Sauder Woodworking Announces
Plans To Streamline, Simplify Business

Some Lose Jobs; Others Transferred

by David Pugh
Buckeye Staff Writer

   Sauder Woodworking Company, Archbold's largest employer, announced a plan to simplify and streamline its operations, Friday, March 21, a plan that will result in fewer employees at the furniture manufacturer.
   Kevin Sauder, company president and chief executive officer, said Sauder Woodworking did not make money in 2007. Because of its strong balance sheet, the company can continue to operate, “but we can't sustain that.
   “The business needs to change,” he said.
   The change impacts about 70 management and office employees, along with some labor positions.
   There were a few outright layoffs. “Most were offered some form of alternate position” within the company, he said.
   Some employees didn't want to transfer to a factory position because they were priced out of the market. Some couldn't physically do factory work. Some took voluntary retirement.
   “It hurts us deeply to make these cuts, but the business needs to get back to a sustainable level of profitability,” Sauder said in a press release.
   The company anticipates a lower overall employee count to align with new production requirements.
   “That will be accomplished through mostly through normal attrition,” he said.
   But, he added there are no guarantees.

The Problem
   Sauder said over the last few years, the company had concentrated on overall growth in sales.
   But in chasing that strategy, the company began making too many products, and its management operations have become too complex.
   While fewer products might mean lower sales, fewer products also means lower operating costs, which will result in higher profits, even with lower gross sales.
   Sauder said right now, the company produces about 1,100 products, but 92% of sales comes from 700 products.
   “We have done a lot of analysis of our product line. Our sweet spot is home office and entertainment centers in the $100 to $200 range.”
   The company manufacturers bedroom furniture, but he said there are several importers who offer solid wood furniture for about the same price as Sauder products.
   Another example is niche products, like kitchen carts, sewing centers, and craft tables. The company makes good products in those areas, but those items have different buyers, require different packaging, and because the company manufactures a relative few at a time, they are difficult and expensive to produce.
   “It seemed like a good idea at the time, but we took our eye off our focus,” he said.
   As a result, many slow-selling products and niche items will be eliminated.

Large Retailers
   “Sauder is very good at serving large market retailers with truckload sales,” he said.
   It is those large retailers that represent the majority of sales.
   Sauder said the company needs to find a better, simpler way of serving smaller retailers, such as one-store retailers and small mom-and-pop operations, through placing orders through the Internet.
   Sauder pointed out one local store which gets some of its stock through the Internet.
   “They never see a sales rep,” he said.

2006 Restructuring
   Sauder Woodworking announced a restructuring plan in June 2006.
   The latest effort, known as the Sustainable Business Plan, or SBP, is similar to that 2006 restructuring in terms of the number of workers impacted.
   But the SBP is much more far reaching in terms of company strategy.
   The SBP focuses on simplifying operations, slightly downsizing the company, and focusing the product line on smaller market segment to reduce costs.
   Currently, Sauder said the company is halfway through centralizing its final assembly in the Meyers Road plant.
   That has meant pulling packing lines out of the Brush Creek building into Meyers Road.
   Centralizing final assembly means less movement of materials, plus savings in labor and other costs. In other words, higher efficiency.

O'Sullivan
   In April 2007, Sauder Woodworking announced it had acquired major portions of former competitor O'Sullivan Industries of Lamar, Mo.
   Sauder said the acquisition of O'Sullivan added another layer of complexity to Sauder business, plus many more items to the overall product line.
  But acquiring O'Sullivan was a big win for Sauder Woodworking, because in the process, they got the Lowe's chain of home improvement stores as customers. Today, Lowe's is Sauder's fourth-largest customer.
   “It was a positive thing financially,” he said.

Woodworking
   Sauder Woodworking is North America's largest producer of ready-to-assemble furniture, and the fifth largest maker of residential furniture in the U.S.
   Divisions of Sauder Woodworking including Sauder Global Sourcing, the former Studio RTA, Progressive Furniture, and Sauder Manufacturing.–Posted 3.21, 12:02 a.m.