Vaughan-Bassett Closing Elkin Factory to Weather Recession

November 30, 2008  by in UnCategorized   

By Home Furnishings Business in on December 2008 Bedroom specialist Vaughan-Bassett Furniture will be temporarily closing its Elkin, N.C., production facility at the end of January citing the tight economy and the credit crunch gripping the industry.

All manufacturing will take place in the company’s Galax, Va., factory.

The 700,000-square-foot facility in Elkin, which employs 400 workers, will be “mothballed” until the economy and credit crisis eases, according to Doug Bassett, executive vice president and chief operating officer. The closure will not impact the company’s two warehouses in Elkin and in Boonville, N.C.

Bassett said the company will not sell the factory or the equipment so that it will be ready to reopen as soon as the economy brightens.

“We are now facing both Asian competition and a severe and possibly prolonged recession, producing the worst slump in the furniture business in at least 30 years, but one day business conditions will improve,” said Wyatt Bassett, president and CEO. “By keeping both our factory and equipment intact, we will maintain the ability to reopen a portion or all of the facility when demand returns to normal levels.”

Doug Bassett said the company will give priority to the 400 employees out of work if product demand in the Galax, Va., factory warrants the need for more workers.

Bassett said sales through August were off 4 percent, and then from September to now, sales dropped 25 percent to 30 percent.

Regarding the decision to keep the factory, Bassett said the company has a duty to maintain production that keeps up with demand. “We don’t think this recession or credit crunch is a permanent arrangement, and we’ll be ready to ramp back up as needed,” he said.

Vaughan-Bassett maintains about $30 million in inventory in its warehouses, Bassett said, adding that the volume won’t change. Instead, the company will likely drop from its 16 bedroom groups to either 13 or 14 depending on demand.

The company will apply for Trade Adjustment Assistance (TAA) with the U.S. Department of Labor for impacted employees. In addition, the company will work with the North Carolina Employment Security Commission to provide career counseling, job referral and other services to affected employees.