Jim Sherbert, CEO of Bush Industries, provided insight into how the RTA manufacturer has navigated the recession. Here are his answers to a few questions from CabinetMakerFDM:
CabinetMakerFDM: What has Bush Industries done to streamline and survive the recession while many of the other RTA manufacturers have failed?
Sherbert: Like all companies, we experienced a negative swing in revenues, and in some cases in net margins, which compounds the volume decline. However, we have continued to stick with our business model, which focuses on adding value through combining consumer insights, product development and an exceptionally strong supply chain management system. In addition, we variablized as many fixed costs as possible, using outsourced assets to balance downsized capacity. This required exceptional management discipline, but we have a very strong management team, so we were up to the task.
CabinetMakerFDM: How has Bush improved its manufacturing process? What kind of new technology and software is being used?
Sherbert: With the market depressed, there is little need to add capacity, and even enhanced productivity efforts have a limited payback. We have focused technology and software on improving customer and consumer services. This has made dealing with the various Bush business segments easier, quicker and more cost effective. New CRM systems and expanded supply chain support are among the advancements.
CabinetMakerFDM: Have you used lean manufacturing or other philosophies to improve your process?
Sherbert: Because the complexities in our supply chain make manufacturing on demand a challenge, we use a hybrid of lean manufacturing. We focus on cellular work centers within the manufacturing process and maintain a continuous improvement version of OEE. This allows us to employ some of the features of lean but to focus more intently on specific operational effectiveness targets.
CabinetMakerFDM: How have you changed the business over the past five years?
Sherbert: The company looks little like it did five years ago, which is a good thing. Had we retained the status quo of that time, we would likely no longer be in business. While I doubt anyone could have predicted the severity and longevity of the recession and its impact on our industry, we were insightful enough to eliminate cost redundancies and many inefficiencies. We also developed and deployed a very strong global sourcing process that allows us to capture the best combination of cost and value. Additionally, we have expanded both our product portfolio and the channels/markets into which we sell. It has been more evolutionary rather than revolutionary, but effective.
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CabinetMakerFDM: How has the RTA business changed? How can North American manufacturers compete?
Sherbert: RTA is by its very nature a lower cost means of getting a product to market. Over the past few years, principally forced by low cost, imported items, we have seen substantial price point declines in RTA products, and, unfortunately, a commensurate reduction in quality. Bush has worked very hard to differentiate in this one specific area regardless of source of supply and has differentiated from the field of RTA suppliers as a result.
CabinetMakerFDM: Which product areas do you see as being the strongest in the coming years?
Sherbert: The general market for furniture is not likely to improve much until consumer confidence rises. This, of course, is tied to various indicators such as debt loads and unemployment, and nobody seems to believe these will improve much over the next several months. That means companies will have to create demand by finding or creating market awareness of solutions to consumer concerns. It also means that the traditional channels to market will be challenged to enhance what we call "reach" to consumers. Some of this will be done with various brands that resonate with consumers and some will be achieved by simply improving the supply chain and making shopping easier.
We have seen, however, some improvement in the commercial furniture channels and it is likely that this sector will be a leading indicator in the recovery of in furniture in general.
CabinetMakerFDM: Are there any plans for the future you can tell us about?
Sherbert: We are pleased with our business model and with the channels to which we have hitched our wagon. We believe what we are doing is well aligned with the market channel's needs and that we will be able to leverage our success to attain growth through and with various partners.
Because we are a privately held company, we do not divulge our financials, including our sales. But from what I hear, we have suffered through the last couple of years without suffering typical revenue declines. We employ approximately 1,000 people between operations in North America, Europe and China.