Talk of nearshoring and a resurgent U.S. manufacturing sector weren’t enough to help the Stanley Furniture Company avoid shuttering a domestic manufacturing plant that employs 400 people.
Following steep losses last year, Stanley said it would close its 562,000-sq.-ft. facility in Robbinsville, NC., where ironically enough the company’s Young America line of Juvenile furniture was manufactured.
“After a thorough review of both our own operations and the current marketplace for nursery and youth furniture, management and the board concluded that the Young America business could not achieve an acceptable level of revenue within an adequate time frame to assure sustainable profitability and has decided that it is time for our company to focus its efforts on our profitable and growing Stanley brand,” said president and CEO Glenn Prillaman.
Stanely’s sales last year declined to $96.9 million from $98.6 the prior year and the company reported a loss of $12.6 million, or 89 cents a share. Just five years earlier Stanley had sales of $160.5 million. The company said it would honor all orders for Young America products placed on or before April 28, 2014.
“What is important now is that we exit our domestic operation in a way that minimizes the impact on our retail customers, and that we do all we can to help our approximately 400 associates in Robbinsville with this difficult change for them and their families,” Prillman said. “Additionally, we have retained services to assist in maximizing value from assets related to the Young America brand.”
The decision to shutter domestic manufacturing is a bitter pill for Prillaman. He joined Stanley as a sales representative in 1993 before moving into management roles. When Stanley created Young America as a standalone brand Prillaman was put in charge of sales and marketing.
"I think Young America has the potential to become a really strong trade brand of its own and through our retailers, we'll have more and more consumers recognizing us as the leading youth brand," Prillaman was quoted as saying at the time.
He oversaw the brand for three years before advancing to other marketing and operations roles. He became CEO four years ago just as demand for furniture languished with the nation’s housing industry in crisis mode.
To cope with the situation, Stanley shifted production of its furniture to a fully overseas model but began using the plant in Robbinsville to manufacture the Young America line, which prior to 2011 had been manufactured in Asia. For several years, Stanley and the Young America brand appeared to be a model of nearshoring and the company touted its domestic manufacturing as a marketing and operational strength.
“Controlling production in our North Carolina manufacturing facility allows us to proudly market a product ‘Made in the USA’, which we believe our customers associate with a higher level of product safety and quality,” the company said in its annual report on form 10-K filed with the Securities and Exchange Commission two months ago.
Among the benefits of domestic manufacturing for Young America touted by the company was the ability to produce smaller and more frequent production runs, standardized engineering, tighter control over manufacturing processes and better relationships with a small group of core suppliers. Conversely, the core Stanley brand products are sourced from independent factories in Southeast Asia, primarily in Indonesia and Vietnam, according to the company’s annual report.
In light of the plant closure and expected restructuring charges, Stanley delayed the release of its first quarter results until April 30. The earnings release follows the company’s annual shareholders’ meeting on April 17, in the one-time heart of the domestic furniture industry in High Point, NC.
Despite the potential for a contentious meeting in light of Stanley’s recent decision, Prillaman highlighted to shareholders positive order flow and profitability of the core brand.
“Orders for the company’s Stanley brand were up double digits in the first quarter, even with the weather-related challenges that plagued retailers across the country,” Prillaman said. “We have a healthy Stanley business that is making money. It is supported by a wonderful heritage, strong product in the field and future pipeline, and we are looking forward to the prospects of focusing our team solely on the growth and profitability of this brand in the short-term.”