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From Home Furnishing Business

Bruce Birnbach: American Leather’s president on his first year in a new seat

By Home Furnishings Business in Leather Upholstery on April 2007 Bruce Birnbach joined American Leather as president one year ago, leaving behind Rowe Furniture, the only furniture company for which he had ever worked.

During the first year in his new post, he€™s taken the time to learn the ins and outs of the leather category€™s lingo, put in new processes to help move the company along to increased sales and done more than just a bit of dabbling in the design and merchandising side of the business€”an aspect of the furniture industry that has always been near to his soul. With sales in excess of $70 million, American Leather is poised to grow based on its quick manufacturing time, custom-order capabilities and open ear to
customer suggestions and needs.

Birnbach, who turned 48 on April Fool€™s Day, has stepped out of the shadow of his father for the second time in his career. The first came when at the age of 30 he partnered with a high school buddy on the weekends to start Chicken Out Rotisserie, a 28-store chain of healthful, fast-food restaurants in Metro Washington, D.C. The concept flew and the company grew from $1 million in sales to $30 million in five years. Birnbach still owns a minority interest in the business that he credits with teaching him about lease negotiations, hiring people and old-fashioned entrepreneurial spirit.

Before joining American Leather, Birnbach was president of Rowe Furniture€™s sourcing division and prior to that post, he was president of the mid-priced upholstery producer for six years. Now, Birnbach sits atop one of the industry€™s domestic manufacturers poised for growth.

Birnbach sat down with Home Furnishings Business prior to heading to the High Point Market to reminisce about his first year with American Leather, the company€™s domestic manufacturing and plans for the future.

You were named president of American Leather last year. Sum up the last 12 months.

It€™s been a learning experience just to absorb another segment of the business; another customer base. It€™s been a big learning opportunity. I attended American Leather University (the company€™s in-house training for retailers and new hires), but more importantly I went out and talked to our customers. Between the technical knowledge of the product and the knowledge of our position in the industry, it€™s been great. Furniture is in my blood, and I love this industry, whether it€™s leather or something else. It€™s the same industry with the same great people.

What were the biggest
challenges?

Getting to know this segment of the industry. It€™s more of a premium brand, and understanding how it fits in the market. Learning the different language surrounding leather and getting up to speed on the nuances of leather. The people here have been outstanding to work with and in helping me to understand the leather business.

American Leather has such a strong reputation in the industry. Coming into the company from the outside, what was the one thing that surprised you the most about the company?

The customer response to the product. To piggyback on how the last year has been, going out and talking to the customers has confirmed that great reputation. No matter how great you are as a company, to hear your customers say €œI want to buy more€ is amazing. That€™s been a bit of a surprise.

It must be a different world being president of a privately held company compared to Rowe where the parent company was publicly traded.

Amen. That would be true. In a private company you can be very focused on the business as opposed to Wall Street, the board of directors or the analysts. Here, I€™m looking more at the business as opposed to fitting into the expectations of an outside world.

I have always operated with integrity, but privately held companies give you a lot more flexibility. You can make decisions on a longer light; you€™re not judged quarter to quarter. You have the ability to step back and understand why we€™re doing something and how we€™re doing it without being second guessed along the way.

That quarter-to-quarter mentality is not a great way to run a business, especially in an industry like ours that is changing at such a fast pace.

Moving forward, what goals have you set for American Leather?

We have been fortunate to grow by double digits every year since the company was started. I want to maintain that trend, and things look really well there.

We€™re going to start introducing more textiles into the product mix, and that€™s being driven by customer demand and request.

The company has reached a point where we€™re trying to get a mentality of a bigger company. We need to ensure the necessary infrastructure in place to do that. Other than that, I€™m kind of steering the ship on the same course it€™s been.

I have a yearly volume target, and I want to continue that double-digit growth. I€™d like to take this to $120 million to $140 million. That€™s our goal. Our vision is to take this thing out there and be sure al of our processes are in line to meet that goal.

What changes loom on the horizon that our retail readers can expect to see?

An expanded product offering with a much more design intensive strategy. They€™ll see more textiles mixed with leather.

I€™ve been very much involved in the product, the merchandising aspect. I very much have my hand in that part of the business. There€™s no one that does it better with greater quality than American Leather, but as great as the product has been, I€™m looking to take design to the next level. The showroom looks and feels completely different

American Leather has always been proud of its domestic production. So many furniture companies have opted to adopt an off-shore business model. How is it that AL has remained profitable with a made-in-America story when so many others say it can€™t be done?

I think, one, where we€™re positioned in the market allows us the ability to compete price-wise and design-wise. Technology and driving waste out of the product is also a bonus. At the end of the day, it€™s about the retailer and what they need, and a company that can deliver quickly with a variety of choices meets the needs of many retailers today. Those people in the upholstery business in the middle price arena will always have a place in domestic production. Each retailer has its own value proposition, not every one can buy from China. The American Leather model is the perfect model to survive in today€™s environment.

Exclusive distribution is a key concern among retailers. How does American Leather support its customers in this regard?

We are very much partners with our customers so we protect them. We want to give everyone the opportunity to make money. We have a really strong brand in the marketplace, and we€™re probably able to work that a little differently. We€™re very aware of our customers€™ needs and work hard to protect those needs.

This issue is all about technology. What has American Leather done to keep up with technology in its business?

If you come through the plant, we€™re one of the top three users of technology in the world. Everything is computerized from the leather to the fabric to the cutting to every part of our business, we have some type of automation. We€™re continuing to push forward. We€™re implementing Oracle to allow us to scale up. All throughout our business we€™re looking at technology.

Where do you look for leadership guidance? Books? Role models? Where do you find your inspiration?

I had a phenomenal mentor in my father (Jerry Birnbach, former president and chief executive officer of Rowe). My father taught me about leadership and this business in general. The gentleman I work for now is very bright (Bob Duncan, American Leather chief executive officer and co-founder). I like to read a lot, and seek out self-help whenever possible. I€™ve always led with my heart and what feels right to me.

You grew up in the furniture industry. What changes over the last 20 years do you consider the most eye-opening?

The whole advent of China and the impact it has had on this business. If there is one thing that€™s changed the industry most dramatically, it€™s that. The deflation that offshore sourcing and manufacturing has brought the industry, both retailers and manufacturers, is amazing.

What is your favorite American Leather frame?

The Edward sofa, an updated traditional, channel-back sofa, because it has so many looks that it can appeal to. Either that or the Danford because of its comfort. HFB


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