Greg Harden, Harden Furniture President and CEO on domestic manufacturing and sustainability

November 30, 2007  by in UnCategorized   

By Home Furnishings Business in Case Goods on December 2007 Harden Furniture has faced what manufacturers in places such as North Carolina and Virginia call “globalization issues” for decades. Located in the upstate New York town of McConnellsville, the company, whose roots date to a saw-milling operation, committed its fortunes to making furniture in 1884, drawing from timberlands it owned and had under contract for raw materials.

Just as furniture-making counterparts in the Upper Midwest did, Harden saw its home region decline as a furniture-making hub as low wage rates and ready access to southern Appalachian hardwoods drew the bulk of the case goods industry south in the last century.

Happily for Harden, now in its fifth generation of family management under the leadership of President and CEO Greg Harden, the company keeps ticking along in a place where most manufacturers of any stripe fear to tread. It hasn’t been easy, but capital expenditures over the past five years in a new sawmill, CNC technology and a new upholstery frame facility have helped. That, and a dynamic retail scheme: Harden Home Studio—which now counts 34 retail partners in the United States, and two in Canada, according to the company’s Web site—that puts a spotlight on Harden’s customization capability for upholstery and case goods.

Harden also was heading “green” before sustainability became an industry buzzword, certifying its hardwoods under the Sustainable Forestry Initiative five years ago, and heating its entire facility with wood waste. Harden’s company cars? The hybrid Prius.

Greg Harden took time out from business travel in late October to answer some questions from Home Furnishings Business.

Upstate New York is by no means the least expensive place to make furniture in terms of labor cost, but companies such as Harden and Stickley are still humming along there. Why is that, and can you talk about how your manufacturing operation has changed compared to, say, five years ago?

New York State has a well-deserved reputation as the least business-friendly state in the nation, a state that is ranked at, or near the bottom, in nearly every measurement of cost of doing business, and the situation is even more disadvantageous for manufacturers. We have had to design our operations to be as lean as possible, while constantly looking for opportunities to add value to our product. If we are going to be successful, we have to be the best at what we do, and reward those consumers who support our brand with outstanding quality and design.

To put the dilemma faced by New York State manufacturers in perspective, a recent Public Policy Institute report awarded 27 counties in the upstate region a grade of F for economic performance. The remaining 10 counties were awarded a D. To earn that distinction, those counties failed to achieve the national average on any one of five criteria (F) or achieved only one out of five criteria (D). The state as a whole earned a D.

While Harden and Stickley have survived in that environment, it should be noted that we are the only two furniture manufacturers of any significance left in a state that once had scores of such businesses. Stickley’s most recent investment was in a facility in Vietnam, no doubt a result of the low cost of doing business there.

Governor Spitzer and his economic development team are making progress in improving the economic environment, but it will be a long process. For decades the momentum has been in the wrong direction, and it may take decades for the legislative part of the solution to evolve.

Harden is a member of the Sustainable Furniture Council (SFC), but before that organization was formed, Harden had initiated its own “green” efforts through Sustainable Forest Initiative (SFI) guidelines. SFC leans toward Forest Stewardship Council certification. Is this an issue for the organization, and if so, how do you see it being resolved moving ahead?

I think SFC has been very sensitive to, and sensible about, the benefits of SFI certification and the petty rivalry that FSC and SFI have been party to. Many of the well-known conservation organizations are closely allied with FSC, and perpetuate the myth that SFI participants, and the 133 million acres certified by SFI, are not worthy of recognition as leaders in forest management and sustainability. The SFC needs to ignore the politics and recognize that the science supports full SFI inclusion in SFC.

SFI certification is specific to North American forests and as a result is not as rigorous as FSC on issues that are unique to third-world tropical rain forests, such as illegal logging. Assuming that, at worst, SFI is 98 percent as rigorous as FSC, it will still be tremendously beneficial for the environment for more SFI lumber to be used in the manufacture of home furnishings.

Harden has owned timber properties for generations, and our 10,000 acres have been enrolled in SFI for five years. Our practices and compliance were recently field audited, and we passed the most recent SFI standard—the third time our program has been certified by an independent audit.

Speaking of “green,” we understand you’d given some thought to taking Harden off the grid, i.e., making the company self-sustaining for most or all of its operations. That’s a tall order, but has anything happened on that front?

For better or worse, Harden has always been highly vertically integrated. We heat our entire facility with wood waste, and at one time generated electricity that was sold to our local electric utility. It is technically possible to exit the grid and generate all our electrical energy, but practically speaking it would not be a good business decision. We rarely experience power outages, and when we do it is nice to leave the repairs to someone else.

The anti-dumping petition against wood bedroom furniture from China created a huge split in the industry a couple of years ago. What are your thoughts on how that issue continues to play out, and what’s your response to those who say the petition was all about Byrd Amendment money and hasn’t saved any furniture manufacturing jobs stateside?

The most important aspect of the anti-dumping petition was the conclusion that many Chinese companies were selling bedroom furniture at prices below their cost to manufacture. We never approached the issue from a Byrd perspective, and at the onset of the action we were convinced that any Byrd recovery would not be sufficient to recover our legal expenses.

While Chinese products continue to claim greater market share, there seems to be some rationalization of share occurring. Retailers appear to have a better understanding of what products are more advantageous to purchase from offshore sources, and those of us who remain on the domestic side better understand our niche and opportunities. The acrimony appears to have subsided, and the voices that represented the extreme positions in the debate have realized that the petition was not the end of the world.

We’re resigned to the fact that we have to live with competition from low-wage nations, despite the fact that their cost advantage is significantly more than the wage differential. At some point the world is going to have to address the environmental, product safety and social equity issues that are currently ignored. When that day arrives, we can define fair trade and free trade as essentially equal, and American manufacturers will enjoy a level playing field.

It is impossible to say whether any jobs were saved as a result of the petition, but perhaps the action will bring some honesty to the process and allow those of us who have chosen to remain domestic an opportunity to survive. Our industry needs to realize that consumers want variety, choice and quality, and domestic manufacturers are an important part of that equation.

How and where does sourcing fit into Harden’s product line now?

We currently source about 10 percent of our products offshore, and I anticipate that number will remain in that neighborhood for the next few years. There are some products or components that we either choose to source off-shore due to price, or that are no longer produced domestically. Occasionally we will source some bedroom and dining room, but that represents a tiny percentage of our revenues.

In addition, virtually all our production is special order, and that dictates that we remain predominantly a domestic producer. I doubt we ship the same upholstered fabric and frame combination more than a few times a year, and our case goods are available in 36 standard finishes.

Contract and hospitality are also important categories for Harden, representing about 20 percent of our annual revenue. Almost all this product is customized to some degree. We recently installed a court-house project where we manufactured the judge’s bench and all the mill work for the courtroom.

What is your favorite piece of furniture in the Harden line and why?

That might be the toughest question of the interview. I can easily identify my least favorite pieces, but the favorite has to be one of our upholstery designs. The 2600 sofa, part of our Legacy program, would be my favorite. A seven-inch cushion band allows for a lot of down fill, combined with enough depth and length that I can enjoy it exactly the way most males do—turn on the television, lie down and generally fall asleep. When we first developed the collection we had a prototype in the office in the High Point showroom. I never sleep at market—well, almost never.

How do you spend your spare time?

I enjoy almost any outdoor activity. Northern New York summers are fantastic, and I spend as much time as possible on a bike or on the golf course.

Harden Furniture owns a golf course, but I am not responsible for that decision, as it was founded by my grandfather in 1941. If your readers think furniture is a tough business, they should try operating a golf course in a part of the country where the season is painfully short.

Having grown up in this part of the country, I have to admit that winter is my favorite season. My wife, Lorie, and I have three children who grew up ski racing, and all are competing at the college level this year. We have had a home in Lake Placid for a number of years, and I still coach 13- and 14-year-old junior racers in the NYSEF program.