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HICKORY, N.C. – Vanguard Furniture is a manufacturer of high-end furniture based in North Carolina, employing 600 workers across six manufacturing plants in the state, as well as a location in Hillsville, Va. It also operates a 40,000-square-foot showroom in High Point. The company has been making furniture for more than 50 years.
Furniture Today recently asked the company’s CEO Andy Bray this question: “When business starts to pick up, what is at the top of your list to tackle and why?” Bray’s answer was insightful, giving analysis on the industry’s current issues and offering a reflection of what Vanguard has gone through over the past few years.
Here’s his answer, in-full:
The last three years have been crazy. A roller coaster, ride of ups and downs. Vanguard has been fortunate. Our orders have been pretty steady, up 4% from a year ago. Much of this is attributable to our ability to ship custom furniture in four to six weeks.
About a year ago, our management team looked into the crystal ball and tried to predict what business would be like in 2023. Like everyone else, we were bombarded with economic news of an impending recession and out of control inflation. We concluded that that was the wrong question.
We have been in business for more than 50 years and expect to be in business another 50. For the foreseeable future, everyone is going to need a place to sleep, a place to eat and a place to sit. Furniture is not going away. A quote attributed to hockey legend Wayne Gretzky admonishes: “Skate to where the puck is going to be, not where it has been.” We started this journey a year ago.
The most important decision we made was to increase our manufacturing capacity by opening another plant in Morganton, N.C. We predicted that interest rates would increase and that there would never be a better time to borrow money. This has paid huge dividends in our ability to ship quickly and attract a quality experienced workforce.
Equally important was our goal to reconcile inventory. There is little that is more worthless than obsolete case goods inventory. Many of the companies that are going under have choked to death on overvalued inventory and debt.
In addition to being obsolete, it is overpriced because of the inflated container costs built into the cost of the products. In some cases, the freight was more expensive than the furniture. No retailer is willing to pay for a manufacturer’s inventory mistakes, nor should they. By the same token, retailers need to shed their excess inventory, regardless of what it does to the balance sheet. It will never be worth more than what you can sell it for today. Likewise, no retailer should pay inflated prices to cover a manufacturer’s debt.
A continuing issue that faces all furniture manufacturers is the ability to attract, train and retain talent that will replace our existing labor force in the coming decade. Making custom furniture requires skill and experience. It is artistry and craftsmanship rather than assembly. It takes passion and a special kind of workmanship. As an industry, we need to promote the nobility of working with one’s hands to create luxury of enduring value.
Finally, we need to work with our customers to help them be more profitable. It’s a symbiotic relationship, and one cannot succeed without the other. This has always been a relationship business, but to stand out, we need to provide our customers with the fashion-forward product they want, in a reasonable period of time and at a fair price. We depend on each other to keep our promises and look out for one another.
We are now poised to scale our business intelligently and profitably. We are optimistic about the future of our economy and the furniture sector in particular.
Historically, every trough has been followed by a peak. We are due. Inflation is under control. We gave back some of the stock market gains in September, and consumer confidence is moving to normative levels, but spending and employment are still strong. Slowly but surely, retail inventories are being re-balanced.
Demographics are on our side. Households are increasing. Moreover, people are getting married later, creating a greater number of single households. In every city, large and small, there is massive apartment construction at all price levels.
We have every reason as an industry to be optimistic. Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.” Those manufacturers and retailers that can read the tea leaves and adapt their models will be successful. Those who try to do business as usual will become extinct.
