts. And then an upholstery factory making stationary upholstery, and then an upholstery factory making reclining chairs. And I did that for a while.
And in 1968, this was in my eighth year at Futorian, they wanted me to run the plant that made reclining chairs, wanted me to manage it. The guy that had been running it was sent up to run a plant operation in North Carolina that the company had just acquired at that time, called Barcalounger.
INTERVIEWER: Which is in Rocky Mount, North Carolina, right?
HOLLIMAN: In Rocky Mount, that’s right. And there was a union campaign going on at the time that I went to take over the Okolona, Mississippi plant. Incidentally, that plant is only 18 miles south of here. I had been working mostly in New Albany, which is 22 miles northwest of Tupelo, but I lived in Tupelo. They wanted me to manage the plant, so I took the family and moved to Okolona, a little town south of here, and did battle with a union campaign over the next, I guess, 90 days. We were successful in winning it. It was a close election, but I got my feet wet really, really fast as a result of that, having to dig in and deal with that.
Then I managed that plant, which had — I don’t recall exactly — somewhere between 800 to 900 employees. We made about 1,400 reclining chairs a day. The factory had close to a million square feet of space, manufacturing and warehousing. I learned a lot about the reclining chair business, having that two-year run devoting all of my time to nothing but the manufacturing, and being exposed to the developmental side of the business, product development. And then to sell some of the product we manufactured to retailers, to some extent — limited, but to some extent. Primarily, it was a manufacturing role that I had. I did that for two years.
Then, in 1970, in the early part of the year, I left the company and co-founded what was then Action Industries.
INTERVIEWER: Let’s go back a little bit through your Futorian years. Did you actually speak to Morrie himself before you joined the company?
HOLLIMAN: Yes, but only briefly. But after having joined the company, I spent a lot of time with him, out in the factory, on the production floor. He was a man that had a special interest relative to quality product. He spent a lot of time focused on looking at the minute details of furniture being made on the production lines, where the upholstering was taking place. He would go into the service departments like the sewing department, the cutting department, the frame assembly department. He would look at the work that was being done on the product at that point, and then when it was all brought into the production lines. He was the author or the father of mass-produced furniture. Most furniture that was made up until the time that Mr. Futorian got involved was done by craftsmen — one person would basically build the entire piece of furniture. And I think after awhile, maybe there were as many as three people that might be doing it. But no assembly lines.
He introduced assembly lines when he came to Mississippi and started manufacturing upholstery product. He introduced the concept of mass-produced upholstery, where he would have an assembly line that might have 12, 13 or 14 operators who were each doing 2½-, 3-, 3½-minute job assignments and then moving that product to the next person, and then taking one from the person before them on the line.
So, he spent a lot of time on these production lines, focused on quality. And a great deal of my learning came from him about the fundamentals of making furniture in the right way. So, over time, I spent a lot of time in his presence on the factory floor and then in planning meetings relative to new product development and how goods would be taken to market, who’s going to be sold ...
And back in those days, he would host a number of retailers periodically at the plants, maybe one, maybe three times a year. He would bring them to Mississippi to one of these plants and they would open a big area up in a warehouse, on a concrete floor. There would be nothing fancy about the presentation, but there would be product there. He would do these promotional events. I always participated in those plant presentations — learning, listening to him selling and talking about the product and the value story, and how to market it and all those kinds of things. So, over the 10-year window of time that I was there at Futorian, I spent a great deal of time in his presence and learned a lot from him.
INTERVIEWER: Obviously, he was a hands-on guy.
HOLLIMAN: Very hands-on.
INTERVIEWER: Did Morrie have any industrial engineering background himself? I know he came down to Mississippi from Chicago. His family had made furniture on pretty much a craftsmen-like basis, did they not?
HOLLIMAN: That’s right. In what would be the equivalent of a larger garage in Chicago. His family came to Chicago ...
INTERVIEWER: From Russia, I believe.
HOLLIMAN: From Russia, that’s correct. And around the time he came to Mississippi, there was a governor here that had started a program commonly called at the time, BAWI, which stood for Balance Agriculture With Industry. The governor’s name was Hugh White, and he and Mr. Futorian got their heads together and the state gave some financial support to launching him in Mississippi. He built his first factory in New Albany. Then he built a woodworking plant in a little town called Eupora. And he built an upholstery plant in another little town called Okolona.
INTERVIEWER: Was this in the late ’40s, early ’50s?
HOLLIMAN: That’s correct, late ’40s and early ’50s.
INTERVIEWER: The woodworking plant was for the frames?
HOLLIMAN: That’s correct.
INTERVIEWER: They weren’t putting out case goods.
HOLLIMAN: Oh, no. This was all upholstery. It was either a stationary sofa or a stationary chair or a reclining chair. The things that we commonly call motion furniture in the industry today — that would be a sofa that has ends that recline and backs that have hidden tray tables that fold down — none of that was around. It was nothing but reclining chairs and stationary furniture. That was all it was.
So, the woodworking plant made the frames all out of hardwood lumber. Today, they’re made out of everything known to man, but there’s very little hardwood lumber in the frame components today, but that was the way Morrie Futorian got started down here, and then built his company up into a huge manufacturing operation, making upholstered furniture. There have been many spin-offs in this area up until the current economic downturn. You probably had north of 30,000 employees here in the state making furniture. And all of that was born from Mr. Futorian’s introduction of upholstered furniture into the area.
INTERVIEWER: His objective obviously was not to make just low-priced upholstery, since I’ve heard other people say that quality was very important to him, and you’ve made a major point of that. What sort of marketing theories or thinking drove Morrie to do what he did?
HOLLIMAN: Well, I probably don’t have the insights from him as to how he appraised the marketplace in terms of what its potentials were. What I remember was that he had relationships with most of the major retailers during those years. His theme was low overhead, but not overdone because he built a management organization and a good one. So, he invested in leadership, but he was careful, and he did it as the company grew. He didn’t overdo it at any given point; he did it along with the growth of the company.
But the thing that I remember most is what we just got through talking about — the integrity of the product. He didn’t try to be the lowest price. He wanted to bring great value to market with exceptionally well-made product, and then be disciplined in the timeliness of how he made delivery of the goods.
One of the unique things about the industry at the time, which is totally and completely different from the way it is today, is that there would be just two markets over the course of a year. You’d have one in the spring and you’d have one in the fall. And when I joined the company the big market was in Chicago on Lakeshore Drive.
INTERVIEWER: But weren’t those January and June markets back in those days?
HOLLIMAN: You’re right, it was January and June.
INTERVIEWER: And so Futorian must have shown at 666 Lakeshore Drive, which became the American Furniture Mart, is that correct? I think it was already probably at its peak at that point, was it not?
HOLLIMAN: That’s exactly right. Now, and we can get off into this if you want to, but there were regional markets then that ultimately became the national market, which wound up down in High Point. But the major markets were in January and June in Chicago. I remember some of the times I would go up there, it was so cold. But the point I was going to make was that we would go to market and sell half of the year out, literally. I mean, we would — we being the company — would write orders at a market and cover six months of the year. So, the salesman’s role was more of service because the orders were already written. Of course, the salesmen would revise them over time depending upon what was retailing more and what wasn’t.
But that’s the way it worked in those days. You booked your business for half a year at market, and I don’t think that was unique to Futorian, I think other companies that were around then were doing essentially the same thing. But it was just so interesting, the fact that you could sell out your capacity twice a year. You’d take new product to market, you know, and also show some other in-line goods that were doing well, and you would sell half a year out, one season out, fall season, spring season. And that’s the way it worked then.
But I guess my answer to your question about what it was that made Morrie and Futorian so special, was the integrity of the product. And that was a great learning experience for me because that was the theme of what we were doing in reality because we devoted so much time to the integrity of the product, and that was all something that we got from Mr. Futorian.
INTERVIEWER: Describe Morrie as a person. What sort of person was he in your experience?
HOLLIMAN: His work ethic was remarkable, from beginning to end. He would work days and he would work at night. I remember what I was telling you about when the company would have those promotional events and bring the customers in. He would entertain the customers in the evening. He would even have them in the warehouses looking at product at nighttime — would either have food brought in or would go to a restaurant. But the workday could have been 12, 15 hours a day. So, his work ethic was unbelievable.
The other thing that I noticed about him, and that was so remarkable to me and made such an impression on me at the time, was the intensity of the work effort while he was at work. I mean there was no casual sitting around drinking coffee. It was all business. And when he was not at work, his social life, I never did get around that too much. I think he had a social life, I mean it wasn’t just all work, but it wasn’t too far removed from all work. I mean he would work weekends, he would work weekdays, whatever it took. His work ethic, the discipline around working, was just incredible.
He was a good man in that he cared for his employees. He treated us with respect, but he was a strong disciplinarian. If he saw work that was being performed not up to what it should be, he could be pretty critical. And the way in which he was critical had lasting impact; it was not just a passing remark. It wasn’t that he would just chew you out and beat up on you, but he would make his point with some emphasis which once again has been a benefit to me in whatever I’ve accomplished over the years. So much of it was from what I learned from him.
INTERVIEWER: Was he open to new ideas?
HOLLIMAN: Very, very. And he encouraged it. He was not one to claim he had answers to all of the questions. He was very open to new ideas and encouraged new ideas, and was willing to spend on new ideas, new equipment, new concepts. He never was a penny-pincher when it came to investing in the business in the right way.
INTERVIEWER: So, your first boss, your immediate boss, was the chief industrial engineer at Futorian. Tell me a little bit about — I assume it was a him ...
HOLLIMAN: It was.
INTERVIEWER: ... since there wouldn’t have been too many women in that job in those days.
HOLLIMAN: Nope. My first boss was a guy by the name of Bob Jett, who came from the state of Arkansas, got his education from Arkansas. He was a good engineer. He had a staff of about ... When I joined the company there were about 10 people. We worked out of the headquarters operation, but there were three plants that we did work in, all three of those locations. Bob was a good engineer, and was with the company for a number of years. I don’t recall how long he was there because once I was promoted out of the engineering department, I don’t think he stayed a long time beyond that, but I just don’t remember.
But he was a good leader and I learned from him. We focused on time study work. We used to go out on the work floor and time all the different tasks with stopwatches, but then later we implemented a predetermined time system, where certain aspects of an operation would have times assigned to them, so you didn’t have to go out on the work floor with stopwatches to work on times. You would have all these small components of time that you would have developed for the various tasks. We would go through the entire operation, timing the work, and you learned a lot about making upholstery by doing that.
Bob was very good at that and did some good work with us in helping to teach us. And that was one of the things that we went to this training school in Kentucky to learn — methods and time measurement. So from those time studies, a lot of other things would grow out of that, such as plant layout, cost evaluation studies, just all the different kinds of engineering-type functions that you would think about. So, Bob did a good job.
INTERVIEWER: Were you constantly changing the way the line worked and the way the line was set up in the factories? Was it always a work in progress?
HOLLIMAN: Yes, it was always a work in progress, and we were constantly making a lot of changes. The methods by which the employees performed their work were constantly being changed. The way that raw materials were flowing into and through the plant were constantly being changed. The factory floor layout was changing all the time. We would get together as the engineering group, and then we would get together with the plant management of a given factory and sit down and talk about these things and make these recommendations. Sometimes we would get the leadership of the factories to cooperate and say they would agree with that. Other times they would resist, and we’d have to work hard if we had strong convictions about what we were doing and that it was going to help the company. But it was on-going and constant change. Nothing remained the same over time.
INTERVIEWER: What sort of input were you getting from the workers? Did you have foremen?
HOLLIMAN: Oh, yeah, we had foremen on the floors. Then you would have a plant superintendent, you would have quality control managers, you would have inventory control managers, warehouse leaders, things of that nature. Those were big factories, so you had a lot of supervision.
INTERVIEWER: And these were all pretty much company-trained people?
HOLLIMAN: All company trained. There were no competitors in the area. This was the only company making furniture, so almost all the people were literally brought out of the agricultural field, you know? They knew nothing about making furniture so the leadership of Futorian trained everybody. That’s where this industry got its springboard from within this state because of so many people that were working for that company. Then some of us went out and started our own companies because we had a burning desire to do something all on our own. That was a desire which I had, and which my mother had beaten into my brain over all those years when I was growing up, that if you ever wanted to make something special of your life, and have things that you didn’t have while growing up, then you had to step out on your own and take some risks. So, all the years that I was working for the Futorian Company, I was thinking that that would not be where I would always be — that I would want to do something on my own.
And it just so turned out that Bo Bland and I — he and I were the two founders of Action Industries — had common desires. We didn’t have any money to amount to anything and really had to stick our necks way out, but we both wanted to have our own business. And what Mr. Futorian did for us over that 10-year window of time in my case, and in Bo’s case he was with the company for 16 years ... But he taught us the fundamentals of how to go out on our own and be successful.
Then the great thing about it after that — he lived for several years beyond our start of Action, and we were fortunate to have been fairly successful — was that he would come to see us during furniture markets. He would stand outside the showroom’s entrance and he was reluctant to come in because we were a competitor.
INTERVIEWER: He didn’t resent you and Bo Bland starting up a competing company, in effect?
HOLLIMAN: He never did. You know what this man did that was unbelievable? Bo and I told him that we wanted him to come into our showroom and see what we were doing and to critique it. He would be resistant, but finally he would give in. He would go through our showroom and would point out things that he felt we should be doing better. Even after our having left the company and having become a competitor. He was not as involved in Futorian by that time — it was more like he was an advisor to the business. I mean, he wasn’t running the Futorian Company then, but he was still connected. But he was still criticizing shortfalls.
INTERVIEWER: Did Morrie ever come into your plants, your factories?
HOLLIMAN: No. He never did. But he visited our showroom every market. Once we got him in the first time, after that he would come and visit and he would always say, “I just wanted to come by and say hello.” We’d say, “Mr. Futorian, you have to walk the floor with us.” We would take him through the floor, and he would not hesitate to point out anything that he saw that he felt was compromised — even then. That should tell you something about what I mean when I talk about how his whole philosophy was built around quality and integrity of product. He was pointing it out in the late years of his life to a company that was started by two people that had left his company. He never did resent our having left. He was not running the company in ’70. Bill Richman was running the company, but he was still involved.
INTERVIEWER: And the company became Mohasco — or Mohasco bought Futorian ultimately — isn’t that pretty much what happened?
HOLLIMAN: That’s correct.
INTERVIEWER: But when you joined in ’60, Futorian would have been pretty much at its peak, would it not?
HOLLIMAN: No, it grew more after that, and Mohasco came on after that. When I joined Futorian there was no Mohasco — that came later. But the integrity story just lived with him all the way until the time, I guess, he drew his last breath.
INTERVIEWER: Given what you said about Mr. Futorian’s work ethic, I assume you weren’t working eight-hour days either. You likely were working a lot longer than that, and perhaps with the same intensity that you described in him.
HOLLIMAN: I learned it. For the first two or three years I worked at Futorian, we would always work a half day on Saturday. Always. There was no golf and weekend stuff like that. We would work. We would work long workdays, 6:30 in the morning until 7:00 at night was very routine. I remember on the weekends, after working a half day on Saturday — this was when I was in the engineering department — Bob Jett always wanted to go to this little restaurant area in the factory, and we would play chess for a couple of hours after we got out of work on Saturdays, and then we wound up going home at 2:00 or 2:30 in the afternoon.
But this work ethic was something that followed me all the years of my career. That was one of my expectations of others that their work ethic would be comparable to the things that we did in those early years. And up until the time I retired from Furniture Brands, I spent many, many hours a week working — whatever it took.
INTERVIEWER: So, you must have felt you fit right in at Futorian, even though you’d had no knowledge of furniture at that point. It was just the right fit for you and it was fascinating work, I assume.
HOLLIMAN: Very. It wasn’t making jet engines, but it was very fascinating. I guess the real testimony to that fascination is that I spent my entire career in furniture.
INTERVIEWER: Did you ever get into training the workers?
INTERVIEWER: What aspects of your career with Futorian stick out in your mind?
HOLLIMAN: Well, my responsibilities up until 1968 were staff-related as opposed to line management. Then in ’68, when I became the plant manager, I had responsibility for the entire operation, and had to draw on everything I’d done and learned. I had direct responsibility for carrying out the game plan, meeting the targets, ensuring the integrity of product, growing the company, measuring up to expectations around the profit goals, all those kinds of things.
INTERVIEWER: As an engineer, were you involved in all those aspects of the enterprise, the overall strategy and what that meant in terms of production and quality?
HOLLIMAN: No, just all of the things relative to the manufacture of the product. I didn’t get involved beyond the engineering time frame. I did not get involved in the sales and the marketing and the product development pieces of the business. Most everything was focused on the manufacturing floor. Then subsequent to that, later on in my career, I did get involved in some of these other roles and in some of those things.
INTERVIEWER: What was the first furniture market in Chicago that you attended?
HOLLIMAN: It was in the wintertime, but I’ve forgotten the exact date.
INTERVIEWER: Would it have been fairly early on after you joined the company?
HOLLIMAN: It would have been most likely in about the third year.
INTERVIEWER: Well, as a production and manufacturing guy, what was your role at your first markets? Why did Morrie think you needed to be there?
HOLLIMAN: Probably so I would be learning more about the overall business, I would assume. I wasn’t privy to these conversations, but I guess they thought that maybe there was some opportunity for me beyond where I was. So, it was more of an exposure type of thing. Getting to meet customers, hearing of complaints or compliments or those kinds of things. But initially, I really had no specific role at the market — it was just exposure. I guess from his perspective, and those that were my supervisors, it was that it was preparing me for something else.
INTERVIEWER: Tell us what you remember from the first market you attended and describe it in detail.
HOLLIMAN: Oh, gosh, it’s been so long ago it’s hard to remember. What I remember was Lake Shore Drive, and it was so cold. It was in the wintertime and it was so cold it was unbelievable. I had never been exposed to such cold as a Mississippi boy — all that cold wind blowing off Lake Michigan.
I remember just being fascinated by the magnitude of the big city and the furniture industry that reached from coast to coast, east to west, north to south. And meeting some of those people in the Futorian Company whose names I had heard but I had not met. These mostly were people who were not directly involved in making the product like I was, but who were selling the product to our customers. Then meeting the retailers who sold our product to consumers — hearing and learning a little bit about how they marketed the product, how they advertised it, those kinds of things. Just getting to know something about the business around a market as opposed to spending all of your time on a factory floor. That was basically what I remember.
INTERVIEWER: Tell us what you remember from the first market you attended and describe it in detail.
HOLLIMAN: Oh, gosh, it’s been so long ago it’s hard to remember. What I remember was Lake Shore Drive, and it was so cold. It was in the wintertime and it was so cold it was unbelievable. I had never been exposed to such cold as a Mississippi boy — all that cold wind blowing off Lake Michigan.
I remember just being fascinated by the magnitude of the big city and the furniture industry that reached from coast to coast, east to west, north to south. And meeting some of those people in the Futorian Company whose names I had heard but I had not met. These mostly were people who were not directly involved in making the product like I was, but who were selling the product to our customers. Then meeting the retailers who sold our product to consumers — hearing and learning a little bit about how they marketed the product, how they advertised it, those kinds of things. Just getting to know something about the business around a market as opposed to spending all of your time on a factory floor. That was basically what I remember.
INTERVIEWER: Why did Morrie apparently see the need for those private markets at the Mississippi factories? Since you were selling out six months of production at the Chicago markets, why did he bring these customers or potential customers to the plant? What was the idea behind that?
HOLLIMAN: I just think that what he wanted to do was to give the retailer whatever ammunition he needed to promote when he needed to promote. Where there were gaps in the business, where it was soft. He just took a special interest in giving good value, and when he would sell out his capacity, he still would have blocked out some order capability within that window of time to do this thing that he would do when he would bring the people to the factory. In other words, he might set aside a thousand units for some retailer that would not have been identified at the beginning of that six-month period. So he would still have a slot for X amount of units after he would bring these major retailers to the factory for these promotional events. And I guess at times he would do it just to stimulate business where he might have some excess capacity, and he would do things like that.
INTERVIEWER: I guess the High Point Market in part grew out of some of the North Carolina factories bringing in major retailers for private, invitation-only markets, so that perhaps wasn’t an unusual thing for people to do in those days.
HOLLIMAN: Probably not. And then, of course, the Chicago market started going down and High Point started going up, and then everybody started moving into High Point. And these warehouse-type sale events like I’ve been talking about disappeared over time.
INTERVIEWER: So, Morrie was actually trying to sell to retailers at these private markets. The dealers weren’t just being sold on the quality of what Futorian was doing. He wanted to actually get commitments.
HOLLIMAN: Oh, yeah. And it was serving two purposes: He was giving exceptional value in a narrow window of time to the retailer to drive business; and then a lot of times he was taking inventory that he had too much of, or something that he wanted to get rid of. And so some of it would be what you’d call closeouts. He may have had one style that he was going to drop from his lineup, but he had materials that were specific to that style. So, he would promote it or he would do a closeout for the benefit of giving good deals to important retailers, and for his benefit by getting that inventory cleared out of his system. So the retailer would get an exceptional value on that product for a last time. But those days are done now. You don’t do that anymore, but that was part of the marketing and merchandising concepts back in the early years when I first got into the business.
INTERVIEWER: Was Futorian offering a whole range of fabrics on frames?
HOLLIMAN: They would do it.
INTERVIEWER: Was there a real made-to-order component to what Futorian was doing?
HOLLIMAN: In some cases, yes. And it worked extremely well for a given window, for a given period of time for a few years there.
INTERVIEWER: Did you ever get involved in those days in the shipping and delivery of the product?
HOLLIMAN: Well, when I became a manager of production and inventory control, when I was serving the needs of corporate, so to speak, or the larger company, yes. Timeliness, you know, was important. We would have schedules where we would have commitment dates and we would need to have the raw materials all on location to make sure that that product could be made to meet that commitment date. And if we didn’t have it, what were we doing in expediting to make sure that the materials were being addressed to complete that order on time? As far as the warehousing, and being responsible for loading the trucks and the railcars and things like that, I didn’t have that responsibility.
Now, from an engineering standpoint, I would get involved because we would be looking at the size of cartons that we packaged the furniture in to maximize the number of units that we could get in a boxcar, for example. We would look at the specifications of the carton, and maybe we would change it a little bit where we could get more in the car than what was being put in it. Those would be engineering studies that you’d be working on. But from a standpoint of managing the loading and unloading, all of that, I wasn’t involved with that.
INTERVIEWER: Was it typical to have large inventories of components? Or were you working towards what nowadays we call just-in-time manufacturing?
HOLLIMAN: No. Back then you had large inventories.
INTERVIEWER: And you had large warehouses of product ready to ship.
HOLLIMAN: Very large warehouses. Oh, yeah. You would have thousands of pieces of furniture in a warehouse.
INTERVIEWER: So, in that sense, it was a different world.
HOLLIMAN: Totally different. For example, all of the fabrics were made in the United States back then, just as one example. Today, fabrics that are put on furniture that is sold in America come from all over the world. But back then, all of the fabrics were made domestically. One of the reasons Mr. Futorian was attracted to Mississippi was that the hardwood timber industry was so vast in this state, and he would have his plants closely accessible to that particular component of raw material, the hardwood lumber industry, and he would be right here where sawmills were right here in this area, right around where his factory was located, to make hardwood frame parts.
INTERVIEWER: I thought the hardwoods were all in Appalachia, and that’s why the North Carolina furniture manufacturers were where they were.
HOLLIMAN: That’s true, that’s true. Probably a lot of different species of wood versus what they would be down here, but that was one component. The other component was very inexpensive labor, as opposed to some other part of the country at the time. That’s all changed, but back then he was able to capitalize on some very low-cost labor because it was all out of the agricultural industries, very poorly paid jobs. But his access to the hardwood lumber inventory right here where his factory was, was another key consideration.
INTERVIEWER: You said you took over as Okolona plant manager in 1968, right?
INTERVIEWER: Describe the situation. You alluded to a union campaign there.
HOLLIMAN: Well, at the time that the move was made, I had production and inventory control responsibility for the company — a staff job that involved providing the plants with the raw materials that they needed to manufacture product. That was an important responsibility. Then in the early part of the year in ’68, they approached me on becoming the manager of the Okolona plant. I was overwhelmed by it — 800 people, a million square feet of space, making 12, 13, 14,000 pieces of furniture a day, a union campaign underway, people not happy with some things that were going on, the way the company was being run, I guess. I’ll never forget it. The lawyer that worked with us was a guy by the name of Herman Dacover from Chicago. Chicago, with Mr. Futorian living there, I guess was part of that connection.
But anyway, not to dwell in too much depth on the campaign itself, but just to say that it was a tough time to take over a factory when you had something like that right on your table. Basically my message to the people was that I’m going to be forthright and honest with you, I’ll tell you the truth, we’re going to operate with integrity. Not that that wasn’t being done, but something obviously wasn’t right or the people wouldn’t have been upset with management and wouldn’t have been considering voting a labor union in.
But we were successful in winning that vote, got it behind us, and in fairly short order, probably within the first 120 days, from the time I took the job. Then, after that, it was all about learning how to do the things that a plant manager at a big plant does. And you know, I think maybe my education and the training that I’d had in those eight years that preceded that job at Futorian, and learning from Mr. Futorian and learning a lot about the company, prepared me fairly well. And then it was all about leadership and working with people that were subordinates, direct reports of yours, and executing and doing the things that needed to be done with a real work ethic — all the things that we’ve been talking about. I think we were quite successful. That plant manager job lasted for two years.
INTERVIEWER: What were the elements of that job that were most challenging to you, perhaps because of your lack of experience in those areas?
HOLLIMAN: Understanding the workforce, especially in light of the things that drove them to where they wanted another voice to represent them instead of the management of the company. Understanding the why of that was a big challenge to me, and I probed that in depth, trying to learn from the people why they had done this, and what was wrong there. And that was an important, extremely important, thing because I felt like I sort of dug that out and thus had determined what kind of leadership would make people not want to consider things like voting in a labor union.
INTERVIEWER: What did you learn?
HOLLIMAN: That it was of the utmost importance that you as a manager were trustworthy, that the people in the plant knew that they could count on management, and that when the management said it would do something, that it would do it. That was a key part of it. I’m sure there are things that are not specific to my recall at the moment that I could add to that, but I think that if I accomplished anything, it was making the people believe that whatever I told them would happen, it really would happen. They thus would have confidence in the leadership of the company, and not only from what I told them would happen, but that the entire management of the company would subscribe to that thinking as well, and would lead that way and would be truthful with people that worked underneath them, because that’s what I expected of the managers.
And then I had to deal with the growth of the company and the plant; it was fairly dynamic at the time. And doing it and executing and learning as I was moving along. I had been a production manager before in a factory, before I took the corporate-level production and inventory control thing. I had been a production manager, which was scheduling the work and seeing the pros and cons of how that works in getting product through the factory, what the hurdles were. So, it wasn’t like I was coming in and taking over and not knowing anything. I mean, I learned a lot in those eight years.
But the leadership piece of it, leading the management team, leading the people, that was a learning curve that hopefully I did well with. And that looking back on it, that’s what the people would say
INTERVIEWER: I take it from what you said that the union campaign in your view wasn’t really about pay, about wages. The workers weren’t complaining about being underpaid or anything like that.
HOLLIMAN: That’s right.
INTERVIEWER: You’d think that a union coming into a Southern plant would say to the workers: Look, you guys are getting paid X dollars less per hour than the folks doing the same work in Virginia, or something like that.
HOLLIMAN: None of that in this case that I remember. It certainly was not a highlight of the union effort. There could have been maybe a few people in, for example, a sewing room environment that would complain about somebody over here having a wage that was a little bit different than theirs, but that was not the key issue of the union campaign. As I’ve said, it came down to the workers being able to trust the leadership to do what they said they’d do. That’s what it boiled down to.
INTERVIEWER: Let’s lead up to you and Mr. Bland’s founding of Action Industries. When did you first meet Bo Bland? He was already working for Futorian when you joined the company, correct?
HOLLIMAN: Yes. I met him after I went to work at Futorian.
INTERVIEWER: He was also a Mississippi State graduate as you were, and also ended up in industrial engineering, if I recall.
HOLLIMAN: That’s correct. I went to work in February of 1960. I don’t remember the month when I met him, but it wasn’t too long after that. He was running a plant here in Tupelo. He lived here in Tupelo, and the plant was what was referred to then as the Avon plant. And this was a plant making chairs. It wasn’t a really big plant, and it was making upholstered chairs that were in a different price point, and were not of the same type exactly that was being made as companion chairs to the sofas that were being made in the big plant in New Albany.
And that’s where I met him because I was doing some engineering work in his plant. I met him for the first time there. And then later on, he became vice president of manufacturing, and he was vice president of manufacturing when I was named the plant manager of the Okolona plant. And we got to be very close, of course. One of the reasons we became friends was because I also was living here in Tupelo at the time. I was commuting back and forth to New Albany, but I lived in Tupelo. So, while he was here I got to know him, and when he became VP of manufacturing I got to know him better. We spent a lot of time in each other’s homes visiting, socializing, and going out to dinner together.
It was during that period of time when we started talking about the possibilities of starting our own business. We got our wives involved at some point and basically told them that this would be a huge risk and we both were committed to do whatever it took. I know we both used this frame of reference, I know I did. If I had to pump gas the rest of my life that was a risk I was willing to take to be a part of starting your own company. And Bo was instrumental in all of this. He was older than I was and he had more contacts in the local area. We needed some support in addition to what we could do in putting the capital structure of the company together. We needed some support from some local investors and he had better contacts there than I did. So, he led a lot of that effort.
But the answer to the question is, just through the friendship is what brought us to understanding from each other the will and the desire of wanting to be a part of our own thing. He had a clear conscience over the 16 years that Bo had given to Mr. Futorian’s company, everything we both had done in terms of effort and contribution — in my case in just under a 10-year run. I believed that I had done everything that I could do.
I guess the point I’m making is that there was no guilt left behind in leaving Futorian. We felt that both our contributions had left it hopefully to some degree much better than when we first got there. And I believe that was true.
But that’s what led to our launch of Action. We were compatible, thought a lot alike about a lot of things, and yet my experiences during my time with Futorian were different from his. So, that led to putting pieces of knowledge together, I guess you could say, to work more effectively.
And having just run a factory for two years, that was fresh on my mind, and I had a lot of contacts as far as knowing who to contact about bringing people in to start your business. We started up with about 40 people in the mid-year of 1970. And from there we grew and were very fortunate.
INTERVIEWER: Who was your immediate boss when you were plant manager at Okolona?
INTERVIEWER: So, as VP of manufacturing he would have been your immediate boss?
HOLLIMAN: He was my immediate boss.
INTERVIEWER: Other than the very strong desire to step out on your own and run your own company, what opportunities in the industry did you see for a small, startup company? Were there niches that Futorian and other companies weren’t serving adequately? What was your strategic thinking?
HOLLIMAN: We felt like there was a niche. As a matter of fact, when we first started the planning of the company, we were thinking we were going to be in the stationary upholstery business. We changed our thinking as we put a business plan together. We spent a lot of time putting it together on weekends, long hours at night, and tore it up and threw it in the trash can.
HOLLIMAN: Because we decided that our better opportunity was in motion furniture — reclining chairs. So we rewrote the plan, produced a new plan, a new business plan. We decided to focus our entire effort on upholstered reclining chairs initially, and then down the road sofas that had ends that reclined. And until the Lane Company got involved, we stayed with that all the way up to close to the year 2000, so 30 years. We devoted our efforts to nothing but furniture that had something underneath it that made it do something — a stationary chair that became a reclining chair, and sofas that had ends that reclined, and backs that had components that folded down for tray tables and things of that nature.
INTERVIEWER: What convinced you and Bo that that was the way to go as you tore up your first business plan and came up with the new one?
HOLLIMAN: There was more than one thing, but we felt that as a startup operation — no different than today — you start with a different overhead structure, your value story could be better than larger companies. I mean Futorian had grown to be a big company. La-Z-Boy had grown to be a big company. There was nobody out there that we knew about at the time that looked like what we thought we could look like, which would be a low-overhead operation that had great integrity in terms of its product and that had a fairly good exposure to the marketplace at the time.
We had both been out there and spent time in the marketplace and knew of salespeople, sales organizations.
We brought in a guy that had been a part of the Futorian family of companies, that was older, a good bit older than us at the time as a matter of fact, and who was single. A guy by the name of George Pickard, who headed up our sales and gave us a lot of leadership on the marketing side of the business. But there was a niche out there for us as a small, flexible company offering great value. We thought we could make a place for ourselves, and carve out a piece of the market that could be attractive.
We had a very conservative business plan. As I remember, the first full year we were in business, our plan called for a volume of $4 million — no, called for about $2.5 million in the first full year. We actually did $4.6 million. We were profitable in the second month after we launched the company, and never did operate at a loss after that first month. We grew at a much faster pace than we had anticipated, but it was controlled growth. We didn’t let it run away from us.
I guess that’s pretty much the simple answer to how and why we started up Action Industries. There may have been a few other factors that just don’t come to mind right now, but I think it was simply a belief that we could do it as well as anybody else, that we could do it with a better value story. We could offer our customers price points that our competition could not, mainly for the reason of being small and having a low overhead. So, I think that’s a key to it.
INTERVIEWER: Who were your target retailers?
HOLLIMAN: That was driven by this person I was telling you about, George Pickard, that led our sales organization. But just to mention one or two, there was a San Francisco-based company called Breuners. Do you remember them?
INTERVIEWER: Oh, yes. They were a big West Coast furniture retailer that eventually went out of business, maybe in the late ’80s or early ’90s.
HOLLIMAN: They were great people. During the Futorian years they had stores in probably 10, 11 or 12 communities in and around San Francisco. They were a big customer of ours. I can’t think of the name of it now, but in St. Louis there was another big customer. I remember Mark Smith was the buyer but I can’t recall the name of the store. But our first customers were some of the same retailers that Futorian was selling, and that we knew. We picked up some additional customers along the way, but a lot of those people that we saw knew us initially, knew who we were. So, we took advantage of some of the contacts that had been made from our prior experience.
INTERVIEWER: As you started Action, how did you get the financing, how did you decide on the facility and hire your first workers? Tell us some of the nuts and bolts of the startup.
HOLLIMAN: We capitalized the company for $285,000, which sounds like a low number today, but it was not that bad then. In addition to the money that Bo and I were able to muster up, we went out and sold some shares to some local people — accountants and doctors ...
INTERVIEWER: That you knew personally?
HOLLIMAN: That we knew. Bo did most of that because he had been here longer and knew the people more than I did. The bank that this office is in, it’s now BancorpSouth, was the bank we borrowed from to start Action. Back then it was the Bank of Mississippi, and prior to that it was the Bank of Tupelo.
INTERVIEWER: Did the bank have shares in the company, or did you just have a line of credit with them?
HOLLIMAN: We had a line of credit with them, and it was based on who we were and whatever reputation we had, because our resources were very limited. So, the bank took a major risk too, a major risk.
INTERVIEWER: Were you both living in Tupelo at this point, both you and Mr. Bland?
HOLLIMAN: I had moved to Okolona when I became plant manager there, but I moved back to Tupelo. We leased a building from a friend of his and mine. The building had 40,000 square feet of space and it was split down the middle; it was a little warehousing operation for two different companies that were warehousing in the building. And this building, by the way, I can nearly point it out from right where we are in this office, it’s probably not over a two-minute drive from here. But the partition that came through the middle of the building allowed us to lease 20,000 square feet of space in the 40,000-square-foot building, and we started operating out of that 20,000 square feet of space. The parking lot was a dirt and gravel parking lot. As we grew, we leased the other 20,000 square feet, so we had 40,000 feet of manufacturing and warehousing space. Then as we grew some more, we had to move warehousing out of that building because we had to have that space for manufacturing. So, eventually, we took all 40,000 square feet of space for producing.
Then we would truck the goods to a warehouse that was nearby and that was much larger, so that was our warehouse for finished goods. Then two years later we built our factory, our first factory, which was south of here, about four miles south of Tupelo, and we built a 100,000-square-foot building. And then as we grew, we built onto that building, and then later we moved to Pontotoc, Mississippi. I can’t remember the exact year we did that. I started to say ’73, but I believe it probably was ’76. So we built a factory that’s 25 miles west of here.
INTERVIEWER: A separate factory?
HOLLIMAN: Yes, a separate factory, and we expanded it several times, and expanded the one here several times, and then built a factory in Saltillo — this is over a number of years now — which is north of here about four miles. And then we finally built a factory northwest of here in the Belden community. And all of those plants made different lines of product. Now, that’s what it ultimately came to. The factory in Tupelo, the first one, was a reclining chair factory. The second one in Pontotoc also was a reclining chair factory. The one in Saltillo was a factory that made sofas that have ends that recline and then the one in Belden is a factory that was a combination of what the other three plants were making.
All this growth includes the time after the Lane Company acquisition, and I guess I should back up in the chronology and talk about that for a moment. When we started making product in mid-year 1970, we got to be known fairly fast because our growth was moving at a pace considerably beyond what our plan had called for. And it was starting to stress our capability financially. During that period of time, the word got around that this was a company that probably had some opportunity to grow even more. So, the people from Bassett made contact with us about the possibility of acquiring Action.
INTERVIEWER: This would have been early in the ’70s?
HOLLIMAN: This was in 1972, two years after we got started. The Bassett people made an approach and the Lane people made an approach. There was a company called U.S. Furniture Industries that owned a furniture company called Brookwood that was based in Pontotoc. They made an approach, and there also was a company in Tennessee that was in the upholstery business. The owner of the company was a guy by the name of Ben Gaines, and I can’t recall the name of the company but the Holiday Inn family had an interest in this business.
So, we got involved in dialogue with all of them. And the reason we did was because we could see that our ability to keep growing was going to be impaired by the limited amount of capital that we had for expansion — most of our capital was going for operations. So, the Lane people got very aggressive, and one of their divisions had an airplane they sent down here to Tupelo, came down and picked Bo and me up and we went to Virginia and met with who then was the CEO of the company, Hampton Powell, and B.B. Lane. And I’ll never forget, Bo and I went back to the hotel because we didn’t really ... Had we been given a choice, we wanted to keep the company independent.
INTERVIEWER: That’s why you founded it, of course, to have your own business.
HOLLIMAN: To have our own business. But, we were in Hickory, North Carolina, and we sat up all night long talking about whether we should sell the company. I’ll never forget, we sat up all night long. We’d been with the Lane people in Virginia, we’d come back to Hickory and we were going to fly home the next morning early. We wrestled with it all night and finally decided that if we were going to grow the company and take advantage of what appeared to be an enormous amount of opportunity, we were going to need some supporting capital. And Lane was ... They basically said we’ll do whatever is needed. I think frankly that they were affected a little bit by the fact that Bassett had made an inquiry as well, but I don’t know that for sure.
Anyway, long story short, we agreed to sell. And that was a ... I would say that our relationship with Lane was good. They did everything that they said they were going to do. Unfortunately, the value of the stock — which was a big piece of the deal that was made ¬— we received stock in the Lane Company — deteriorated in a significant way over time and made what appeared to be an attractive package for us look less so. In hindsight, just from my point of view, because I can’t speak for Bo on this, but if I had to do it over again I’d probably do it differently, probably would have settled back because staying independent was important. Anyway...
INTERVIEWER: I’m not very good at finance, and obviously you’ve had to become an expert at it over the years. Since you were a strong, growing company, why couldn’t you just have kept borrowing to keep the company growing? Obviously, you can’t dig yourself into deeper and deeper holes, but ...
HOLLIMAN: We were doing all of that. We were borrowing and we were factoring our receivables. But still, in spite of all that, the demand for cash because of the rapid growth was outpacing our capability to supply it. Even with the lending that was there, it still wasn’t enough.
INTERVIEWER: So, you couldn’t have grown to four plants. You didn’t have the ability to invest that amount of money on your own.
HOLLIMAN: Exactly. And one thing that Lane had was money. They weren’t growing. They had several subsidiary companies they owned, and they weren’t growing. We were growing by leaps and bounds. We were producing attractive earnings results. So, obviously what they did was they agreed to provide whatever capital was necessary. So, that relationship, from that point of view, was excellent. But over time, the value of the deal, taking into consideration that the big majority of it was in stock, turned out to be less than what we first had thought. So ... and maybe I’m out in front of you too far, but I’ll go ahead and tell you about this, we decided we were going to leave and start up another business.
INTERVIEWER: This would have been about when?
HOLLIMAN: I would think this would have been in the late ’70s or early ’80s.
INTERVIEWER: And Lane bought you in ...
HOLLIMAN: ’72. And Lane was acquired in the late ’80s by Interco. But at this time it was still Lane. And Bo and I decided that the return was just ... We just felt like we were not happy with what was taking place and with what we had received; we felt like we had returned a lot more to them. So, we were going to leave. And they brought in a consulting firm in the benefits field, a company called Towers Perrin. And they had their people working out of Atlanta. Anyway, once again long story short, they made an appeal for us to stay and then backed it up with what both of us felt was worthy of staying in terms of benefits. And so —
INTERVIEWER: It really wasn’t a matter of getting more capital; they had supplied you with capital.
HOLLIMAN: They had. This was a personal issue, hinging on the fact that we just felt that the deal that was done in ’72, had The Lane Company prospered and done well as a public company, we would have been fine. But while we were doing extremely well, the other pieces of Lane were not. If the principals were sitting around this table today, they’d tell you the same thing.
Anyway, that’s the way it worked out and why we stayed. And then the rest is history. Bo retired in the early ’90s and then I became the CEO of Lane. I was executive VP, he was the president. When he retired I became the president of Lane. And that lasted until 1996. We were a $600 million company with outstanding earnings performance. By then we were a part of what was then Interco, which subsequently became Furniture Brands International. And I’ll tell you the story about how that happened when we’re at that point. Or maybe there’s something that we’ve missed in the interim.
INTERVIEWER: We can go back and cover those things, but continue please.
HOLLIMAN: In 1996, when I was president of Lane, Dick Loynd was the chairman of what was then Interco. That company had gone through bankruptcy and had come out of bankruptcy in the early ’90s with an enormous debt burden on its shoulders — three-quarters of a billion dollars. Dick came to Tupelo and told me that he was going to retire as the CEO of the company, and was going to become chairman. They had done a comprehensive search and had not been successful in finding a replacement for him as CEO, and he and the board wanted me to consider taking over the CEO role at Interco or subsequently at Furniture Brands.
I didn’t want any part of it. I knew that it would have to be a relocation to St. Louis and I was happy in Tupelo. Action was doing great, we were growing. I had my family here, most of my kids were here. I have a daughter, Carlyn, in Memphis who is a nurse at St. Jude Children’s Research Hospital; another daughter, Tracie, here in town who’s married and her husband’s in the furniture supply business. A son, Skipper, who was working for us at the time; and Brandi, another daughter, had married and her husband was in the furniture field, had been with Lane, had left and come back, and so she was here. And then I have a daughter, Paige, who was going to school at Vanderbilt and that subsequently wound up in the psychology field as a counselor.
So life was good and I didn’t want to move. So I told him I didn’t have any interest. And he came back and appealed again. We went through several months of this; it started in March and I think it finally came to closure at the end of September. He made a number of trips to Tupelo; I made two or three to St. Louis. I never did just say leave me alone, don’t bother me anymore, but from the time this all started until I agreed to take the job, the board agreed to let me live here, let me have an office here and then have the office in St. Louis. Dick was going to remain as chairman for a while, which he did. Then I became chairman after I took the CEO role. About a year later, I took the chairmanship role as well.
But the reason I finally took the job was that I had become fascinated, over time, as I learned more from Dick, about what was going on in the company. At the time, the company consisted of the Lane Company, Broyhill and Thomasville. That’s all it was, but that was a big chunk, a lot of business.
INTERVIEWER: So, Interco had been through the bankruptcy ...
HOLLIMAN: They had been through the bankruptcy.
INTERVIEWER: ... and had shed Florsheim Shoes and some other companies. They were a huge conglomerate at one time, and all the furniture was almost a minuscule part.
INTERVIEWER: And didn’t they buy Ethan Allen at one point?
HOLLIMAN: Yes, owned Ethan Allen at one point, but in the bankruptcy they had to get rid of that and most all of the non-furniture stuff. They didn’t get rid of 100 percent, but they had to get rid of most all of it. There were a couple of components left when I got involved, and that were later spun off, but most all of it had already been unloaded.
INTERVIEWER: So, when you agreed to be CEO it was essentially Broyhill, Thomasville and Lane.
HOLLIMAN: That’s right. And so I took the job ...
INTERVIEWER: This would have been in what year?
HOLLIMAN: This was in October of 1996. And the company purchased an airplane, based it here, and that way I could commute between here and St. Louis, and then do whatever I needed to do. I spent a lot of time in the field with retailers, some relationships which had been cultivated previously. Others that I worked on after getting the job. And we turned in record growth and sales numbers in ’96, ’97, ’98, ’99, 2000, 2001 and 2002. And then we hit the wall in 2003.
Now, we did something else, and this essentially was my doing, during my time as CEO. Masco wanted to bail out of the furniture business. I felt this was a great opportunity, and the board agreed, so we acquired Drexel Heritage, Henredon and Maitland-Smith. As I’ve said, we owned Lane, Broyhill and Thomasville — those were the primary pieces of the furniture business. But we also owned some smaller furniture companies, such as Pearson and Hickory Chair. And we owned a small business that was in the high-end office products business, which has subsequently been sold, called Hickory Business Furniture. But these were little pieces. The big guys were Lane, Broyhill and Thomasville. And then we added Drexel Heritage, Henredon and Maitland-Smith, all pretty good-sized pieces. And with the smaller companies, we had 13 companies in total.
But the market started changing, with more and more furniture manufacturing being done overseas, particularly in Southeast Asia, with China taking on a growing role. And more and more retailers were going to the factories and to the markets over there. And to some degree, it seemed to me that this could have a really bad effect on us and our business, and that we needed to get involved in retailing in a fairly significant way beyond just our Thomasville stores, because I had the fear that all or most of the important retailers were going to go direct and start sourcing product from other parts of the world, and we were going to be left out in the cold. So, we put Broyhill in the retail business, and put Lane in the retail business. Reflecting on that today, it was a mistake, we shouldn’t have done it, but at the time it was just done out of fear that all of that market was going to change overnight, and why should stores buy through us to get product that we were probably going to source to some degree offshore ourselves? So, that was the reason to do it. But that’s the chronology of how we got to that point.
INTERVIEWER: I do want to go back to your days at Action and ask: How did you and Bo decide on your respective roles? You were both industrial engineers by training, and I assume you both were heavily involved in setting up the original plant. But were you basically the manufacturing person and Mr. Bland was essentially the marketing person? How did that work out?
HOLLIMAN: I was the manufacturing guy. I would take care of the operation, recruiting the people, bringing in the management team, the factory management team. At the beginning, of course, he and I were the only top managers — that was it. We did have the sales guy I told you about, the older guy, George Pickard.
INTERVIEWER: How did you come to know him?
HOLLIMAN: It was through the Futorian years. Knew him really well. But George was sales. Bo was president of the company and George was going to answer to Bo. Bo was going to be the administrator and I was going to be the operator, the factory operator, factory manager. So, I recruited the people for the most part — all of the factory people for the most part and the management, and set up the factory and was in charge of all that out there, and he was doing all the other stuff. I was working on the inventories and had a couple of girls in the office doing the buying and stuff like that. We did some of that together, too. A lot of it was teamwork, he and I just working as a team. And then over time that of course changed, but initially, to get the company going, that’s the way the structure worked. We never had any real disputes, never. We worked easily and well together. We were a good duo.
INTERVIEWER: And Action grew a lot faster than you anticipated. What about your price points? Were they a major driver of your growth?
HOLLIMAN: I would say that when you match what we were doing in terms of price and value, we were probably 20 percent under the market. When I say under the market, I’m talking about under the Futorians, under the La-Z-Boys, and that was where most of the reclining chair business was done, although there were other companies. But we were probably 20 percent below that market. In terms of product integrity and quality, we were as good as anybody out there, if not better. That drove the business fast, plus the fact, I think it would be safe to say, that we serviced the dealers. People that ordered goods from us were getting timely deliveries.
I think that the obsolescence issues were limited. The things they bought from us, they were turning instead of sitting on their floors and not retailing, and having goods back up in the warehouse. The stuff was selling. And it was selling, by the way, because the customer, the consumer, could look at it and see there was a value there that was better than what they saw on the floor with the other brands represented. Of course we didn’t have any brand recognition at the beginning, but over time, we had the Lane brand, which probably helped to some degree, but it was not the difference between being successful and not being successful. It was just outstanding value, with product that had a great deal of integrity in terms of quality.
INTERVIEWER: What markets did you go to in those early years?
HOLLIMAN: We had national coverage almost from the very beginning. Pickard had been sales manager for Barcalounger for a period of time, and George traveled the whole country for us. He spent a lot of time in the West but he knew people all over the U.S. So in leading the sales effort and recruiting salesmen, he helped us do business everywhere — North, South, East, West. The majority of our business early on was probably out West — I’ve already spoken of Breuners being one of our first big accounts in the West. But closer to the location of the factory, in the southeastern U.S., let’s say from the Mason-Dixon line south, probably in the first three or four years of the company, that was where a majority of our business was done. But we did business everywhere.
INTERVIEWER: Did you have major accounts in the Southeast?
HOLLIMAN: Haverty’s. Rhodes also was a customer, but we did the majority of our business in that part of the country with Haverty’s. We also sold to a lot of mom-and-pop retailers, and to some of the department stores. We sold to Nebraska Furniture Mart, and Star Furniture in Houston. We sold Finger in Houston. We sold Sanger-Harris in Dallas. If I could put my thinking cap on, I could come up with a lot more specifics. Betterman’s in St. Louis comes to mind. In Roanoke, Virginia, I remember Grand Piano. Those were some of the retailers that we sold, not all of them right out of the gate, of course, but over the years as we grew.
But over time we became completely national from every point of view. And more recently, before I became head of Furniture Brands, we were selling to the discounters — Wal-Mart, Sam’s Club, Costco, BJ’s Wholesale — and still are.
INTERVIEWER: One of the reasons Lane was interested in you was simply because they wanted to get into recliners, true? They tried some recliners but were unsuccessful.
HOLLIMAN: That is true.
INTERVIEWER: They found it a lot more difficult than they expected.
HOLLIMAN: Well, yes, they found it a lot more difficult. The effort that they made to get into the recliner business faded quickly. But they wanted to be in the reclining chair business. Mr. Powell made that abundantly clear to us that that was one of the keys to why they were pursuing us among maybe other things. Fortunately for Lane it worked out that this deal was put together. They became a major factor in the reclining chair business and own a significant piece of market share today as a result of that.
INTERVIEWER: You’ve already described some of this, but after you and Mr. Bland sold Action to Lane, you continued to grow by leaps and bounds through the ’70s and into the ’80s.
HOLLIMAN: And the ’90s.
INTERVIEWER: Oh, yes. Describe what was happening with your career during that period. I take it you were still basically running the plants as they grew, and you hired more and more people.
You were still chiefly the manufacturing person, I assume.
HOLLIMAN: I wish I had kept a diary to help answer those kinds of questions, but I didn’t. But I would say — and I’m just thinking about when this occurred, probably some time during the ’80s — the Lane people, and with Bo in agreement, felt that I should take the sales and marketing responsibility of the company as well. I just don’t remember the exact dates and times.
INTERVIEWER: Well, the exact dates are not that important.
HOLLIMAN: Bo was at a point where it wasn’t going to be too much further down the road before he was going to be retiring. Anyway, I guess the most significant thing was that, other than the operating end of it, I had brought a guy in by the name of Tom Foy. I had brought him in and we had put him in charge of the sales organization at a given point in time, after I had the responsibility. But that was the biggest move as it relates to me. It was just that ... What would be the right word? Not fear, I don’t think, but just that I was an operating guy or a factory guy, and that practically was all my background, other than some exposure to sales. But my primary duties had always revolved around the operational end of the business. And all of a sudden, here I’ve got sales and marketing answering to me.
INTERVIEWER: And this happened in the early ’80s or mid ’80s?
HOLLIMAN: This happened in the ’80s. I don’t remember exactly, but it happened in the ’80s.
INTERVIEWER: And this was something you were not especially eager to do, it sounds like.
HOLLIMAN: A little bit apprehensive of it, yes, a little apprehensive of it. But after getting into it, I loved it.
INTERVIEWER: Well, you’re a people person.
HOLLIMAN: Well, relationships are really the key to the furniture industry, and most of the success I’ve had I believe came from my understanding that, and from my ability to just build relationships. The furniture business is all about relationships, and the failure to grasp this has been one of the reasons that major companies that have gotten into the furniture industry have failed. I can name a lot of them. Masco was one, Mohasco was another. The company that bought Thomasville was one — Armstrong. And Magnavox got into the furniture business. Champion International. I mean the list is this long. It was top-down management. And all of them came and left. And most of them, when they left the furniture industry, had gotten burned. Nobody from outside the industry, even until today, recognizes, in my judgment, the true value of, the necessity of, building relationships.
INTERVIEWER: From the outside, the furniture industry looks like easy pickings, with a high-margin product.
HOLLIMAN: True. Those came, once I had the sales and marketing management reporting to me because I started cultivating these relationships in the field with retailers, many of which I’ve still got today. I just had lunch last Tuesday with Morty Seaman. Every time he comes to Tupelo, we get together. But I can go on and on about him and the other guys that I’ve been talking to for years — Jim Kittle in Indianapolis and Melvyn Wolff down in Houston. I can just run that string out for the next half an hour, talking about people that I built relationships with over time that are great friends of mine. And a by-product of that is you also do a lot of business together. And a lot of these large companies that have gotten into the furniture industry have always felt that was just not that important, that it was mostly just idle conversation. And it’s really one of the building blocks of what happens in the furniture industry, of making things work right. Without it, it’s a problem, and a lot of these companies have witnessed that.
But the greatest benefit to me personally was the cultivation of all those relationships, and I think that was a benefit to the company as well because we grew along with a lot of the accounts that we were doing business with at the time, and maybe some of them we were not doing business with came on board because we worked on building relationships. I don’t mean to take credit for all of that, but being ultimately responsible for the entire company, you started reaching out, either through the salespeople, by doing it yourself, or whatever way that got you there. But reaching out and then establishing and expanding on those relationships over time I
think has paid off handsomely and led to the results that we had.
INTERVIEWER: Touch on some of the key members of the team that you developed during your career as you came up through Action, Lane and Furniture Brands. Some of the outstanding people that you’ve been associated with.
HOLLIMAN: Well, over time, Bo and I did this together, and when George Pickard joined us, it turned out he was a tremendous asset to the company. A guy that is well known in the furniture industry that I brought in from the operational side of the business is a guy by the name of Jackie Hooker, who did a terrific job. He retired just recently. In thinking through the list, Tom Foy was extremely capable in the selling side of the business. He did a great job during all of his years at Lane. I think he joined the company in 1985, so for 15, 16, 17 years, he did a great job of running the sales, and then subsequently the marketing side of Lane. And then taking over Lane and running it, he did a terrific job. And then we brought him into Furniture Brands and gave him a broad responsibility.
Some of the younger guys: Bo’s son, Roger, was recruited into the business, and my own son was recruited into the business. Looking back on it, those guys have made what I think have been good contributions. You know, I could name lots of people. We’ve had good people leave, like we left Futorian, and start their own companies. One of them was a guy by the name of Jim Muffi, who did a good job in the early years for us, then left and started PeopLoungers.
Two fellows, Guy Lipscomb and Larry Todd, who were both really good managers. Guy was more of an administrative person and Larry was a distribution traffic manager, and also worked in some production areas. Larry and Guy, they started up Southern Motion, which had Action roots. There was a guy by the name of Ray Hill that we brought in when we first started Action in 1970, who was our product development guy and did an awesome job for us. I could just go on and on with names.
As for people that were in the selling end of the business, I could name a half dozen of these, but I’ll just name one — a young guy that we brought into the company that was up in Kentucky. His name was Sam Wise, and he was a salesman that turned out to be a terrific sales manager. That’s a handful of the kind of people I’m talking about.
INTERVIEWER: It’s obvious that it was not an easy decision for you to leave Lane and go with the parent Furniture Brands. Or was it still Interco when you took the job?
HOLLIMAN: It was in the transition from Interco to Furniture Brands.
INTERVIEWER: Interco, I recall, was a conglomerate that once was mostly a shoe company, and had already had some difficulties and had been through a bankruptcy. By the time you took on your role there, I believe they were essentially out of everything except furniture. But it took months of discussion for them to convince you that it was a job you really wanted to do. Did your reservations have anything to do with the company maybe being too big to get your hands around? It seems to me that conglomerates in the furniture industry have always had problems.
HOLLIMAN: Yeah, there may have been a little bit of that. The big thing initially was just the transition of the family, and that I would have to relocate in the later years of my career. And I would be leaving a company with enormous momentum. I love what I’m doing. I love the community I live in. I have my family here. I had finally reached the point in time where I could take a little extra time for family and not feel like I’m compromising the business any because I have great people working with me. It was an ideal situation, in my estimation, about as good of a job situation as one could have. Here, I’m moving into a much broader field. I understand the upholstery business, but I’m not a case goods guy. There’s Broyhill, and there is Thomasville, both in a big way in the case goods business. I don’t know anything about the case goods business. That was a little bit of a worry. That bothered me, having to try to learn another segment of the market.
And over time as we talked, some of those issues, some of that changed. The family situation got some satisfaction by the fact that I didn’t have to relocate, but I knew the job would gobble up more of my time than I would have wished at that stage of my career. But the challenge of it stimulated me, and I think that was what won in the end, rather than say no and then at some point in the future wish I would have at least given it a try.
And Furniture Brands did extremely well for 6 or 7 years. The last few years were unpleasant because of the global market and the influences of offshore production. I’ve already described earlier my concerns about some of what we did in terms of strategic direction of the company that, looking back on it, probably was a mistake. But, you know, those were unknowns at the time those decisions were made. I guess those would be my thoughts relative to the question.
INTERVIEWER: Well, it’s a long way from a startup company in Tupelo in 1970 to Furniture Brands International, a big public company, a conglomerate. Your career has taken a huge arc.
HOLLIMAN: I spent a lot of time talking to the board of directors of the company, and to the guy that ultimately brought me to Furniture Brands, about the fact that I was an entrepreneur and I’m not a part of the structured, big-time corporate world. That’s not who I am. And yes, I had to go through some transition to become that kind of a leader. But at the core, at heart, inside of me, it’s still all about entrepreneurship and not big corporate governance.
INTERVIEWER: What did you have to do to adjust your perspective? Here you are a major furniture conglomerate, at one point the biggest furniture manufacturer in the country.
HOLLIMAN: Well, there were all kinds of adjustments I had to make. The biggest one that I had to make was not knowing anything about Wall Street. Here’s a publicly held company with shareholders, 85 percent of whom were institutional shareholders, and I had no knowledge of how to deal with Wall Street in any way, shape, form or fashion. And what they did with regard to that was to send me to New York for about three weeks. It was sort of like my deal with going to work for Futorian, when they sent me to Louisville, Kentucky, to go through some engineering training with a company there. Furniture Brands sent me to New York and I spent a week with Smith Barney and Jamie Diamond, who was the CEO of JP Morgan.
And they put me through a lot of training on how to deal with investors and how to make presentations. I had to get up and make these financial presentations to the people in the Smith Barney organization, and take questions from them in a live type of environment where Q&A was so important. Then I spent many, many days in New York, many days, speaking to investors and investor groups about Furniture Brands and what was going on with the company.
So, this was all a part of transitioning away from having been a more entrepreneurial executive at The Lane Company, to going to Furniture Brands, a conglomerate and a big corporate company in the furniture industry. I had to learn to deal with Wall Street, and learn how to deal with other things such as tax issues and HR issues, on a much broader scale than I had to deal with before. Legal issues that went far beyond anything that I had to deal with down at the brand level. All those things, they were hurdles. They were tough, tough challenges that required a lot of time. And when you were dealing with all that, your focus was away from the day in and day out running of the company, and developing those industry relationships that I talked about earlier, you know, I didn’t have as much time to do that as I’d been accustomed to.
So, those were the kinds of challenges that were quite different from what I had dealt with in the past, and now I had to address them. Dealing with corporate staffs and the things that they deal with every day is a lot different than what you deal with down at the brand level. So, it was a big change.
INTERVIEWER: It must have proved ultimately rewarding for you, but it was very much of a change from how you had begun in this industry.
HOLLIMAN: Yes, but once again, developing relationships, even though they were different kinds of relationships, mainly in the financial world, was still important and rewarding. I know a lot of people today that I would never have known had I not taken the Furniture Brands job. Some are friends that I have maintained contact with even since retirement. So, that was a plus.
INTERVIEWER: So, not only is the furniture industry very heavily relationship-based, but even the financial community, where you hear a lot about the buccaneers, the get-rich-quick folks.
HOLLIMAN: To a degree. There are some great guys that I’ve met in the financial world, some fine people. There are those that you cite that are there as well, but then I’ve run across some really pretty neat people.
INTERVIEWER: Tell us about your Furniture Brands experience. You were dealing with, what, about six major companies? And you had to be ultimately responsible for their leadership and their bottom line. You had some very respectable companies — Lane, Broyhill, Thomasville. There must have been an array of different problems and opportunities with them. Then you bring on Drexel Heritage, Henredon and Maitland-Smith at the upper end, which I assume would be another whole set of challenges. Maybe you can describe, company by company, what you did to assist them in their growth and development.
HOLLIMAN: Well, I put Tom Foy in charge of Lane when I took the Furniture Brands job.
INTERVIEWER: This is 1996, as I recall.
HOLLIMAN: 1996. A gentleman by the name of Brent Kincaid was running Broyhill at that time. Brent was in the later years of his career and had indicated to me shortly after I got to Furniture Brands that he was going to retire. But we were given some time to deal with that, and we ultimately brought in a guy by the name of Dennis Burgette, who was marketing director at Lane, and put him in charge of Broyhill.
At Thomasville, we had to make a change there. The track record there, when I got to Furniture Brands, had deteriorated quite a bit, and so we brought in a guy from Broyhill and put him in charge of Thomasville. And there have been changes made in top management at both Lane and Broyhill since then. We had to cope with management changes at the top of those businesses caused by retirement and lack of performance.
And then with the acquisition that we made from Masco, when we bought Drexel Heritage, Henredon and Maitland-Smith, within 90 days after we took over Drexel Heritage, we made a change there. A guy by the name of Dan Grow was running that company. Drexel was nearly a throw-in with the acquisition because it was doing very, very poorly, and the company we had our eyes on was Henredon. That’s who we really wanted. But the only way to do the deal was as a package with Drexel and Maitland-Smith. Maitland-Smith at the time was doing quite well. It’s an offshore company in the ultra high end of the market.
But we went through change at Maitland-Smith, we went through change at Drexel Heritage and we went through change at Henredon. And again, we were dealing with issues of retirement, older guys, and in some cases lack of performance. So, from the time in 2002 when the acquisition of the high-end companies was made, and when Masco decided to get out of the furniture business, there were challenges. We had some victories and we had some defeats. Some have been win-win and some of those changes have not produced the results that we hoped they would have. And all of that is a learning experience. You learn each time you go through those kinds of things. The company is hurt in some cases, it’s helped in others, but that’s all part of the process in the furniture business.
Somebody has made the comment that all we do in the furniture industry is just recycle the same people. We just move from one company over to another, to another. And there is some truth to that, and it doesn’t always produce great results. But, we’ve had victories in the process and we’ve had defeats.
INTERVIEWER: It’s obviously tough managing different furniture companies. La-Z-Boy didn’t have great success in doing that after they bought LADD. It seems to me that it’s a major problem to operate any conglomerate, and you’ve done it and you’ve done it relatively successfully, but there’s always going to be problems.
HOLLIMAN: In looking back on it, I guess the big thing that I have learned is that it’s extremely hard to be a manufacturer and a retailer at the same time. Furniture Brands is still dealing with that today. Kincaid, Klaussner and others are dealing with that. Anybody that’s in both manufacturing and retailing is really trying to serve two masters, and as a result there are issues and they are tough. I have learned to appreciate that a lot more than when I first had the challenges to deal with it. But it is what it is, and companies that are engaged that way today have got their hands full.
INTERVIEWER: What sort of management techniques did you rely on at Furniture Brands? In effect, you were managing top managers of other companies.
HOLLIMAN: Techniques being the way I conducted the business?
INTERVIEWER: Yes. How you made decisions and carried them out, how you dealt with people.
HOLLIMAN: I guess, to the best of my ability, what I was trying to do was make sure that in leadership responsibility roles, we were dealing with people of integrity, people that were honest, people who had a great work ethic, people that you could really count on in tough times. Investment in quality people, I think, would be key in that area. And then I’ve always operated, I guess you can call it, as a cheerleader and an encourager, focused on growing talent but then really encouraging to the leaders we chose. So it’s like I’m doing pep rallies, trying to keep people energized and focused on what they were trying to do. Those would be the techniques that I’ve used over the years that have been rewarded, I think.
INTERVIEWER: Let me ask you to talk about some of the more broad-brush changes in the furniture industry during your career. How has the industry changed in manufacturing, for instance? That would, of course, involve the move to offshore manufacturing, where Furniture Brands has been a major player.
HOLLIMAN: In recent years, that would be the boldest change that has taken place — all of the overseas sourcing activity that’s going on, especially in wood products. But it’s not limited to wood because in upholstery a lot of the product that’s made in this country today is made with components that come out of the Far East. And you know, we’ve gone to Mexico and then we’ve gone to China, we’re in Vietnam today, we’re in Indonesia, we were in Taiwan, we were in Malaysia, so that’s a moving target, with sourcing constantly changing. How we’ll deal with sourcing in the future is going to be an interesting question, because one of the things that has been damaging to the industry — and I’m talking about both retail and manufacturing — as a result of going offshore has been the issues around obsolescence and poor decision-making, where it’s been extremely costly.
Working capital has been expanded in many cases because companies have had to build up larger inventories in order to service the dealer and the consumer because it takes so long to get the product from overseas. So when you take those risks, you misfire a lot of the time. And things that you thought would sell well do not. So, in the case of a manufacturer, you’ve got obsolescence and cost issues when you need to dispose of that unsuccessful product, and that hurts your profits. The retailers have had some similar experiences when they buy products from offshore, either direct or through U.S.-based manufacturers. They usually need to buy in depth to service their customers, and they risk having too much inventory and having to get rid of slow-moving product by cutting prices.
That’s all changed today. Because of the capital structure of business today and the liquidity needs of these companies, both retail and manufacturing, you no longer can afford to carry these risks. So, you’re operating on a much thinner base, you carry a lot less inventory, you turn it a lot faster. So, as a result of that, can one depend on sourcing tomorrow the same way one did yesterday? And I question that, and I think that we’re going to see some change there. I think some of the manufacturing will come back here, some of the goods that have been purchased in other parts of the world may be made here. The reason being much more timely response to demand, where those risk factors are removed. That’s what I think is going to be different. The jury is out and I don’t know for sure. I’m not suggesting that all product eventually may be made here once again. We may still get product from all over the world, but it may come in different shapes and forms, so to speak, than what we’ve been accustomed to seeing more recently. That’s the biggest change in manufacturing companies today — they are engaged in contract-type purchasing, where you buy commodities that are in your business like lumber or other kinds of staples that you project out longer term. That’s a lot different from what we used to do. And the changes that have taken place in manufacturing have been fast-paced, and will continue to be fast-paced. You’ve got to be fast and nimble. I’ve already talked about mass production, and things like that have done nothing but be stepped up to higher levels.
INTERVIEWER: So you see some of the moves to offshore sourcing in recent years reversing themselves, perhaps?
HOLLIMAN: I think there’s a good possibility that we may see some of that. And it’s primarily because of liquidity issues, both in companies that are manufacturers and amongst retailers. Liquidity issues are going to cause retailers to conduct their businesses, and manufacturers their businesses, differently in the future than in the past. I think that may contribute to seeing more product made at home rather than made offshore.
INTERVIEWER: Because there’s less need for inventories and warehousing, which ties up your money?
HOLLIMAN: Right. You’ve got to relieve the pressure on working capital. Say I’m a retailer and I’ve got a $5 million working capital base, and all of a sudden that’s evaporating and today I’ve got $2.5 million. Then I’ve got to do things differently in how I run my business. I’ve still got to take care of my customers. When they come in and shop what I’ve got on my floor, I’ve got to be able to respond to it fairly immediately. But if I don’t have the luxury of carrying that big inventory, I’m going to have to depend on fast replenishment of product. Well, you won’t get that when you’re buying it overseas, and it takes 90 to 120 days to get product. So, that’s the reason I think we may see more furniture made here, which is a good thing.
INTERVIEWER: Do you see any differences between the mass market and the high end in this regard? At the lower prices, maybe furniture has to be made where it’s the least expensive? At the higher end, you’re dealing with custom orders and more specialty product with generally higher margins.
HOLLIMAN: I think the consumer that is more of a budget consumer ... I think a disproportionately higher piece of the business today that we all engage in is going to go in that direction. The high-end market, I believe, is going to be less in terms of demand than it has been in the past. I think we’re going to see more product move at price points that are somewhat lower, at least in the next 2, 3, 4, 5 years. Longer term that may change, but when we’ve got consumers that are going to be stressed to some degree in terms of their earning power and their disposable income, we may see a higher degree of retail take place at price points that are lower than what we have seen in recent years. If that is the case, I think a lot of that product will be made closer to where those markets are, which is a good thing.
INTERVIEWER: You’ve been involved in some of the furniture industry associations, have you not?
HOLLIMAN: We’ve been involved in the associations. My personal involvement has not been that great. I’ve been one who has tried to stay focused on the company’s business and not get into too many of the organizations in the industry. I’ve got good friends that have done great work in that regard. We have been supporters, even going back to the old Southern Furniture Manufacturers Association. We’ve always been supporters and I have participated. I’ve made presentations and a few speeches and things like that, but not a lot. I guess the key point here would be that we have not turned our backs. We’ve been financial supporters. I think we were the largest contributor for years to the American Furniture Manufacturers Association. So, we’ve been key supporters.
INTERVIEWER: What sort of relationships have you had with your suppliers?
HOLLIMAN: Well, I would think very good. Just to give you an example of one, Leggett & Platt. We’ve always done a lot of business with Leggett & Platt. They’ve diversified, getting into a lot of product fields. I’ve got great relationships with the CEO all the way down into the organization with some of the lower-level leaders. We do that with companies that we do a lot of business with. We make sure that those relationships are good and strong, so that we’ve got an ongoing dialog and we’ve got candid exchanges of information that should be helpful both ways.
INTERVIEWER: What do you see as the most serious problem facing the furniture industry today?
HOLLIMAN: I think it’s probably one that I’ve already talked about, and that’s liquidity. We’re seeing an enormous number of failures, especially amongst the smaller retailers in this country. I mean we used to have literally thousands more retail entities than we have today, and that number is shrinking pretty fast. I do think we’ve got good, solid, regional retail players around the country. But I think the most serious challenge that we’re faced with today is liquidity issues on both sides of the spectrum, the wholesale side and the retail side. There are other issues, a lot of other issues, but that one in today’s world stands out to me as being the most serious that we’re confronted with.
INTERVIEWER: Obviously, this is a very difficult time in our economy. Were you CEO of Lane back in the late ’70s, early ’80s? That would have been the previous worst spell for most furniture companies.
HOLLIMAN: That was when we were still at Action Industries, which was a part of Lane, a wholly owned subsidiary. We went through that, and there was a cycle in the ’70s that was difficult. There was a cycle in the ’80s that was difficult. And there was a cycle in the ’90s. Each of those decades had a difficult period in them. But nothing compared to what we’re dealing with now. I mean, those were just bumps in the road. Now we’re dealing with not just a bump in the road, we’re dealing with having driven off a cliff. And we got through those earlier difficult periods without a great deal of damage. All of us gave up a little margin, gave up a little profit, both retailers and manufacturers. You didn’t see many retailers going out of business. You didn’t see many manufacturers going out of business. Today, we’re seeing failure everywhere.
INTERVIEWER: You’re seeing major layoffs in companies that are still in business.
HOLLIMAN: Look at our own company. In the month of December, we laid off 1,500 people. When I took the Furniture Brands job, and after we grew some, we had 30,000 plus employees. Today, we’ve got a third of that. So, this current downturn is like nothing we’ve ever experienced before, and it will take a long, long time to come out of it. Now, I will say this: It’s not like the world is coming to an end. We’ll see spring-ups, we’ll see new retailers, startup operations, smaller companies. We’ll see manufacturing startups, because as we continue to go through change, there’s always opportunity out there somewhere. There will be opportunity.
Look at the labor market. Everybody’s complaining about the fact that we could have 10 percent or more unemployment. Well, that’s right, but we have 90 percent employment. So, the world isn’t coming to an end, business will be done and there will be opportunity. I think it’ll work on both sides of the page — wholesale and retail. This will be a cleansing period. But it’s going to take some time to pull out of it.
I’ve never seen anything that anywhere near approaches this in my lifetime, and I’m getting ready to turn 72 years of age in a few months. I’ve never seen anything — I mean nothing — like this. I don’t even know the words to describe the difference.
INTERVIEWER: Do you see any glimmers of hope at this point?
HOLLIMAN: Well, you do continue to hope, but I don’t see any signs that tell me that we can expect any kind of near-term turnaround. I think we’re going to go through some period of time that will continue to be very difficult.
(Second part of interview, November 8, 2010)
INTERVIEWER: This is Tony Bengel. It’s November 8, 2010. I’m talking with Mickey Holliman in his office in Tupelo, Mississippi, via telephone conference call, and I’m in High Point at the Hall of Fame offices. We’re completing an interview that was begun last year. So, Mickey, let’s begin.
What do you consider your own greatest contribution to the furniture industry?
HOLLIMAN: I think probably the fact that I co-founded a reclining chair and motion furniture manufacturing company by the name of Action Industries. The reason I say that is because when we got started in 1970, I think we stepped up the quality image in that category in comparison to what was then being manufactured and sold in the marketplace.
By motion furniture I mean sofas and loveseats that have ends that recline, and this was comparatively new. This new product came on in the late ’80s. Reclining chairs had been in the marketplace for years when our company was founded in 1970. We were strictly a recliner manufacturer up until the time we entered the motion furniture business.
I just feel that we brought it to a different level in terms of quality and appearance. So I think that was my greatest contribution to the marketplace, to the industry. It has continued to improve over the years since then. I think we were a seed for that kind of progress to be made.
And the other thing is that in a state that traditionally has had employment issues (Mississippi), we’ve provided employment from the beginning up through the time that I left the company in 1996 to take the role of CEO at Furniture Brands International. We had between 3,000 and 4,000 employees. And in a state and area that comparatively speaking over the years has had high unemployment numbers, I think that we did something rather special, and as a result I think both the industry and the state benefited from that.
INTERVIEWER: I know you’ve talked about this previously, but let’s revisit Action Industries a little bit. When you talk about the better quality you were able to offer, how were you able to stay competitive in terms of price? Recliners have always been a price-sensitive category. How were you able to increase the quality without incurring significant cost increases?
HOLLIMAN: We owned our own metalworking operation, and we were able to do some things to enhance the performance of the mechanical system underneath the chairs that was appealing to retailers, and ultimately to consumers.
That was the primary vehicle. And then our approach to manufacturing was a departure from what the industry had traditionally known, which was compensating people through incentives. Piecework was the reference point back in the ’70s, ’80s and ’90s, and still is fairly commonplace. We departed from that. We paid people on an hourly basis so that they weren’t just running every unit they could possibly get through in an eight-hour period, but they could focus on things other than just productivity. Productivity, of course, is important. We felt the way to get the productivity was by having top-quality management, which I think we had. And by having an hourly pay method, we could have a high degree of focus on the quality of the product.
So we felt we were efficient, and also had a heads up on some of the advancements and innovations in the mechanical systems that kept us competitive in the marketplace.
INTERVIEWER: So you never had to buy your own mechanisms.
HOLLIMAN: We made our own, yes.
INTERVIEWER: So your major suppliers would’ve been the fabric people, right?
HOLLIMAN: And the hardwood suppliers. We made our frames out of hardwood lumber. It’s changed over the years. And even from 1970 to the mid-’90s, we evolved into using a lot more plywood. And today, there’s combinations of plywood and some other technological advancements with waste materials that are made into certain types of supplemental component pieces to complement the hardwood, but are less expensive.
But fabric and wood, those were the other two key pieces of costs, in addition to the mechanisms. And then you had the labor and the overhead you applied on top of that.
INTERVIEWER: Are the plants that you and Bo Bland started and ran for a number of years still in operation today?
HOLLIMAN: Unfortunately, some of them are not. There were four plants back in the Action days. We had one plant located in a little community called Verona, which is about four miles south of Tupelo; it was a large manufacturing facility. We had one over in Pontotoc, Mississippi, which is about 22, 23 miles due west of Tupelo. Then we had one north of Tupelo, about six miles, maybe seven miles north of town, which was a huge factory. And then one northwest of town about two miles, another huge factory.
The Verona plant and the Pontotoc plant have been closed, so there are only two of those four that are still making product. Obviously, there’s been a significant decrease in the amount of units that are being generated by Action, which subsequently became Lane, today versus what it was in the late ’90s.
INTERVIEWER: But if you’ve still got roughly half of your production capacity still online in the United States, that’s doing pretty well under the current conditions, I would say.
HOLLIMAN: It is. And there have been some advancements that have been made to allow more productivity, so that’s part of it as well. The units are down, but yes, we’ve salvaged a lot of what was, in many other cases, taken offshore completely.
INTERVIEWER: Have you gone to a different kind of manufacturing, or were you doing what is now called “lean manufacturing” from the very beginning?
HOLLIMAN: It was pretty much a lean manufacturing concept from the start. Today, we use some different terms and production approaches, such as what’s called cell manufacturing, where you break production down into smaller groups of people making pretty much the complete product. But it’s lean-manufacturing focused.
INTERVIEWER: Later on in your career, after you had joined Lane and then Furniture Brands, what would you consider your most important contributions?
HOLLIMAN: Well, a lot of what we were doing at Action, a lot of the best practices, were implemented in some of the other business units. Furniture Brands acquired the Henredon, Drexel Heritage and Maitland-Smith brands from Masco. I felt that if we could bring those higher end companies in above the Broyhill, Lane and Thomasville businesses that we already owned, that we would sort of have a lock on brands from top to bottom, and that the longer-term implications of that were good.
As we have seen the industry evolve and the marketplace change, there have been challenges as a result of that. But as far as having a brand story to tell, we had virtually all of it other than a few brands such as Ethan Allen or La-Z-Boy. But we had essentially all of the other widely known brands in the industry in our portfolio.
I felt at the time that was a great opportunity for us, and we were able to acquire those companies at what would be considered fairly significant discounts from what their real value was at the time. So that would be the key piece of change that we believe was good for the company.
INTERVIEWER: Did you ever do any extensive brand building with consumer advertising?
HOLLIMAN: We did both consumer and trade advertising, but with a much greater focus on the consumer side. Meanwhile, the industry was going through a transition, with goods being made more and more offshore. A lot of the bigger retailers started buying product directly from offshore factories, and that changed how we approached the marketplace.
We’ve always done advertising. Today, I don’t think Furniture Brands spends as much on advertising as a percentage of revenues as we were doing in those earlier years, but they’re still doing it.
INTERVIEWER: Let me ask you about racial attitudes. Did they affect the companies that you were involved with, particularly since Futorian and Action were Mississippi-based companies?
HOLLIMAN: I don’t think so. I think if anything, we helped the racial situation. We had black people working beside white people in our factories, both male and female. They were treated equally. We saw cases where there was advancement in responsibility, and people were given managerial roles on the factory floor and on the production lines, as well as in our sewing operations.
During my years at Futorian, and definitely in the Action years, I think that was a big positive for us, and in no way was a negative. I think people would testify the same, if they were asked that question here in this area.
INTERVIEWER: So you never had any significant discrimination lawsuits or complaints filed against your company?
HOLLIMAN: Not one.
INTERVIEWER: What about union efforts? Were there any serious attempts to unionize at Action, or later on at any of the other plants you might’ve been associated with?
INTERVIEWER: Was that because of some specific policies you had?
HOLLIMAN: Well, our policy was pretty simple, and I’ve always believed this: There is no need for employees to have any representation other than the management of the company. It was all about management treating people fairly. If you treat people fairly, they’ll respect the management of the company, and there’ll be no need to be represented by anyone else. That’s pretty much the policy we lived by, and I think it’s the reason why we never had any issues.
INTERVIEWER: Did you have committees of workers to make suggestions or to keep you posted on any potential problems?
HOLLIMAN: Well, we had suggestion boxes in all of our locations for people to have an opportunity to write up any kind of issues that would be of concern to them, or to write up ideas of how they thought we could improve on costs, or what we could do to improve our quality. Everybody had a free opportunity to express themselves in whatever ways they felt were important to them and to the company. But the communication vehicle relative to any kind of external threats to the company, that was all through our leadership. When we would have staff meetings with all of the business units, that was a topic that we would periodically talk about.
INTERVIEWER: How have women’s issues touched your career or affected the companies you’ve been associated with?
HOLLIMAN: Well, during my time at Action and Lane, women were extremely important to both companies. I don’t remember the ratio of males to females, but we had lots of women working for us. Of course, we were big on sewing machine operators back in those days, and most all of them were women. That has changed today because all of that’s moved offshore. But back in the ’70s, ’80s, ’90s and early 2000s, there were a lot of women sewing machine operators. We had women supervisors that managed all those operators. We had women on our production line and in the office. We had women fulfilling a lot of different roles administratively. We had women involved in our advertising program, and some on the marketing side of the business.
As I said, I can’t tell you what the ratios were, but they were high in regards to women. And from my point of view, the woman in the organization was just as important as the man.
INTERVIEWER: Did you ever have any key women executives in product development, marketing or in some of the top executive roles in any of the companies you were associated with?
HOLLIMAN: We did in product development, we did in the advertising area, and on the marketing side of the business. On the factory floors, I’ve already talked about that. But yes, administratively, we had women in leadership roles in most of the companies, if I recall correctly.
INTERVIEWER: Wasn’t there a woman head of Thomasville while you were CEO at Furniture Brands?
HOLLIMAN: That’s correct. We had a woman that came out of the fabric business that we put in charge. We brought her in and moved her up and put her in charge of the entire Thomasville organization.
INTERVIEWER: Did that work out well for Furniture Brands?
HOLLIMAN: Well, different people would offer different opinions on that. She was interested in innovation as to how we would take product to the marketplace. She changed a lot of things in the company, and some were met with positive responses, and some were met negatively. And her methods of communication were sometimes criticized. But as far as bringing new ideas to the company on how we could go about marketing at Thomasville, I thought it was healthy.
INTERVIEWER: Have the various federal and state environmental regulations had any significant effects on the companies you worked for, or influenced any of the key decisions you made?
HOLLIMAN: Yes, in upholstery we were dealing with the flammability issue for a number of years. It’s still an issue in the marketplace today, but I would think it’s under control because we’re doing things and have been doing things in the way in which we go about building furniture to make it less flammable. And that has to do with the raw materials that we use in furniture today as opposed to what we used before we had flammability controls or regulations. In order to avoid mandatory federal regulations on flammability, the industry was able to come together on voluntary standards, with an industry group called UFAC (Upholstered Furniture Action Council) which offered oversight and product labeling for the entire industry. We had companies bringing thoughts and ideas to the industry to improve and come up with better answers to make the product more resistant to fire without incurring unreasonable costs.
In case goods, the wood side of the business, where finishing materials are used, we dealt with regulations that involved lacquers and varnishes, a lot of different kinds of finishing materials for wood furniture, which would pollute the air and water. I don’t remember too many specifics about it, but once again, a lot of work has been done to clean all of that up. A lot of progress has been made. And those regulatory issues were really beneficial in the end for the industry and the environment, both from a flammability perspective on the upholstery side, as well as dealing with the finishing materials on the case goods side of the business.
INTERVIEWER: Did you ever feel that these regulations were ham-handed or done in a way that was detrimental to the industry, that it didn’t need to happen that way?
HOLLIMAN: I’d be less than honest if I said that all the management and all the businesses were totally in concurrence with the regulations as they were applied. But in looking back on it, I think there was a fairly high spirit of cooperation. A lot of this brought on some added costs in order to deal with some of these issues, which wasn’t looked upon favorably at the time. But I don’t think anyone would question the wisdom of those regulations being the appropriate thing to do.
INTERVIEWER: So you don’t see them as something that made the U.S. industry less competitive compared to the offshore companies?
HOLLIMAN: Well, the offshore companies don’t worry about things like that. And there are some cost issues involved. I don’t think it’s to the degree that that’s a factor that takes you away from being competitive. But there are different standards. In the Far East, the waste from finishing materials is certainly treated differently than it is here, and there are some costs that are associated with that. I just don’t think they’re that significant.
INTERVIEWER: Describe your involvement in any social, civic or business activities outside of the furniture industry.
HOLLIMAN: Well, from a business perspective, I still sit on the Furniture Brands board of directors. I’m on the board of directors of the largest bank holding company based in Mississippi, a company called BancorpSouth that has an eight-state footprint in the Southeast. I’m on the board of a plumbing fixtures company based in Meridian, Mississippi, that makes plumbing fixtures for the housing industry. So as far as business is concerned, those are the three boards that I serve on currently.
From a civic standpoint, I’m on the North Mississippi Health Services board of directors. I believe we have what is referred to as the largest rural hospital in the United States right here in Tupelo. And I have been and continue to serve on the medical center board here.
I also serve on the board of a foundation called Create. It’s based in Tupelo but serves a region of 16 counties in the northeast part of the state. It’s committed to improving the quality of life for people in northeast Mississippi, and I have been on that board for some time.
I have been sitting on a blue-ribbon committee on public education here locally. I’m on the board of directors of the Development Foundation of Higher Education at Mississippi State University. And there’s another foundation there that I serve on called the Bulldog Foundation.
INTERVIEWER: And what about your charitable activities?
HOLLIMAN: Well, in addition to serving on the Create organization’s board, my family is an investor, a contributor to Create.
INTERVIEWER: Tell us what Create does or has done.
HOLLIMAN: It encourages and manages charitable funds that are supported by individuals and families, and organizations and corporations in the area. We do a lot to help in the field of education. We also reach out to people that are less fortunate, where there are needs for financial support. It’s really pretty broad. The monies invested in Create are allocated in just
a large variety of ways to help people in the community.
INTERVIEWER: So we’re talking about scholarships of various sorts?
HOLLIMAN: There’s some of that. We try to help kids that have dropped out of school to get back in school. There are scholarships to junior colleges where a kid’s family can’t provide total support. We can supplement that or even provide total support. We do some of that. As I say, it just touches all different kinds of bases.
INTERVIEWER: Would it include such things as food banks?
INTERVIEWER: Do some of these activities you’re involved with go back to your Action days?
HOLLIMAN: Some do. My wife has served for many years in an organization here called the Free Clinic, where doctors come in to provide care without charge to low-income people that have health concerns. There’s an organization here called Alpha House, which is a house for young men from broken homes with all kinds of issues. We’ve been big supporters of that over the years.
We’re also involved in a home for girls called Gardner-Simmons. We have been involved in the Hospice House here in the area. So those are some of the things we’ve done from a charitable point of view.
INTERVIEWER: You mentioned your service on the boards of a plumbing fixtures supplier and a bank holding company. Do both of those go back some years?
HOLLIMAN: Yes, the bank holding company goes back to the early ’90s, and the plumbing fixtures company goes back, I think, to the later ’90s.
INTERVIEWER: As the former chief executive officer of Furniture Brands, how do you see your role now as a member of the company’s board?
HOLLIMAN: Well, it’s a little awkward at times. I think if you were to interview a dozen former CEOs, most of them would tell you that once they made the decision to retire or leave the company, that would be it, and they would not want to be involved in any ongoing basis such as serving on the board. I think that’s pretty much the norm across the industry.
In my case, we had brought in an individual to run the company who had no familiarity with the furniture business. And under those circumstances, I felt that I could be helpful to some degree. Not to be intrusive or to try to tell the new leader how to run the business, but to be a support. I thought that was important for a given period of time. And incidentally, I’m going off the board, primarily because of my age, but I would do it anyway because this is the third year I’ve been on the board since I retired, and I think that’s long enough.
But I felt that it was important, for at least some period of time, to be a good supporter of the new leader. I’m the only person on the board that has had any furniture experience directly and so I feel I can bring a perspective from the industry that can be helpful to the leadership. And I think he would tell you — the guy who’s the CEO now — that I have been an adviser to him. He’s consulted me on a lot of things over that period of time.
So it can be a little awkward sitting there as the former CEO of the company while board decisions are being made. Sometimes you may question the wisdom of the decision, and you bring things like that to the table. But in other cases, you may say to yourself, well, I’ve made enough of an issue of other matters, so it’s probably best that I just not say too much with regard to this matter. So from that standpoint, I guess you could say it’s been a little bit awkward. But I believe the new guy would tell you that the time I’ve served has been helpful to him, at least to some extent.
INTERVIEWER: It sounds like the board has been pretty active.
HOLLIMAN: It has. It’s been faced with enormous issues with the global markets and the monumental changes that have taken place in the industry. But it is an active board, and is made up of a cross-section of people in the country that bring different kinds of capabilities. So hopefully, looking to the future, the board can be productive and can help this company recover from some of the tough, tough, hard things the industry has been faced with in recent years, and can help it become better.
INTERVIEWER: Give us your assessment of the situation Furniture Brands now faces as a huge conglomerate in the furniture industry. What do you see as the future of Furniture Brands?
HOLLIMAN: If the company can be successful — especially in the case of Lane and Broyhill, but also in regards to some of the other companies, all the way up to Henredon — in being a low-cost producer, it can have a good future. What that is going to entail, in the wood or case goods side of the business, is for the company to own its own manufacturing facility in another part of the world, and to be successful at it. That commitment already has been made, and the facility is going up as we speak in Indonesia.
There’s been an enormous amount of research done, and the board has unanimously agreed that Indonesia is the right location, and that the risks involved in manufacturing there — the political risks, labor risks, sourcing risks — all of those risks are within reason, and support the argument the facility is being built in the right location. Time will tell. Lane and Broyhill in particular, as well as the other brands, are going to be somewhat dependent upon that plant as a source of low-cost product on the wood side of the business.
In upholstery, the low-cost argument can be made in the same way for cut-and-sewn fabrics and leathers. Furniture Brands is sourcing cut-and-sewn goods out of China today, but is now moving way down into Mexico. I mean, way, way down into the country, away from the drug issues and where there’s stable employment, where there’s some capability and some experience in sewing. I can’t tell you exactly where it is, but it’s somewhere in the Yucatan area.
Low-cost production is a moving target, and the search goes on continuously. We’re seeing labor costs in China now approaching $2 an hour; five, six, seven years ago it was 50 cents. There are more competitive rates now in that area of Mexico that I’ve talked about, as well as in some other parts of the world. Nicaragua, for example, and maybe some of the Vietnamese plants, might offer a little bit more competitive labor rates, too. But it’s a moving target, as I said, and it’s constantly changing over time and will continue to change over time.
But if Furniture Brands is to be successful in the future, low-cost manufacturing is critical. And the other key to success with all of the brands, is finding ways to advertise effectively. That means a good, comprehensive advertising campaign that has sustainability. Not here today and gone tomorrow, but out there in front of the consumers on an ongoing basis. That’s another critical piece for these brands.
And there may need to be some consolidation of the brand story. I was responsible for acquiring all these brands, but the landscape was a lot different than it is today. So there may be some value in having X number of brands rather than having Y number of brands as we do now.
So I think that a combination of getting the brand story across to the consumers with continuity and sustainability, and making sure we are the low-cost manufacturer, particularly for Lane and Broyhill, are the critical elements. It’s more critical for those two companies than it is for any of the other brands, even though it’s important everywhere. Those would be the keys, I think, to making sure that Furniture Brands is successful in the future.
INTERVIEWER: Could you go into a little more detail about why Indonesia seemed to be the best place to produce furniture for Lane and Broyhill, particularly?
HOLLIMAN: Lane’s an upholstery company. Broyhill is more important in wood products, although about half their business is in wood and half in upholstery. And then you’ve got Thomasville, also in both wood and upholstery, as are both Henredon and Drexel Heritage.
The Indonesian facility is near the raw materials required for the products these companies are making, so they don’t have to go all over the world in search of raw materials. It’s there. And it’s not just wood per se. They also have easy access to stone, glass, metals and other types of materials that are often incorporated into wood furniture. A lot of that raw material is right there.
The other advantage, of course, is that they’ve got low-cost labor, and the research showed that the government is fairly stable. The plant is not right in the hotbed of where government lies. It’s in the more outer areas, and it’s got great access to the ports. So those are the reasons why — for making wood products, not upholstery — a plant at that location makes sense.
INTERVIEWER: So China just didn’t look that good to Furniture Brands when you were making the decision about plant location.
HOLLIMAN: Yes, because the labor costs had started moving way up. Labor costs in Vietnam, for example, in wood products are lower today than they are in China. So my opinion is that we’re going to see less and less product for the industry coming out of China.
INTERVIEWER: What about production at the upper end with Drexel and Henredon? Will they be able to maintain some domestic production in the future?
HOLLIMAN: In wood, I don’t think so. I think it’s going to come from other parts of the world. In upholstery, yes. In that category, we can take advantage of lower-cost labor in other parts of the world, and assemble the furniture here.
I’ll give you an example of how that works. We used to make all of the fabric used in upholstery here in the United States, primarily up and down the East Coast from Massachusetts to the Carolinas. Now, that’s all gone. There’s no fabric being made here, unless it’s some really high-end, ultra-expensive fabric that has very, very limited demand. It’s all gone offshore.
So we have to be close to where that fabric is being made, especially if the labor cost nearby is very competitive. And what we do in these cases is, we buy the material there. And today, primarily, the material is being made in China. That eventually will move as well, but that’s where it is today. We buy the material, and then we cut-and-sew the fabric that’s going to go on the frame. We do that near where the raw material or, in this case, the fabrics or the leathers are being made. Then we put them on containers and ship them here to the U.S. We have assembly operations where we make the frame here, and do the upholstering with the cut-and-sewn fabrics that come from wherever they come from around the world. And that’s pretty much the way we do it in most all of the brands today that make upholstery.
The only thing that will change that is if the market for low-cost fabrics moves around. In other words, in today’s world, most of those goods have been sourced out of China. Some of the fabrics are being made in China, and then they’re being shipped, for example, to Vietnam or to Mexico to take advantage of the low-cost sewing labor in those two cases.
So it’s a moving target. But I don’t see that changing much in the near-term future, unless there are some changes made in regulations that would require fire-resistant chemicals to be applied to fabrics coming in from other parts of the world. Unless some changes take place like that, I think what will be here in the United States is primarily an assembly operation in upholstery.
And the reason for that is, when we bring the packages in of cut-and-sewn fabrics for upholstery, we don’t have the cost factor of a fully finished upholstered sofa or chair being shipped across the world and having $150, $200 of costs added in freight just to get it from point A to point B. We avoid that in upholstery for the most part. Not totally, because we have to put the cut-and-sewn packages on containers, but we can put 1,500 or 1,800 of those packages on a container, instead of 70 or 80 finished sofas, or 115 to 120 finished chairs.
INTERVIEWER: But that same model will not work in wood furniture, apparently.
HOLLIMAN: It doesn’t work in wood furniture. In wood furniture, you’re bringing in a finished product from other parts of the world. We can’t compete.
INTERVIEWER: You’ve already mentioned some of this, but what sort of business and leisure activities have you been involved in since you retired as CEO of Furniture Brands?
HOLLIMAN: Well, the business activities are the three boards. And incidentally, I’ve got a son of mine and a son-in-law of mine who were formerly Lane executives that today have left Lane and started their own company. They’re making, believe it or not, recliners and motion sofas and love seats. Not directly competitive with Lane, but there’s a little overlap. I’m not involved in their business, but I’m certainly interested and I want them to do well.
In addition to serving on the three boards and the various civic and charitable activities I’ve mentioned, I play golf. I’ve been playing golf since my late 20s, and in the summertime I play a couple of times a week. In the winter, a little bit less. I’ve got some property down in Florida, so I go down there and play golf every five or six weeks.
I’m very involved at Mississippi State University, and I have an interest in a hunting camp, so I hunt with my kids and my grandkids. So that’s the post-retirement profile of what I’m up to these days.
INTERVIEWER: Don’t you have a family-owned investment company, too?
HOLLIMAN: We do have such a company. It’s called Five Star, and it’s our investment vehicle. It also owns some property. It’s based here in Tupelo, in the building owned by the bank holding company where I serve on the board. It’s the same office that I had here in Tupelo when I was running Furniture Brands.
INTERVIEWER: It doesn’t sound like you have a lot of leisure time.
HOLLIMAN: No, my time is absorbed pretty well.
INTERVIEWER: And other than leaving the Furniture Brands board, do you intend to maintain your other activities?
HOLLIMAN: Oh, yes, definitely. I try to keep in a little bit of contact with the marketplace. I talk to some of the manufacturers that are friends of mine. I talk to some of the retailers that are friends of mine. Not often, but occasionally. So I keep in touch a little bit. But I don’t go to the markets anymore because it really would serve no purpose. I miss the people, but I stay in touch by telephone. And maybe once every three or four years, I might go up to High Point and go to a market, but that would be about as frequently as I would do it.
INTERVIEWER: Let me ask you about the recent book that Michael Dugan published called, “The Furniture Wars.” You play a pretty important role in the book through your career at Action, Lane and Furniture Brands. Have you had a chance to read the book?
HOLLIMAN: I have.
INTERVIEWER: Give me your assessment of his viewpoint on the industry and your role in it. Do you think he was pretty much on the mark or not?
HOLLIMAN: Well, first let me say that Mike is a very, very good friend of mine. We acquired Henredon when he was running the company. And I have a tremendous amount of respect for him. He is very knowledgeable about the industry. If you were going to pick somebody to write a book on the furniture industry, you might have been able to find a few people that would be able to offer the profile he did, but not very many. He’s a real student of this industry, and has been for all these years.
So he’s been an industry observer and participant for a long time, and I have tremendous respect for him. I appreciate the generosity that he extended my way, his comments about me and my role. I think he was fair. Everything he said about me was not, in my view, completely on the mark. He made some nice comments, and then he made reference to some things — like the revolving door of managers coming and going at Furniture Brands — that I might take a little exception to, although there was some truth to that as well.
So, all things considered, his take on me and what I did and didn’t do, I think was fair. We all make mistakes and I’ve made my fair share like everybody else has when you’re dealing with difficult issues.
In the years that I served as the head of Furniture Brands, there was this dramatic global change, and I and some of the other leaders in the company felt really threatened by the thought that we were going to see more and more retailers circumventing us as sources of product and going directly to the offshore factories to buy their furniture. And that brought about some decisions — like going into retailing ourselves — that I, had I had a second chance to do it, would have decided differently. And I think that some of that is reflected in some of his comments.
I also think that he presented a good assessment of the impact of people who entered the industry from outside through acquisition, and who didn’t have any familiarity with how business is done in our industry. Through all my years, a lot of the business done in the furniture industry was done through great relationships, with people having confidence in each other, as opposed to just making decisions without knowing who it involved at the other end of the telephone line, or the other end of the order. In this regard, I think this industry, to a great degree, has been different in comparison to a lot of other industries.
INTERVIEWER: So you do have this sense of insider/outsider tension as a key element in the furniture industry. Of course, you were one of the longtime insiders.
HOLLIMAN: The insider/outsider thing did bring about a lot of tension. And I think that’s pretty well shown in Mike’s book. I think the industry has experienced some setbacks in some cases as a result of that situation.
But to answer your question about the book and how I see the book, I think it’s a reasonably fair presentation of the period of history he covered.
INTERVIEWER: We’ve covered a lot of ground and I really appreciate your time. Is there anything you’d
like to add or comment on that we haven’t touched on?
HOLLIMAN: I think the only thing I would add is that, when you look at the industry’s share of the consumer’s disposable income to date, I feel that we as an industry are deserving, if we earn it, of a greater piece of that disposable income. I know we have to earn it. But the home is critical to the future just like it has been in the past, and bringing out great products for consumers to put in their homes to me is of the highest priority.
If we as an industry can find answers through innovation, through focusing on common goals, helping each other, getting some breakthroughs in how we communicate with consumers that’s different from the way we’ve done it in the past, I think we can build a lot of confidence on the part of consumers that the products they get won’t be a disappointment, that they’ll be impressed with what they get. And as a result of that, we can earn a larger percentage of their disposable income. That’s a challenge that I think is healthy for us as we look to the future, having that as a focal point or priority.
INTERVIEWER: Well, the industry is highly competitive and still pretty much fragmented, even in the face of the consolidations that have taken place. Do you think the industry can ever come together in some sort of common effort to achieve those goals? Or do you think it’s just going to have to be the individual companies battling amongst each other?
HOLLIMAN: I believe there will be some additional consolidation. But I just think there has to be some very mature and seasoned thinking among industry leadership that is unselfish, to a degree. I know everybody is out there trying to take care of their own concerns and are not worried about the other guy. But I’m saying we’ve got to do business differently if we’re going to get a greater piece of the consumer’s disposable income than we’ve gotten in the past. That’s going to take a different kind of leadership than we’ve seen in years past. It’s going to have to be smarter, and maybe a little more of a team effort. But when you look at it, it’s just a sad commentary on our industry that we get such a low, low piece of the consumer’s disposable money.
INTERVIEWER: Do you see any signs of that kind of effort emerging at this point?
HOLLIMAN: Not too much. We’re going to have to see some profound leadership coming forward for some of these things I’m talking about to get done. Today, I don’t see a great deal of that happening.
INTERVIEWER: Do you think maybe it’s because of the general economic malaise this country seems to be in, or do you think when growth resumes in some really strong way that something like that could happen?
HOLLIMAN: Well, we’re going to have recessions and we’re going to have good times for years and years to come. That’s what history tells us. Certainly, improved economic conditions will help everything. But we’ve just got to find ways to make the consumer more interested in spending more on the products that we make than what they’ve been spending, and less on products that they’re buying from others. This whole technology thing, particularly the Internet, could be an open door to a better opportunity for the furniture industry.
What we need is some real top-notch leadership to help us get there. We need strong leaders encouraging others to do things such as, for example, lifting the quality level of our products from bottom to top, and making a much better product tomorrow. We need to make consumers feel really good when they buy furniture, so the whole experience has been a really rewarding experience. And over time, over a number of years, you can change things. And when consumers have a better taste in their mouths about furniture, they’ll spend more on it.
INTERVIEWER: Well, thank you again. We very much appreciate you taking your time to talk with us and give us your insights.
HOLLIMAN: Thank you very much.