Leggett & Platt, Incorporated

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Leggett & Platt, Incorporated

One Leggett Road
Carthage, Missouri 64836
U.S.A.
(417) 358-8131
Fax: (417) 358-6667

Public Company
Incorporated: 1901 as Leggett & Platt Spring Bed &
Manufacturing Co.
Employees: 13,000
Sales: $1.52 billion
Stock Exchanges: New York Pacific
SICs: 2515 Mattresses & Bedsprings; 2511 Wood Household
Furniture; 2514 Metal Household Furniture

Credited with launching the U.S. bedspring industry, Leggett & Platt, Incorporated, one of the nation’s largest manufacturers of bedding and furnishing products, began operating in the late 19th century as the sole manufacturer of the coiled bedspring. From this single product, invented and patented by one of the company’s founders, Leggett & Platt slowly expanded its product line to embrace a diverse assortment of products primarily related to the furnishings industry. As the company’s product line evolved, so did the company, becoming a component supplier for other manufacturers rather than marketing and distributing its products at the retail level. Entering its second century of business, Leggett & Platt’s product line comprised four product categories: bedding components, furniture components, finished products, and diversified products, manufactured by and distributed through a large network of strategically located production and warehouse facilities.

Carthage, Missouri, in the late 19th century was home to two men, each possessing distinct skills, who came together to create a company that would outlive both them and their children, to flourish more than a century later. One of these men was J. P. Leggett, an inventor who had achieved modest success with several patented inventions, and the other was C. B. Platt, a businessman and manufacturer, whose family owned a factory in Carthage. By 1883, Leggett had developed an idea for a new product and turned to Platt, his brother-in-law, to solicit his manufacturing expertise and resources. Leggett’s idea was innovative, a distinction that had already garnered him a patent, and would literally support generations of Americans to come. Leggett had invented the coiled bedspring.

Platt agreed to assist Leggett in manufacturing his invention, and the two formed a partnership in 1883, using the Platt Plow Works in Carthage as the production site for the first Leggett bedsprings. Until Leggett had developed the coiled bedspring, bedding in the United States generally consisted of cotton, feather, or horsehair mattresses, with no added cushion beyond that provided by the mattress material itself. Leggett’s bedsprings were designed to be used as a foundation for these mattresses, with the coils fabricated separately, then sold to retail merchants and assembled in the backs of stores or on the walkways in front.

For 12 years the Leggett and Platt partnership operated out of the Platt Plow Works, forming the coils with belt-driven machinery and selling them to retail merchants. By 1895, the partnership had its own factory and offices, a two-story building that housed both sides of the young business’s operations and contained its entire work force, which at that point totaled seven people, including the two founders. Before the decade was over, another manufacturing plant was added in Louisville, Kentucky. Then, as if to formally recognize the recent expansion, the partnership became a genuine corporation in 1901, incorporating under the name Leggett & Platt Spring Bed & Manufacturing Co., with Leggett serving as its first president.

The waning years of the century marked a rush of activity for Leggett and Platt. The construction of two factories in five years, after twelve years of production at Platt Plow Works, and the incorporation of the growing concern appeared to foreshadow further expansion; however, the company would barely exceed the pace of physical growth established between 1895 and 1900 in the 60 years following its incorporation. Moreover, the first half century of Leggett’s and Platt’s business, from 1883 to 1933, would be almost entirely devoted to the production of a single product—Leggett’s patented coil bedsprings. So, from 1901 forward, the newly named Leggett & Platt Spring Bed & Manufacturing Co. seemed resigned to fulfilling one need with one product, with little effort expended toward expanding the company’s scope. Leggett remained president until 1921, when Platt assumed the company’s leadership and oversaw the construction of a new factory in Carthage in 1925 to replace the now outdated original factory.

Platt’s stewardship of Leggett & Platt devolved to Leggett’s son, J. P. Leggett, Jr., in 1929, a position he held for three years. In that time he initiated the introduction of the company’s first new product in 50 years and its first diversification into another market in 1933. Leggett & Platt began manufacturing springs for innerspring mattresses that year, a product that would become increasingly integral to the company’s operation. By this time, Leggett & Platt had effected an important and defining change in the way the company operated: it now sold its products to other manufacturers rather than to retailers, as the company had originally done. With a growing market for innerspring mattresses, the company found greater success and greater profits selling springs to mattress manufacturers, who then assembled a finished innerspring mattress with the springs provided by Leggett & Platt. Perhaps equally important to the evolution of Leggett & Platt into a diversified component specialist was its diversification into peripheral markets, specifically the manufacturing of coiled springs for the producers of upholstered furniture.

With these important changes behind it, and a rapidly growing market for springs waiting ahead, Leggett & Platt moved forward, past the Great Depression and toward the century’s next notable event, the Second World War. A new factory was established in 1942, the first new location for a Leggett & Platt facility since the Louisville plant opened nearly 50 years earlier. Located in Winchester, Kentucky, the new factory absorbed the operations previously located in Louisville. Five years later, another new plant was established, this time in Ennis, Texas.

The addition of the Ennis plant concluded Leggett & Platt’s physical growth until 1960, a pivotal year that would inaugurate for the company a new era of expansion and diversification, a new corporate strategy, and new leadership, transforming the modestly sized company into a formidable force in the furnishings industry. Chiefly responsible for this dramatic change in course was Harry M. Cornell, Jr., J. P. Leggett’s grandson, who joined the company in 1950 and then became manager of the Ennis, Texas, plant in 1953. When he was appointed as the company’s president in 1960, Cornell inherited from his father, H. M. Cornell, Sr., Leggett & Platt’s president from 1953 to 1960, a company with three production plants and $7 million in annual sales.

The younger Cornell’s plans for Leggett & Platt were entirely different than those actualized by each of the company’s six previous presidents, who had limited Leggett & Platt’s presence to a regional level. What Cornell saw after an examination of the U.S. furnishings industry was the opportunity for a company such as Leggett & Platt to capitalize on a highly fragmented market for finished furnishings products. This could be done, he theorized, by broadening Leggett & Platt’s scope to a national level and by manufacturing and distributing components of furnishings products to manufacturers at a lower price than manufacturers could produce on their own. The first step in this direction was achieved during Cornell’s first year as president, in October 1960, when the company acquired a small woodworking plant in Springfield, Missouri. Though the acquisition was small, it represented a move toward diversification, enabling Leggett & Platt to fabricate wood bed frames.

Additional acquisitions would follow, seven throughout the decade, as Leggett & Platt strategically added more facilities for manufacturing an increasing variety of bedding and furniture components. By the early 1970s, roughly a decade after the implementation of the company’s new business philosophy, Leggett & Platt’s growing network of manufacturing and distribution facilities comprised 17 manufacturing plants and five warehouses. Annual sales hovered around $50 million, reflecting a sales volume more than seven times greater than that recorded less than 15 years earlier. This growth translated into a 16.8 percent annual increase, a rate of percentage growth outpaced by the 25.5 percent annual increase recorded in the company’s per share earnings since Leggett & Platt stock was first sold over-the-counter in 1967.

The company’s growth and diversification fed upon its self. First, by bolstering its presence in the bedding and furnishings market, the company increased its economies of scale, which proved to be Leggett & Platt’s point of leverage in a fragmented industry. Secondly, the company had begun to vertically integrate, establishing production facilities that would supply its raw material needs. Through a joint venture with Armco Steel Corporation, Leggett & Platt constructed a wire mill in Carthage in 1970, enabling the company to satisfy virtually all of its wire needs within several years. Similarly, a wood saw mill was constructed in Naples, Texas, that same year, becoming operational the following year, to assure a steady source of lumber for the company’s wood frame business.

Aside from Leggett & Platt’s physical growth, progress was also being achieved in other areas, such as in the development of the company’s products and in the machinery utilized to manufacture those products. At this point, in the early 1970s, the company had high hopes for a new and promising innerspring coil unit, the continuous coil spring, which required substantially less wire and less labor than the conventional coil assembly process. Also, new machinery for producing boxspring units was under development that would automate several manufacturing steps currently being performed by hand. All of these developments—the additional production facilities, the new products, the more sophisticated machinery—combined to increase and solidify Leggett & Platt’s presence in the home-furnishings market, a market that was valued at $11 billion at the retail level, was growing 6 percent annually, and specifically contained $900 million worth of business for a company with Leggett & Platt’s interests.

Concurrent with this growth, Leggett & Platt changed into a more diversified company, a change evinced by the proportional representation of the company’s products in terms of the sales each product category generated. This shift was particularly evident in the early 1970s, when the production of bedding components began to contribute less to Leggett & Platt’s sales volume. In 1970 bedding components accounted for 70 percent of the company’s $40 million in sales; in 1974 the production of bedding components represented 43 percent of the company’s $94 million in sales. This decline indicated significant diversification engendered by a greater focus on the company’s finished furniture and upholstered furniture components product lines.

Entering the 1980s, Leggett & Platt’s annual sales exceeded $250 million, having increased 18 percent annually from 1975 to 1980 despite a lackluster 1979. The company now had 60 manufacturing plants scattered throughout the United States that provided products for more than 10,000 large and small manufacturers. With 20 years of exponential growth behind it, the nation’s largest independent supplier of components in the bedding industry continued to grow, doubling its sales volume by the mid-1980s to reach $500 million. This sales growth was even more remarkable considering the rest of the industry had suffered through three years of stagnant growth between 1980 and 1983. Leggett & Platt’s continuous coil innerspring unit was partly responsible for the company’s growth during an otherwise deleterious period for furnishings manufacturers. The product had inspired much confidence during the early 1970s, but had remained in a developmental stage for ten years and had finally been introduced in the mid-1980s.

Also contributing to the company’s growth was a series of acquisitions, ten in the three-year period between 1983 and 1986, that, combined, had generated $164 million in sales before being acquired by Leggett & Platt. Two of these acquisitions in particular brought the company into the office furniture market, an arena in which the company wanted to increase its presence. Gordon Manufacturing Co., a Grand Rapids, Michigan, manufacturer of chair controls and steel bases for office furniture, was acquired in 1984, followed by the purchase of Northfield Metal Products, a leading manufacturer of similar products, a year later.

As part of a nationwide recession, Leggett & Platt experienced several years of less than robust growth in the early 1990s, posting a decline in sales between 1990 and 1991. Then the company began to show signs of recovery, recording a relatively small gain in 1992 of nearly $90 million to reach $1.17 billion in revenues. The company returned to its 30-year legacy of prodigious sales growth in 1993, registering $1.52 billion in sales. That same year it concluded two strategic acquisitions, adding to its network of 135 manufacturing facilities located throughout the United States and Canada. One of these was Hanes Holding Company, a converter and distributor of woven and non-woven industrial fabrics used in the construction of furniture and bedding. The other, Hickory, North Carolina-based VWR Textiles & Supplies, Inc., gave Leggett & Platt additional furniture and bedding fabric manufacturing resources, strengthening its position in another market related to the furnishings industry. As of 1993 the company held 22 percent of the furniture and bedding components market, and, expecting to record 15 percent sales and earnings growth, Leggett & Platt anticipated garnering a an even greater share of various markets valued at an estimated $5.3 billion.