Schafer Bros. ‘Saved’ by Ex-Employee : Turnaround: Entrepreneur spends $65,000 in savings and takes out a $150,000 loan to reopen furniture manufacturer.
Schafer Bros. furniture was just another small manufacturer that couldn’t make it through the hard times. In January of last year, the 52-year-old Orange County company--victim to higher overhead and lower sales--closed its doors.
Two months later, on the night before the company’s equipment was sold at auction, former salesperson Janette Fling walked through the huge, quiet warehouse, looking at the rolls of leather and woodworking equipment tagged for sale.
“I said to myself, ‘I can’t see this company go away,’ ” Fling said.
So, she bought Schafer Bros.
Today, she runs a smaller version of the chair and sofa maker, which once had $25 million in annual sales. She has opened a smaller factory in Garden Grove four blocks from the original one and has rehired 19 of more than 200 former Schafer Bros. employees.
“There are very few times in your life you come upon a business opportunity that has a 51-year-old history behind it,” Fling said. “This company is special. It just needs to be carefully managed through the ‘90s.”
Fling, clad on a recent Friday morning in a green silk blazer with matching glasses, explained that she had left Schafer Bros. five years ago to start her own company in Los Angeles representing other furniture manufacturers.
In all, she has spent $65,000 of her savings and taken out a $150,000 bank loan. She expects to have her first profitable month in July, 13 months after she reopened the company. She said 1991 sales should reach $2 million.
In its glory days, Schafer Bros. was known for crafting traditional high-back leather chairs, the sort with dozens of brass tacks running down the arms and along the seams, a look that reeked of staid success. Attorneys, bankers and insurance executives were among its best customers.
But an ill-timed expansion in the late 1970s, including the purchase of a table maker and opening a second factory on the East Coast, loaded the company with too much overhead, according to Fling.
Office furniture sales were brisk in the early 1980s, growing by as much as 23% to $5.62 billion from 1983 to 1984. In those years, many businesses bought desks and office dividers to fit the new computer age, and opulent leather chairs and acre-wide hardwood desks were in style. But the industry’s fortunes dipped along with the economy in recent years. Sales rose only 2% from 1989 to 1990, and the Business and Institutional Furniture Manufacturers Assn. predicts no growth in 1991.
The slowdown meant that many small manufacturers went out of business, and others were bought by larger companies. In 1987, big companies such as Steelcase Inc. of Grand Rapids, Mich., and Westinghouse Electric Corp. of Pittsburgh began to buy many smaller furniture makers. Peter Jeff, a spokesman for Steelcase, the acknowledged leader of office furniture, said buying small, high-quality manufacturers with a specific market niche allowed his company to provide one-stop shopping for people furnishing offices.
“These smaller companies became very attractive because they could focus their efforts,” Jeff said.
Because the industry remains very competitive, with many manufacturers slashing prices, small companies will need to target specific markets to survive, he said.
That is one part of Fling’s strategy. Schafer Bros. is offering only 200 designs now instead of 350, and it is focusing on traditional chair and sofa designs. Fling is also staying out of the retail market for now. In the past, the company also sold furniture through the May Co.department stores and Barker Bros. Furniture.
And using the expertise of former employees is key to Fling’s plan.
Fortunato (Marty) Martinez, production manager, said the six-month hiatus between the closing and reopening of Schafer Bros. gave him just enough time to finish an addition he was putting on his house. Schafer Bros.’ problems were clear to employees before it folded and many, including Martinez, began saving money.
With the company for 15 years, Martinez said that on the first couple of days at the new location, he drove to the former factory before he remembered the company had moved.
“It’s a heck of a nice feeling” to be back, he said.
Cutting costs whenever she can is another of Fling’s strategies.
She paid just $200 to hook up the phone system at Schafer Bros.’ new location because the phones came with the building. “It’s not the best,” she confessed. “It doesn’t have as many features as we’d like, but it works.”
After reopening the company in June, she and her staff went to close-out auctions of other companies--including defunct furniture makers--to buy a delivery truck, work tables, heavy woodworking equipment. They paid cash for everything.
Fling is also her only sales force, using the connections she made as an independent manufacturers’ representative for other furniture companies in Los Angeles. Her sales company, J. Fling & Associates, will continue to operate, but it lost four of its 10 customers when Fling bought Schafer Bros. because those customers consider Schafer Bros. a competitor.
She said she is still amazed that she was able--with $15,000--to outbid 20 other people for the designs and rights to the Schafer Bros. company name. Working in her favor was that no one had come to buy the whole company.
“Almost everyone wanted a piece, either the traditional or the contemporary” part of the business, she said. “I was the only one who had the guts--I either had the stupidity or the guts--to put my fortune on the line to say it could be done.”
