Factory Man : How One Furniture Maker Battled Offshoring, Stayed Local - and Helped Save an American Town (9780316322607)

by Macy, Beth

  Fulton eschewed the style of the old-line misters, who’d run the business as a model of efficiency—working weekends, sweating every detail, hiring people “who got up with the chickens and went to bed with the chickens,” as Mr. Doug liked to say. He replaced them with marketing guys who emphasized short-term stock-market gains and profit margins and gobbled up what the economists, bankers, and business schools were saying about creative destruction.

  Retired now for twelve years, Gale said he loves Rob Spilman like a son. But he still wakes up every morning “tee-totally mad” over the factory closures, which he sees as an intentional failure to compete and a total disregard for the generations of factory workers who made the Bassett family and other shareholders rich. “Paul Fulton couldn’t make a toothpick!” Gale shouted into the phone. “The little people were just used and abused.”

  Instead of modernizing and adopting lean manufacturing principles to keep its factories efficient, North Carolina State University furniture expert Steve Walker recalled, Bassett Furniture and others “took the easy way out. Barring some big effort on the part of the government to protect industry… if you were a public company, it was a whole lot easier to just shut ’em down and go buy the product.”

  Meanwhile, the smaller, privately held Vaughan-Bassett was pouring millions into new machinery to keep the plant efficient and up-to-date. It was a gamble, to be sure, as JBIII watched his sales plummet, going from $168.2 million in 2000 to $83.9 million in 2011, a period when the company received more than $21 million in Byrd money, most of which John funneled into computerized routers and kilns and a new rough end.

  It wasn’t a social experiment per se, as Rob Spilman might have put it. But with much of his personal wealth tied up in the business, JBIII had no choice but to fight to protect his family and company assets, his nephew and other industry watchers argue.

  “If I had forty percent of my company’s equity, and I had no brand name, and I only made one product—bedroom furniture—and my alternative is to close all my factories and import, that would be a death sentence for me,” Rob said. “But if I wanted to keep the value I had in my private company, I would fight tooth and toenail, and get the U.S. government and whoever else I can think of to help me keep the value of my company.

  “So everybody picked their poison.”

  In 2004, Rob Spilman still believed he could keep the last of his factories going—the Superior Lines cash cow. Asked to recount what his father thought of the closings that followed Bob Spilman’s 1997 retirement, “He just said, ‘I feel so sorry for you son of a bitches, I can’t stand it. I was there when the easy money was made.’ ”

  By that point, a rare form of leukemia had zapped the fire out of the hard-charging, expletive-dropping businessman, a man his son fondly called “the best ass-chewer in history.” A man who had fully and inimitably articulated what he thought about everything and everybody, from his quirky corporate pilot to his cocky brother-in-law.

  Like many of his underlings, I had a hard time grasping the essence of Bob Spilman. Was he a tough-guy genius motivated by the art of deal-making and loyal to his card-playing cadre? Or was he just a selfish narcissist, broken by his own lousy childhood and compelled to control the movements of everyone around him?

  During my only trip to the Taj Mahal, when I asked Rob these questions, he chuckled and shook his head. “God Almighty, he was hard. But he did mellow as time went on,” he said. “He had a charm about him that was endearing, and this extended to everyone from the guy pumping his gas to the Wall Street guy.”

  He then told two stories to illustrate his point.

  The first was about a table-plant manager named Dick Rosenberg whose wife was a city girl and refused to live in Bassett; she made Dick return to their home in Atlanta on weekends, which irked Sweet Ole Bob to no end.

  So much so that the CEO became positively obsessed with making sure that Rosenberg never left early on Fridays, even if he’d already put in well over forty hours that week. Spilman called Rosenberg’s secretary every Friday afternoon at four to make sure he was still there. One Friday, Dick had already sneaked out when Spilman phoned and barked, “Where the hell’s Rosenberg?”

  When his secretary told him Rosenberg had left, Spilman made another call. He ordered Virginia State Police patrolmen to put up a barricade across the Virginia–North Carolina line to stop him. The troopers hauled the poor guy back to the Taj Mahal, where Sweet Ole Bob was standing in his office, making a big show of looking at his wristwatch.

  “Well, it’s five o’clock. Time to go!” he said, beaming. “Have a good weekend!”

  The SOB was shrewd. He was funny—though usually at someone else’s expense. And he was a master showman, as illustrated by a grand gesture Rob described him making at a High Point reception in the late 1990s.

  Bob Spilman vented his rage about Chinese imports—on an innocent suckling pig. He picked up a carving knife, shouted “Larry Moh!,” and stabbed the porcine centerpiece so hard the apple in its mouth quaked.

  He was sick and tired of hearing Moh’s name.

  He may have been the puppeteer manipulating the factory closings, installing Fulton as his replacement until his son grew ready for the challenge. But the Spilmans were not the only factory men drowning in their scotch. The next people hit with pink slips were John Bassett’s 385 workers in Sumter, the glit makers who had, over the course of almost two decades, added mightily to his company’s profits. Until 2001, when the profits turned to losses. If the Chinese were hammering the wooden-bedroom-furniture market, they were positively killing the paper-on-particleboard sales. Why buy a printed product when you could now buy a wood one at the same price? Even the masses knew that much.

  John Bassett closed the V-B/Williams plant in Sumter at the end of June 2004. To stop the hemorrhaging and keep the rest of his plants viable, he had no other choice. As he told a Sumter newspaper, “The government has determined China is cheating, but it’s coming too late to save our Sumter plant.”

  Still, he worried about people like Roger Plock, a longtime maintenance man who couldn’t afford to retire and was still healthy and eager to work. Who was going to hire a sixty-four-year-old in Sumter, especially with a job market already flooded by the closing of two nearby automotive-supplier plants that had moved operations to Mexico?

  Twelve years had passed since Ross Perot warned Americans about the “giant sucking sound” of NAFTA. But people now saw firsthand that the fallout from all those trade-policy acronyms written years ago in faraway Washington, Doha and Uruguay eventually trickled down to small towns like Sumter, South Carolina, and Bassett, Virginia.

  Back in Galax, the muttering reached new heights. So did the questions. Sheila Key, John’s assistant, had to calm down nervous employees waiting to speak to him after their shifts. They wanted reassurances that the flagship Galax plant wasn’t going down next.

  “He wasn’t sleeping at night,” Sheila told me. “You could tell by looking that it was weighing heavily.”

  What happened next should have killed him. If you saw the photograph of his Lexus sedan, mangled from bumper to bumper, you’d wonder how he’d survived falling asleep on the Blue Ridge Parkway and crashing into a tree with only a sprained hand, bruising, and copious shards of glass embedded in his skin.

  When he woke up moments after the impact, the airbags had all deployed. The first thing he noticed was the odor of cordite, the propellant that forced out the airbags, and it smelled exactly like hot shotgun shells. John Bassett was so tired and so embattled, so worried about angry retailers and legal fees and coalition members calling left and right, that it didn’t occur to him that he had fallen asleep during his morning commute.

  He thought somebody was trying to kill him.

  PART VII

  22

  Million-Dollar Backlash

  What happens is you see the sales start to trail off, and usually one day they stop ordering from you.

  You usually don�
�t know exactly… who you’ve been replaced by.

  —WYATT BASSETT

  By the time the retailers, importers, and furniture makers descended on High Point for the April 2004 Market, nobody was shooting at John Bassett. But as the usual crowd of seventy-five thousand descended on the furniture epicenter to browse showrooms and decide what to order for their stores, it occurred to him that his son Wyatt’s prediction of mockery followed by anger had hit the bull’s-eye. Some openly ridiculed him. Not only did many stop ordering from his factory, but several sported buttons emblazoned with a picture of a droopy-eared basset hound and the words How big is your duty?

  Buyers were warmly welcomed at the new replica of Beijing’s Forbidden City, erected by importer Lifestyle Enterprises, which was making no secret of where its furniture originated. Lifestyle was owned by Taiwanese-born William Hsieh, a friend and protégé of Larry Moh, and his company had contracted with factories across Asia, with a concentration in Dongguan, to make its low-end promotional furniture.

  This Forbidden City was a miniature showroom replica, just as John Bassett’s Graceland had been, and it was every bit as gaudy, with sloped roofs, golden lions guarding the entrance, and smiling women decked out in embroidered Asian gowns. (The Peking duck, though, was surely a cut above Vaughan-Bassett’s peanut butter, banana, and bacon sandwiches, an Elvis favorite.)

  The antidumping petition turned out to be a boon for Lifestyle, which raked in the business that spring, its American-division CEO James Riddle said, recalling an über-popular $399 four-poster bed named the Emperor that featured leather inlays and hand-carved accents. “If anything, the controversy played to our favor,” Riddle said. “The retailers looked instead for companies like us because we were a better value and highly promotional. They were so mad at John, they opened the door to us.”

  The retailers had progressed beyond anger now to a whole new stage: retribution. By June 2004, fifteen retailers across the country had dropped Vaughan-Bassett, wiping out some eight million dollars in orders.

  They weren’t using the word boycott, a Furniture Retailers of America spokesman claimed, though they did buy two-page ads that named every company listed on the petition, and everyone knew who the leader was, even if the ads didn’t directly say so—the hound dog caricatured on the button: John Bassett. “Why are these companies asking to put their hands in your customers’ pockets?” one ad said.

  Even companies like Copeland, the Vermont furniture makers, were feeling the ire. Copeland Furniture had lost a quarter of its business to imports, and the Asians were knocking off the Frank Lloyd Wright designs that Tim Copeland, the company’s founder, had paid big bucks to license, wholesaling them at prices that were a third below Copeland’s. Eventually Copeland laid off thirty employees, nearly a quarter of his workforce.

  At Johnston/Tombigbee Furniture in Mississippi, CEO Reau Berry ended up delivering pink slips to over half his workforce. The third-generation Mississippi furniture maker had been visiting High Point all his life. Founded by his grandfather in 1932, the company had a Market showroom right above La-Z-Boy’s, and Berry counted as friends retailers who’d been doing business with his family for forty years.

  It was happening to everyone in the coalition. Half of Berry’s customers dropped him, many without saying a word. Longtime friends and customers walked by his display at High Point and waved—on their way to the Chinese manufacturer’s showroom next door. “When China joined the WTO, they took a nightstand I had for a hundred dollars, copied it, and sold it literally for fifty dollars,” he said. “I can’t compete against a government, especially a Communist government.”

  Berry was already importing some residential furniture from China in 2003 when an import agent working in tandem with the Chinese government threatened to cut him off if he supported John Bassett’s coalition, Berry said. So Berry cut the agent off.

  He overhauled his business model, dropping the residential furniture line. He made smaller cuttings of hospitality furniture instead, mainly for hotels and motels. Like upholstered furniture and kitchen cabinetry, hotel furniture is often custom ordered and therefore not as vulnerable to offshore competition.

  Once a devoted Republican, Berry became such a vociferous and outspoken opponent of President George W. Bush’s free-trade policies that his favorite publication, the London-based Financial Times, finally banned him from making any more comments on its website.

  “I’ve sat here on the front end of this whole deal, and I may not be the brightest bulb, but I know that when my people don’t have a job in Columbus, Mississippi, they’re out of work forever,” he told me. “There’s nothing here for them to retrain for.”

  During both the fall and spring High Point Markets in 2004, the dueling sides hunkered down in separate quarters to strategize. The retailers and importers brainstormed ways to minimize the impact of the forthcoming duties, like setting up shop in Vietnam and Malaysia, as Lifestyle would soon do. (Bedroom imports from Vietnam, in fact, had already tripled during the first three months of 2004, according to the U.S. Customs Service.)

  John Greenwald advised a packed house of three hundred that they needed to organize, and the Furniture Retailers of America spokesman followed up by explaining just exactly where they should send their checks. The FRA had already raised five hundred thousand dollars to fight the coalition, and it needed more. The opposition took out more trade-magazine ads, the general theme being that the petitioners were not only hypocrites who were themselves importing but also greedy protectionists.

  FRA lawyer Bill Silverman accused petitioners of “making war” on retailers, decrying the preliminary decision to impose duties on dumpers. Silverman laid out the possible financial liabilities for all involved: years of annual investigations, the need for cash deposits paid ahead in anticipation of annual reviews, and continued legal fees.

  The analyst Jerry Epperson told a Furniture/Today reporter that both sides were exaggerating the threat and overstating their arguments in an effort to raise more money for lobbying and legal fees.

  When Keith Koenig, the CEO of Fort Lauderdale–based City Furniture, told the group that John Bassett’s coalition was by and large “not the cutting edge, best and brightest in the industry,” the crowd roared with cheers and applause. Koenig had been an old friend, golf companion, and longtime customer of John Bassett’s. But he too canceled many of his Vaughan-Bassett orders.

  Koenig described the worst possible result of the forthcoming investigation: If some of the seven Chinese companies being investigated by the Commerce Department were assigned high duties during the annual review process, it would significantly raise the cost of the imports for every furniture store in America. It could lead to an average duty of more than 20 or 30 percent, which would ultimately prohibit most of the Chinese bedroom-furniture factories from exporting to the United States.

  “That imbalance would throw the furniture industry’s supply chain on its ears, would not bring back any jobs to the United States, and would serve to provide [the few factories in China that had preliminarily been assigned low duties] with a near monopoly on bedroom furniture from China,” he said.

  “There’s a neutron bomb in the parking lot.”

  From his Richmond office, Epperson meticulously tracked the shift to imports for his investment firm’s database, and he attended all the meetings, pro and con. He wrote careful, evenhanded columns for Furniture/Today in which he predicted that duties would be “modestly inflationary for consumers.”

  The trade publication eventually hired him to write for its monthly Mandarin edition too. “I don’t badmouth the Chinese,” he told me, adding that he often included humorous tidbits about his early Asian forays—such as the speech he gave to Taiwanese businessmen in 1982. His translator had instructed the audience to laugh politely instead of actually translating Epperson’s jokes, which the man didn’t think the audience would understand.

  Epperson conceded that John Bassett and his sons had ever
y right to press their case: “A lot of these factories were getting rewards from the Chinese government,” he said, including Dalian Huafeng. “Back then, they could sell with no profit at all and get a check back from their government as a thank-you for exporting.”

  That stopped with the start of the housing recession in 2008 and annual double-digit wage hikes in China. “Now they’ve shifted those rewards to high tech to raise the standard of living for their citizens,” Epperson said.

  That shift continues to prompt a small but growing reshoring movement as companies come back to the United States. New American GE and Caterpillar factories have gone up and there’s even a new giant Ashley Furniture upholstery plant and distribution facility south of Winston-Salem, but there have been no major wood furniture-making endeavors in the mix. “Remember,” Epperson said, “furniture has always been used as a way to educate agricultural workers on how to work indoors in a factory with heavy equipment.”

  Which is what Mr. J.D. did when he swiped the industry from Michigan and New York furniture makers. Who had swiped it from Boston’s. Who had swiped it from England’s. All of them in search of the cheapest labor and wood.

  The free traders loved to remind the protectionists of this sweeping pattern. Globalization was imminent, and standing in its way was simply another futile gesture, a finger in a leaking dike.

  In another rented room during the spring 2004 High Point Market, John Bassett gathered his bread-and-butter retailers, the mom-and-pop store owners with whom he had cast his lot; the same people who’d provided the seven hundred letters Joe Dorn had presented to the ITC with a dramatic thud.

  John reminded them of his speedy VBX delivery program, then described his new ideas. One involved helping the retailers with advertising, and another was a new cooperative consumer-credit program he’d personally negotiated with a bank. “We call this the Triple Crown of retail,” he said. “I’m going to birth you, feed you, and burp you!”