THOMASVILLE, N.C. — The new owner of Thomasville Furniture Industries Inc. told employees today it is closing all operations in Thomasville by March 21, which will affect 84 employees.
The announcement by Ira Glazer, president and chief executive of Heritage Home Group LLC, was not unexpected.
Glazer is a veteran corporate turnaround expert.
There had been talk among industry officials that Heritage, which took over Furniture Brands International Inc. on Nov. 23, planned to consolidate its North Carolina operations.
According to a copy of Glazer’s memo to employees, obtained by the Winston-Salem Journal, Glazer said the company is closing Plant C at 405 E. Main St. and the Area 100 building at 505 County Line Road.
Glazer cited “business circumstances” for the plant closing decision. Heritage officials, through a public-relations group, declined to make further comment about the decision.
However, when a U.S. Bankruptcy Court judge approved Heritage’s $280 million bid for Furniture Brands’ assets, Heritage said it debuts “as a well-capitalized company, with no legacy obligations and access to the financial resources necessary to execute its ambitious business improvement and growth plans.”
Glazer indicated that employees would be let go as production winds down. Employees said they were told the consolidation was not affecting Heritage operations in Hickory and Lenoir.
“Unfortunately, this permanent closure will mean the end of all operations, and that all employees at these locations will be discharged,” Glazer said. “There are no bumping rights for affected employees.”
Local employees, who asked not to be identified for fear of losing their jobs, told the Journal in November they were to expect cost-cutting measures aimed at eliminating waste and overlaps between the divisions.
The employees said they were told that Heritage’s parent company, KPS Capital Partners, had a two-year restructuring plan in mind and has pledged to keep a furniture presence in its overall portfolio.
A Thomasville employee said today that employees “have very much been expecting this and (we) made it a lot longer than we had figured.
Many are relieved because the conditions have got so bad in here with inventory and supplies that we can’t complete orders.”
Glazer said the memo serves as the company’s WARN Act notice to employees.
The notice typically is required if a company is conducting a mass job cut — defined as more than 50 employees — involving the closing of a plant or operation within a 60-day period.
Glazer said in a separate memo sent to all Heritage employees Monday that the company was creating a new merchandising group that would have “the best assortment of products across all our brands to satisfy the needs of our core consumers.”
Glazer said in the Monday memo the job cuts “are unfortunately a necessary element of our on-going efforts to create a highly competitive organizational structure.
That said, we are proud that the many jobs saved by the formation of Heritage Home and the acquisition of our brands far exceeds the number that are being let go.”
Furniture Brands declared for Chapter 7 bankruptcy protection Sept. 9, 2012.
It is not clear whether Glazer has any experience running a home-furnishings company — a critical distinction given there are many examples of private-equity companies struggling, if not failing, to run a furniture company after pledging to use a different management and operational style than has worked in the industry.
Some analysts list Furniture Brands in that category.
Furniture Brands in the early 2000s was the largest U.S. furniture manufacturer at $2.2 billion in annual sales, primarily from the Broyhill Furniture Industries Inc., HDM Furniture Industries Inc. and Thomasville divisions.
However, the company has experienced eight years of revenue declines, according to John Baugh, an analyst with Stifel Nicolaus.
For fiscal 2012, the company had a loss of $47.3 million compared with a loss of $43.7 million in fiscal 2011. Sales were down 3 percent to $1.07 billion.
In the past 12 years, Furniture Brands has eliminated at least 8,860 jobs in North Carolina — including at least 2,874 in the Triad — in pursuit of lower labor costs in Asia that have not contributed to increased sales.
Counting the 80 Thomasville job cuts announced today, the totals rise to at least 8,940 in North Carolina and at least 2,954 in the Triad.