Charlotte Observer Newspaper

Wednesday, June 21, 2006

N.C.’S STRUGGLING FURNITURE INDUSTRY
by Kerry Hall

Uncertainty is a reality in the furniture industry, which last week suffered its latest loss when Broyhill Furniture industries said it would lay off 700 workers in Lenoir by August. Workers at Paladin Industries, however, say they remain hopeful about the future. Here’s a sampling of what some said:

1. KEITH PRITCHARD – Keith Pritchard started working in upholstery immediately after graduating from high school. He enjoys being able to see a finished product and feeling the pride that comes with a job well done.  He said he averages 15 pieces a day. On Monday morning, he trimmed a leather chair. After ensuring the leather panel was smooth, he tacked the edges down using a metal strip with spikes, which he whacked with a pallet. “I know I would like to have it in my house,” he said admiring his handiwork.

2. MARTHA HARRINGTON – Martha Harrington has worked in the furniture industry 18 years as a fabric cutter. She came to Paladin Industries because the company pays workers by the hour, not by the piece. That makes working conditions easier on employees and lets people pay attention to quality, she said.

3. BRIDGIT BELANGER – Bridgit Belanger of Stony Point has worked at Paladin for just two weeks as a fabric cutter, but she said she’s already been impressed. More orders are coming thought than did at her previous job, said Belanger, who has cut patterns out of cloth for 12 years.

4. THE BOLICKS – Tim, 47, and Elaine, 45, Bolick. The Bolicks grew up tin the furniture industry. Tim’s father founded Alexvale Furniture, Inc., a furniture manufacturer in Taylorsville, which La-Z-Boy Inc. bought in 1999. Elaine’s grandfather ran a furniture store. After marrying more than two decades ago, the couple opened a store selling rattan and wicker baskets, furniture and accessories in the Hickory area. Elaine was working for Valdese Weavers and Tim for Kincaid Furniture when they decided to quit and open their own business.

A Bright Spot – Paladin Industries finds right fit in upscale upholstery

 Four years ago, Tim and Elaine Bolick ditched their corporate jobs and sunk their savings and livelihood into creating a new furniture upholstery business.

            The couple had industry contacts but no orders. No hints of any commitments for future work.

            Adding to the uncertainty, the economy was recovering from a recession and furniture jobs were fleeing overseas.

            Did people think they were crazy? “Yeah, and I wore the slate off my porch from walking at nights,” said Tim Bolick, president and CEO of Paladin Industries Inc., speaking from his office off NC 90 in Hiddenite, about 50 miles north-west of Charlotte.

            Still, Bolick said, he and his wife were convinced they’d latched onto a viable niche – custom-ordered upholstered sofas, loveseats and chairs.

            “I’d like this company to be here for my children, if they want it,” he said.

            This month, Entrepreneur magazine named Paladin Industries as one of the country’s fastest growing businesses, putting it in the company of real estate, banking and technology firms. To be eligible, companies must be less than five years old and post annual sales of more than $1 million. Bolick said he expects Paladin’s sales to top more than $12 million this year.

            The Bolick’s experience illustrates that bright spots remain in the N.C. furniture businesses, even if it is a shadow of its former self.

            Since 2000, the state has shed 22,000 furniture jobs, or 68 percent of its work force, according to the N.C. Employment Security Commission.

            Within the industry, however, N.C. upholstered furniture manufacturing jobs have been lost at a far slower rate, about 7 percent since 2001, according to the Bureau of Labor Statistics.

            At Paladin Industries, located in a 100,000-square-foot brick building, set back behind an Exxon station, all upholstering is done by hand on site, from the pattern cutting and sewing, to the cushion stuffing to the packaging. Retail prices range from $999 for a chair to $1,999 for a leather/fabric combination sofa.

            Workers listen to iPods and Walkmans as they cut, sew, stuff and shrink wrap. The sounds of staple guns and sewing machines puncture the otherwise quiet production floor. The room smells like freshly laundered cotton t-shirts.

            With more than 100 employees, Paladin produces more than 100 sofas, loveseats and chairs each day. Average weekly pay for N.C. upholstery workers rose each year between 2001 and 2004 (the latest year available) to reach $561.

            Paladin pays workers by the hour, not by the piece, slightly unusual within the industry. The company paid hourly in the beginning because there wasn’t enough piecework to provide paychecks. Bolick said the company has continued to pay hourly wages because it keeps workers happy and lets them focus on quality, not quantity. Bolick said he considers his workers’ quality a competitive advantage.

            Near the back of the production floor, Mark Shumaker, 42, pounded square nails into the bottom of a leather barrel chair – four taps per nail – with unwavering precision. He’s worked in the furniture industry for 27 years.

            Uncertainty is something furniture workers “just have to take day by day,” he said. But Shumaker said he’s felt growing security since joining Paladin more than a year ago.

            “Furniture is never certain the way things are going,” he said. “But this (job) feels better than any others.”

            Medium-to high-end custom upholstery has done better than other furniture categories, said Jerry Epperson, an industry analyst with Mann Armistead & Epperson in Richmond, VA. And consumer demand is expected to remain robust, he said.

            Higher petroleum prices have forced manufacturers to raise their prices because they are paying more for materials such as foam. But Paladin’s customers aren’t as price sensitive as others and can handle the bump, said Elaine Bolick, Paladin’s vice president of merchandising. Its products are sold at boutiques in Boston and other northeastern cities.

            The Bolicks feel confident their initial million-dollar investment is safe and sustainable. They don’t fear being undercut by cheaper foreign competition because their customers want customization and fast delivery.

            Asian manufacturers are set up for large production runs – not custom pieces. Plus, it could take more than six weeks to receive a piece of imported furniture, versus the 21 days it can take to receive one from Paladin.

            “Most people, when they buy a sofa above $1,000, they’re asking the sofa be custom made some way for them,” Epperson said.

            He pointed to a recent merger that bodes well for the Bolicks.

            In May, a Chinese furniture manufacturer bought an N.C. upholsterd-furniture maker, Craftmaster Furniture of Taylorsville. The new owner, Lacquer Craft Manufacturing Co. Ltd., may expand operations.

            Said Epperson: “They realize there are things that have to be done in the U.S. It can’t all be done overseas.”