Palliser Reorganizes Into Separate Companies

August 8, 2006  by in UnCategorized   

By Home Furnishings Business in High Point on August 2006 Canadian case goods and leather upholstery major Palliser will break into four operating companies for residential furniture, one for the contract market, and a real estate group to operate the 220 South Elm showroom building in High Point.

“The world around us is changing, our family is reaching a transition point, and we need to make important decisions to reflect the changing world in which we live and to fully engage the energy and abilities of the next generation of family members,” said Art DeFehr, president of Palliser.

Palliser’s new furniture operating entities include:

* Palliser Furniture, which incorporates the existing company’s upholstered furniture division, which has particular strength in leather. The new company has several plants in Canada, four factories in Mexico, and will import finished upholstered products from Asia. Art DeFehr will continue as president with Carsten Diercks, currently the senior vice president, as the senior manager. Executive Vice President of Sales John Philips and Adrian Price, vice president for Canadian sales and sales administration, will lead the sales effort. James DeFehr, nephew of Art DeFehr, is senior manager of Palliser operations in Mexico. Due to currency values, Palliser’s Canadian production will focus on the domestic market there, while Mexican plants will supply the U.S. and Mexican markets, augmented in the near future by product from Asia.

* DeFehr Furniture is based at Palliser’s 400,000-square-foot Winnipeg case goods plant, which was sold to third-generation family members in 2004. Andrew DeFehr, 38, nephew of Art DeFehr, and a 16-year veteran in wood manufacturing, heads this group, and has adjusted the product offering and customer base to keep it profitable in the face of imports and a more valuable Canadian dollar.

The operation also includes Palliser’s 500,000-square-foot-plus Logic plant, also located in Winnipeg, a fully integrated facility that includes its own sawmill, particleboard plant, veneer plant, laminating facility, and a European-style flat line for finishing.

The enlarged DeFehr Furniture will consist of 1,000,000 square feet of domestic wood manufacturing and more than 1,000 employees, and represents a combination of functions rarely found in North American furniture plants today.

* Blend Furniture Co., headed by long time sales and marketing veteran Roger Friesen, who serves as president of the new entity, represents Palliser’s operations for imported case goods. Philip Klassen, who has both domestic manufacturing and Asian sourcing experience, is vice president of operations. Ben Horch, a 35-year Palliser veteran, is vice president of sales. Blend Furniture will continue to operate out of Winnipeg.

* EQ3, a retail concept Palliser established in 2001, will continue under the leadership of Peter Tielmann, 34, and Art DeFehr’s son-in-law.

Tielmann conceived idea for EQ3 based on his European background and has developed the concept to allow for a full range of merchandise in all categories for a 10,000-square-foot retail footprint. EQ3 supplies both franchise stores that are exclusively dedicated to EQ3 merchandise as well as galleries in more traditional furniture outlets that seek to attract a younger customer. EQ3 sources most of its wood product in Asia but produces its own upholstered products in plants in Winnipeg and Mexico.

* Arconas is a specialty contract furniture company unknown to most customers of Palliser. Arconas specializes in “public seating” and has recently furnished the seating at the new Dallas International Terminal, Boston’s Logan International Airport, Abu Dhabi and many others. The company has been purchased by Dan Nussbaum, son-in-law of Art DeFehr, and is based in Toronto.

While DeFehr believes that a conglomerate structure such as Palliser’s previous organization is possible for a major furniture supplier today, emerging competitors’ focused strategies and product lines demanded a similar approach from Palliser, especially as new generations enter family businesses that have grown beyond the founders’ expectations.

“Creating a cluster of smaller, more focused companies also creates opportunity for third-generation family members to again become entrepreneurs and re-discover the excitement and opportunity of their parents and grandfather,” he said. “Given the history, relationships and shared locations the ‘new’ companies have the opportunity and freedom to co-operate where that is in their interest but to be flexible and creative where that is required. In one instance, the case goods import business, leadership will pass to a group of senior management rather than a family member.”

Palliser or its shareholders will continue to own and manage the 220 Elm showroom facility in High Point plus other investments.

Palliser has considered becoming a public company from time to time but the DeFehr family has always opted for the personal freedom that comes with private ownership.

“The world is changing, the industry is changing and we need to change as well,” DeFehr said. “Part of that change is simply to get out of the way and let the next generation of owners and managers create their own space in a confusing world.”