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Flexsteel Industries Inc.

 


Address:
P.O. Box 877
Dubuque, Iowa 52004-0877
U.S.A.

Telephone: (319) 556-7730
Fax: (319) 556-8345


Statistics:
Public Company
Incorporated: 1918 as Sanitas Spring Company
Employees: 2,375
Sales: $208.43 million (1995)
Stock Exchanges: NASDAQ
SICs: 2512 Upholstered Household Furniture; 2531 Public Building & Related Furniture; 2599 Furniture & Fixtures, Not Elsewhere Classified


Company History:

Flexsteel Industries Inc. is a leading manufacturer of furniture seating for the home, commercial, and recreational vehicle markets. Under the slogan "Quality To Last a Lifetime," Flexsteel's line--which ranges from upholstered chairs, recliners, sofas, and convertible sofa beds to seating and sofa bed units for vans, mobile homes, and other recreational vehicles--features the company's patented Flexsteel spring, a uniquely flexible and durable design backed by a lifetime guarantee. Traditional styling makes up the bulk of Flexsteel's business, although the company is strong in contemporary and modular designs, and leather seating is a quickly growing segment of Flexsteel's sales. The Flexsteel line is available in over 1,000 fabrics, colors, and patterns, much of which is kept in inventory, allowing the company a fast order-to-delivery turnaround. In 1995, Flexsteel's eight manufacturing plants, four permanent showrooms, and 161 retailer-positioned gallery showrooms combined to produce more than $208 million in revenues for a net income of $5.2 million. During 1995, Flexsteel spent nearly $10 million on capital improvements--including a $3.5 million expansion of its Starkville, Mississippi, plant.

Flexsteel's origins may be traced to Frank Bertsch, an upholstery apprentice born in Wurttenberg, Germany, who emigrated to the United States in 1881. Arriving with just 50 cents in his pocket, Bertsch traveled first to Dubuque, Iowa, then to Chicago, and finally to Minneapolis in search of work. By 1893, Bertsch had found employment with the McCloud & Smith Furniture Company. In that same year, a new company was founded in Minneapolis, called the Rolph & Ball Furniture Co., which manufactured upholstery. In 1901, Bertsch, together with three employees from McCloud & Smith, bought Rolph & Ball, and renamed it Grau & Curtis Co., after two of the partners. Bertsch initially functioned as the company's director of upholstery. The company's first catalog was sent out in 1902; by the following year the catalog's 64 pages offered furniture not only for the home but also for commercial use in hotels, lounges, and churches. Already, however, the company's focus was on seating. By the end of its first decade, the company employed 22 people, who crafted and assembled its furniture by hand.

Frank Bertsch bought out his partners in 1917 and brought his son, Herbert T. Bertsch, into the company. The Grau & Curtis Co. next attempted to move into other areas of the furniture industry, purchasing a dining room and bedroom furniture maker during the 1920s. Although the company lost that plant during the 1929 stock market crash, the rest of the Bertsch business survived, however, and, under the new name of Northome Furniture Industries in 1929, actually grew during the Great Depression. Part of the reason for this was its introduction of the "flexsteel" spring in its furniture designs.

The flexsteel spring was initially conceived by E. Werner Schlaprittzi while studying at the University of Zurich early in the 20th century. Schlaprittzi modeled it after the springs found in clocks, while also incorporating the springlike action of tree branches. He was able to sell the spring design for use in the seats of European railroad cars, and upon immigrating to the United States in 1918, he founded the Sanitas Spring Company in Minneapolis.

Nearby manufacturer Northome added the spring to its furniture designs in 1927, and soon purchased a 50 percent stake in Sanitas Spring, which was renamed the Flexsteel Spring Corporation in 1934. From the beginning, Northome products featuring the Flexsteel spring carried an extended guarantee, initially for 25 years, and later for the lifetime of the product. In the 1990s, the company could boast that they still received trade-ins of furniture from this era.

Northome furniture continued to be built by hand until 1936. In that year, attempts at unionizing the company's workers led the Bertsches to relocate their operations to Dubuque, Iowa, where they purchased the former Brunswick Victrola plant, a 480,000 square-foot facility. For the new plant, the Bertsches decided to incorporate the line production techniques developed by the Ford Motor Company. Northome, which had to replace and retrain its entire production staff, was among the first in the furniture industry to incorporate the moving assembly line in their manufacturing process. Over the next decade, production jumped from one million to four million units per year. In 1946, the first company-owned trucks began delivering its furniture; by the 1990s, the Flexsteel fleet would grow to 350 trucks traveling ten million miles per year. In 1948, Frank Bertsch died, and Herbert Bertsch took over the company.

Northome moved toward national distribution and greater expansion during the 1950s. The company built a second, 220,000 square-foot plant in Lancaster, Pennsylvania, in 1955. During that decade, Northome also initiated separate departments for design and development and for central engineering, and rolled out its first national advertising campaign. By 1958 the Flexsteel spring had become so well known that the company renamed itself as Flexsteel Industries Inc.

The company also kept up with the changes in furniture styles of the era. Through the 1920s and 1930s, mass market furniture styles had seen little change from the standard overstuffed Victorian design, but, as the country emerged from the second world war, furniture styles underwent dramatic--and more frequent--changes, from the simple look of the 1940s to the more dramatic styles of the 1950s.

By the mid-1960s, Flexsteel's revenues had topped $15 million per year. That decade saw the rise of the recliner, and Flexsteel began producing its own "Flex-o-Lounger" recliners and reclining mechanisms. During this time, the company also bought its first aircraft--turboprops, which it used to fly dealers to the company's factories. In 1965, Flexsteel created the Brunswick Converting Division for production and printing of its own "space age" nylon fabrics. The company also opened several more manufacturing plants and by the end of the decade expanded its line to include seating for the growing recreational vehicle (RV) market. The company went public in 1969, after posting a net income of $1.17 million on revenues of $25 million.

The company made a cash purchase of the National Furniture Manufacturing Co. in Evansville, Indiana, in 1970, and entered the exposed-wood furniture market with the introduction of its Charisma chair division. Flexsteel moved forward in RV seating, developing its own line of sofa sleepers specially scaled for the limited space requirements of mobile homes and other vehicles. By the end of the decade, the company had gained the entire seating and sleeping business for General Motors RVs. Flexsteel also brought in computerized automation to its production line, beginning in 1974 with the introduction of Gerber fabric cutting machines. These machines allowed far more precise cutting of fabrics, reducing waste while allowing more precise pattern matching. Sales climbed steadily through the decade, from $38.5 million in 1972 to over $96 million in 1979. In that year, Flexsteel's net income reached nearly $4.5 million.

By then the third generation of Flexsteel's founders was leading the company, and the fourth generation was entering the business. The company opened a new plant in New Paris, Indiana, in 1982, moving part of its RV seating capacity closer to the van conversion center of Indiana. Flexsteel also opened showrooms, called Flexsteel Total Concept Galleries, the first of which was called Furniture Manor in Osseo, Minnesota; the company also opened two factory showrooms. Recliner sales became a more important part of the business, particularly with Flexsteel's invention of an adjustable lumbar support mechanism. Then the company moved into a new market in 1984, creating its commercial seating division with a separate salesforce and a product line for health care and other institutional settings. Sales increased throughout the 1980s, reaching $130 million in 1984, and $173 million in 1990.

The onset of the recession of the early 1990s saw Flexsteel's revenues drop in 1991, to $145 million, and the company was forced to write off some $1.6 million in uncollectible accounts receivable, while downsizing reduced its employee rolls by more than 300 people. The following year, the company also took restructuring charges of approximately $2.6 million in connection with the closing of its Evansville plant, and the consolidation of its recliner and motion furniture production at its Dublin, Georgia, plant. By 1992, however, Flexsteel was growing again, outpacing the furniture industry as a whole. Motion--or modular--furniture was helped by the company's newly designed latching mechanism. And in 1992, Flexsteel rolled out its moderate-price Grand Haven line of sofas, which hit the mid-range price point of $599-$699, compared to the typical Flexsteel sofa range of $799-$999. Costs were trimmed for the new line not by skimping on scale, but rather by limiting the range; the Grand Haven line featured only two sofa styles available in 14 fabrics, compared to the 1,000 fabric choices available for the Flexsteel line.

Leather furniture was another growing part of Flexsteel's business, doubling in size through the early 1990s and accounting for more than 10 percent of its revenues. RV products were particularly strong, growing at ten to 18 percent through 1994, and making up as much as 35 percent of total revenues. By 1993, these had climbed again to $177 million, and reached $195 million in 1994. And, from a low of $1.2 million in 1991, net income rose to $6.8 million in 1994. International sales also began to play a stronger role for the company.

By 1995, Flexsteel had rebuilt its employee levels to nearly 2,400 workers. Revenues grew a modest 6.7 percent, however, to $208 million, as RV sales suffered from an economic slowdown. Flexsteel closed its Sweetwater, Tennessee, plant, and consolidated its Charisma contract line at the Starkville plant. Yet Flexsteel continued to invest in new technologies, including dealer-friendly video cataloguing and automated sales inquiry systems, and computer-assisted design manufacturing techniques. And with a $3.5 million expansion of its Starkville plant and a 20,000 square-foot addition to its Dubuque facility completed in 1995, Flexsteel continued to show its commitment toward future growth.

Principal Divisions: Metal Division; Wood Products Division; Charisma Chairs; Commercial Seating Division.





Further Reading:


Brin, Geri, "Flexible Flexsteel," HFD-The Weekly Home Furnishings Newspaper, April 6, 1992, p. 28.
A Century of Seating Craftsmanship, Dubuque, Iowa: Flexsteel Industries, Inc., 1993.
Levine, Charlotte, "Flexsteel Celebrates 100th Anniversary," Central Penn Business Journal, May 5, 1993, p. 12.

Source: International Directory of Company Histories, Vol. 15. St. James Press, 1996.




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