Bush Industries, Inc.

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Bush Industries, Inc.

One Mason Drive
Jamestown, New York 14702
U.S.A.
(716) 665-2000
Fax: (716) 665-2074
Web site: http://www.bushfurniture.com

Public Company
Incorporated: 1959 as Bush Brothers Products Corp.
Employees: 2,200
Sales: $256.3 million (1996)
Stock Exchanges: New York
SICs: 2521 Wood Office Furniture; 2599 Furniture and Fixtures Not Elsewhere Classified; 2511 Wood Household Furniture; 2512 Upholstered Household Furniture

Bush Industries, Inc. is the third largest manufacturer of ready-to-assemble (RTA) furniture in the United States, and the 12th largest furniture maker overall. With an emphasis on innovative design and cutting-edge technology, and the ongoing acquisition of companies that add to its manufacturing capabilities and product lines, Bush has grown significantly faster than the RTA industry as a whole. With continuous product development and annual sales increases since the early 1980s, Bush has firmly established its position as a leader in the furniture industry.

Founded in 1959

Bush Industries began in 1959 as Starline Housewares, a maker of towel racks and toothbrush holders in western New York State. Future corporate president and CEO Paul Bush, a 1957 mechanical engineering graduate of Rensselaer Polytechnic Institute, joined several family members in starting the business, which soon changed its name to Bush Brothers Products Corp. Paul Bush initially served as a sales representative for the company, but by 1967 had assumed operating control. The company’s output during the 1960s consisted mainly of metal-plated and plastic bathroom products, including a clothes hamper that required some assembly by the purchaser.

In 1970 Paul Bush bought out the remaining family members and took over sole control of the management of Bush Products. The early 1970s saw the introduction of chrome and glass end tables and a plastic television table which was made to resemble wood. This product quickly became a success, and led to an increasing focus on the manufacture of furniture. The company changed its name to Bush Industries in 1975.

In the late 1970s, Bush sold its metals and plastics manufacturing facilities, using the proceeds to expand its furniture manufacturing operation. Bush began to make wood products, primarily stands for televisions, microwaves, and other consumer electronics goods, including some items requiring assembly. The success of its RTA products led the company to focus exclusively on RTA goods after 1979. Typically, such items were made from one-inch thick particle board with a plastic laminate covering, or sometimes wood veneer. The public perception of RTA furniture at this time was somewhat negative, due to a reputation for limited durability, unappealing design, and difficulty of assembly. Though estimated by Bush to account for as much as 40 percent of the European furniture market, RTA was much less popular in the United States. By studying the responses of consumers and looking at European and Japanese manufacturing models, Paul Bush began to improve what the company was offering at a time when consumer demand was beginning to increase dramatically.

Rapid Growth in the 1980s

By the end of the 1970s, Bush Industries was still a small company, with annual sales of around $7 million. But the expanding interest of consumers in such electronics goods as videocassette recorders and microwave ovens began to fuel rapid sales growth for Bush, especially in its lines of economically priced furniture designed to house these products. Bush’s wares were being sold largely in discount outlets, including Best Products and Service Merchandise, as well as alongside electronics goods in Sears, J.C. Penney, and Montgomery Ward stores. The relative price of a ready-to-assemble piece of furniture was a third to a half less than that of preassembled goods, and retailers saved greatly on storage costs and space. A downturn in the economy also contributed toward many consumers taking another look at RTA furniture which they had previously spurned, and many found they now liked what they saw.

By 1984, with annual sales increasing dramatically each year, Bush moved into a new 350,000-square-foot plant near Jamestown, New York, consolidating its manufacturing operations and replacing plants at Gowanda, New York, and Bradford, Pennsylvania. Its corporate headquarters were also relocated to Jamestown from its finishing/packaging plant in Little Valley, New York. In 1985 the company went public, with shares offered on the American Stock Exchange. Paul Bush, who was named corporate chairman, kept controlling interest in the company, limiting the shares on the market to 20 percent of the total. The company’s annual sales for 1985 stood at a record $41.6 million.

In the late 1980s, the rise of the personal computer gave Bush a new niche to fill, and its products designed to accommodate computers sold well. Consumers appreciated the convenience of being able to purchase a computer and stand all at once, then take it home in the car with them, rather than waiting for the stand to be delivered later. Another successful line of goods was home entertainment centers, which could hold a television, videocassette player, stereo system, and various tapes or CDs. The company also began to market ready-to-assemble bedroom furniture. Among the design innovations from Bush in the 1980s were the use of soft forms with smooth, rounded edges and products that combined oak veneers with solid oak components. In 1989 Bush inaugurated its “Furniture on the Move” sales program, a product display for use in traditional furniture stores with signs and kiosks giving information about the products. Bush furniture was positioned in the middle to upper end of the RTA marketplace, pricewise, with industry leaders O’Sullivan and Sauder selling more to the lower end. Bush products continued to find space in the 1980s in more large retail chains’ stores, in some cases with pieces designed specifically for a particular client. By 1990 annual sales had climbed to $110.3 million.

Continuing Growth and Acquisitions in the 1990s

In 1990 Bush Industries purchased two furniture manufacturing companies, Case-Casard and Eric Morgan. The former was a maker of lower-priced RTA products, while Eric Morgan manufactured preassembled furniture for the more expensive end of the market. The company integrated these acquisitions into its structure, continuing to use the product names and maintaining the manufacturing operations in Tijuana, Mexico (for Eric Morgan), and Greensboro, North Carolina (for Case-Casard). Bush now had products that sold at both ends of the price spectrum, as well as in the middle. In 1991, Bush sued competitor O’Sullivan Industries for alleged design-patent infringement, but the suit was dismissed “for obviousness.” The company purchased the manufacturing equipment of a former competitor, Gusdorf, Inc., in 1993, and added 450,000 square feet of manufacturing capacity at a site in Jamestown in 1994, plus a distribution center in Saybrook, Ohio, the same year. In July 1994, Bush’s stock began trading on the New York Stock Exchange.

The RTA market, which had grown by leaps and bounds in the 1980s, had slowed a bit by the end of that decade, with Bush’s annual sales increases leveling off in 1989-90. But they soon took off again, fueled by the increasing demand for home and commercial office furniture, a new market for “home theater’ ’ products, and by a lucky avoidance of problems faced by several competitors such as lawsuits and restricted manufacturing capacity. Bush products were being marketed in such office superstores as Staples by the mid-1990s, with Bush becoming a leader in commercial office furniture sales with the 1995 introduction of its Office Pro Collection. The office furniture segment of the RTA market had increased to almost a third of the total by the late 1990s.

The company continually sought new ways to improve its product line and keep the customers happy. One successful idea was the addition of a toll-free help line, available 24 hours a day, year-round. Customers with missing or damaged parts, or with problems assembling their furniture, could call and get immediate help. If needed, replacement parts would be rush-shipped to them. Paul Bush also demonstrated a commitment to his employees and the community of Jamestown. The plant installed a state-of-the-art ventilation system which removed wood dust and compacted it into pellets which could be used as fuel. Bush Industries strove to obtain the raw materials for its vertically integrated manufacturing operations from the surrounding area, shipping them directly to the factory in Jamestown.

Company Perspectives:

Bush is committed to maintaining its position as the industry leader in product design, quality and innovation. New product development will continue to be a top Company priority.

As our markets continue to grow more competitive, we will keep our focus on the principles that have made us successful over the years, particularly continual improvement and teamwork. These principles have guided the company since the beginning and have become more and more important as we have grown and expanded into new markets and distribution channels.

New Developments in the Mid-1990s

In 1995, Bush Industries acquired controlling interest in The ColorWorks, Inc. of North Carolina, a company which had the American and partial foreign master license for a process called HydroGraFix. This manufacturing process, developed in Japan, gave Bush the ability to attach sheets of printed material to oddly contoured surfaces, giving Bush’s designers a cutting-edge tool for future design innovations. In 1996, the company broke ground on a 500,000-square-foot manufacturing and distribution facility in Erie, Pennsylvania. The new facility would give the company a total of approximately 2.5 million square feet of manufacturing capacity. Once the distribution part of this plant was finished, Bush closed its distribution operation in Saybrook, Ohio, transferring its functions to the closer-to-home Erie location. Bush also had showrooms by this point in Jamestown, San Francisco, and High Point, North Carolina.

The company experimented with a site on the world wide web in 1996, though problems with the service provider led it to be shut down after three months. Later, the company developed a web site in-house, going online in mid-1997. The site was to include product information, links to noncompeting furniture manufacturers and suppliers, and online assembly assistance. The complete line of Bush products was also available from a separate online furniture distributor. Also in 1996, Bush was selected by The Associated Volume Buyers, a group of over 1,000 independent retailers, as its primary source for RTA furniture products. Bush was to supply the retailers with a “turnkey” package of marketing tools, display materials and products for their stores. Bush’s annual sales in 1996 stood at $256.3 million, over 35 times what they had been at the beginning of the 1980s, and outstripping the growth rate of the RTA marketplace as a whole.

In 1997, Bush announced the intent to purchase 51 percent of Rohr Gruppe of Germany, the 10th largest German furniture manufacturer. The company formed a subsidiary called Bush-Viotechnik GmbH to market Bush’s surface-finish products to Europe. Bush products were already being sold in 40 countries, but this marked the largest expansion to date onto foreign soil for the company. Another development in 1997 was the creation of a distribution partnership with Thomson Consumer Electronics, makers of RCA and GE products, to sell Bush furniture through smaller retailers serviced by Thomson. Bush would design some models to specifically be compatible with products made by Thomson.

Bush Industries, Inc., following a sustained period of sales growth during the 1980s and 1990s, continued to build on its strengths while moving forward into new territory as the opportunities arose. With a strong position as an innovator and with a steadily increasing share of the market in the growing ready-to-assemble furniture industry, the company should see continued success to the end of the 1990s and into the 21st century.