Meadowcraft, Inc.

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Meadowcraft, Inc.

1401 Meadowcraft Road
Birmingham, Alabama 35215
U.S.A.
(205) 853-2220
(888) 539-3726
Fax: (205) 856-0847
Web site: http://www.meadowcraft.com

Public Company
Incorporated: 1985
Employees: 772
Sales: $162.2 million (1998)
Stock Exchanges: New York
Ticker Symbol: MWI
NAIC: 337124 Metal Household Furniture Manufacturing

Meadowcraft, Inc. is a leading domestic maker of casual outdoor furniture and the largest manufacturer of outdoor wrought-iron furniture in the United States. Other Meadowcraft products, all of which are designed and distributed by the company, include a variety of wrought-iron indoor furniture and both indoor and outdoor wrought-iron accessories, outdoor cushions, umbrellas, and wrought-iron garden products. Meadowcraft’s customers are mass merchandisers and specialty stores, retailer Wal-Mart perhaps the most notable, primarily in the United States.

Origins of the Iron Works

Meadowcraft traces its history to the early 20th-century founding of the Birmingham Ornamental Iron Co., in Birmingham, Alabama, by B. M. Meadow. The fledgling operation began fashioning such ornamental iron products as decorative fencing and gates for Birmingham residences and businesses. Over the years, the company diversified its iron product offerings and its customer base, producing a variety of iron products for local business facilities.

During World War II, Birmingham Ornamental Iron (BOI) began manufacturing a line of metal furniture, in part to offset seasonal drops in revenues it experienced given its dependence on the construction industry. They found a ready, if unlikely, customer in electronics giant Philco, which had been diversifying its interests during the war. From 1946 to 1948 Philco marketed and sold Meadowcraft furniture, named for the founder of BOI, but dropped the line when demand for Philco electronics products resumed following the war.

Following the loss of Philco as a customer for its furniture, BOI resumed its focus on the construction industry, producing stairs, railings, grillwork, metal signs, and a variety of metal products for use in local industrial facilities, including regional plants for Ford Motor Co. and the Container Corp., as well as in the construction of Prudential Life Insurance Co. offices and the Georgia Tech library.

By the early 1950s, the company’s furniture line was languishing and facing steep financial losses. Moreover, BOI had warehoused thousands of tons of metal for use in its furniture; further losses would ensue if that inventory had to be sold as scrap. The problem was met by the company’s vice-president, general manager, and treasurer William McTyeire Jr. McTyeire, an engineering grad and enthusiastic salesperson as well, decided to turn the furniture operations around.

Meadowcraft Furniture Takes Off: 1950s-60s

McTyeire installed a policy of commitment to quality in design and manufacture, as well as to dealer satisfaction. Among the qualities recommending Meadowcraft furniture were its ten-year rust-free guarantee and its availability in popular styles and colors. Moreover, to ensure a high quality product, the company invested in the latest and best manufacturing equipment. Maintaining that “the dealer is always right,” McTyeire once reportedly accepted a return shipment of wrought iron furniture made by a competitor, from a dissatisfied dealer who mistook the furniture for Meadowcraft. Rather than returning the shipment to the dealer, McTyeire saw to it that the pieces were refurbished and returned to the dealer, with an explanation, at no charge. Of course, that dealer was duly impressed with Meadowcraft as were many other dealers over the years.

McTyeire also spearheaded direct mail selling efforts aimed at leading furniture retailers across the country. The company spent heavily on advertising in general, overseeing print and radio promotions. Moreover, the company began offering Meadow-craft furniture for use on the sets of the country’s most popular television programs. In the mid-1950s, the company received an important commission from television stars Desi Arnaz and Lucille Ball, who ordered over 500 pieces of Meadowcraft furniture for use at their new Palm Springs resort hotel.

By the late 1950s, the company was ranked third in the United States in wrought iron furniture sales and was first in the South. The iron works’ sales surpassed $3 million in 1957, over one-third of which was generated by its Meadowcraft furniture line. Still, the iron works’ primary business was in manufacturing the miscellaneous and ornamental metal products.

A New Identity in the 1980s

By 1967, when the company was employing a work force of 259 and the founder’s descendant Evelyn Meadow was serving as chairman, BOI had grown into a collection of consolidated furniture and housewares makers, still based in Birmingham. In 1985, these manufacturers were incorporated as Meadowcraft, with Samuel R. Blount as the new concern’s chairman.

The popularity of Meadowcraft furniture was rekindled during this time, when retail giant Wal-Mart began offering outdoor furniture at its stores, including the company’s lines of chairs, tables, and benches. The Meadowcraft products proved popular and regularly sold out.

When Bill McCanna took over the presidency of Meadowcraft in 1991, his focus was on quality-control particularly as it pertained to designing, producing, and shipping on a reliable, timely, and cost-effective basis. McCanna, who came to Meadowcraft after two decades of running manufacturing plants for Fortune 500 companies, made modernizing the firm’s distribution his first order of business. At the time, the company had been overseeing about ten warehouses scattered around Birmingham, with crews wandering around them searching for the furniture needed to fill orders. A new, better organized system would be in place by mid-decade.

Meadowcraft had net income of $2.2 million in fiscal 1991 (the year ended April 28, 1991) on $50.1 million in sales. In the early 1990s Meadowcraft’s factory closeout sale at Wal-Mart’s flagship store in Bentonville, Arkansas, reportedly sold more wrought-iron furniture in 32 days than the Wal-Mart chain sometimes sold during an entire outdoor-furniture selling season. For Wal-Mart “it was a real eye-opener,” according to Blount, and impelled the giant chain to increase its orders from Meadowcraft.

Meadowcraft added indoor wrought-iron furniture to its products in the early 1990s. The company reported net income of $2.8 million in 1993 on net sales of $73.1 million. This increased to $6.4 million on net sales of $96.2 million in 1994 and $10 million on net sales of $120.8 million in 1995.

In 1994 Meadowcraft added a 660,000-square-foot manufacturing and distribution facility to its existing operation in Wadley, Alabama. The company also completed a 500,000-square-foot distribution center on Birmingham’s Carson Road in early 1995 and a 160,000-square-foot addition to that center later in the year. This facility was adjacent to the company’s newest expansion, a 350,000-square-foot factory near company offices off Pinson Valley Parkway. A smaller factory/warehouse at the company’s Selma, Alabama, plant was also under construction in 1995. The $30-million Pinson Valley plant, located in Valley East Industrial Park, was completed in late 1995. The company also was leasing a 240,000-square-foot plant and corporate headquarters on Meadowcraft Road and a 340,000-square-foot distribution center on Goodrich Drive. Both were about a half-mile from the Carson Road/Pinson Valley facilities.

McCanna told a reporter in 1995, “We’ve probably added more square footage of manufacturing space over the past few years than any other company in Alabama.” The expansion came in the face of caution among analysts about the furniture industry, but McCanna maintained that Meadowcraft’s improved sales had come across the board. By this time, the company’s outdoor furniture brands included Meadowcraft, Plantation Patterns, Arlington House, and Salterini. The new Interior Images line of upscale, iron indoor furniture for specialty stores also had shown strong sales, and Meadowcraft was about to introduce a lower-priced line of indoor furniture for mass-market merchants. The firm also was making bedframes, tables, plant stands, kitchen racks, and other home accessories. In fiscal 1997 it added wrought-iron garden products as well.

Expansion: 1996-1998

Meadowcraft’s net income grew to $7.9 million on net sales of $117.4 million in 1996 and $15.9 million on net sales of $141.9 million the following year. The company was a partnership 90-percent owned by Blount and other family members and ten-percent owned by McCanna in 1997, prior to making its initial public offering of common stock in November 1997. More than 3.2 million shares—about 17 percent of the company—were sold at $13 a share, raising $39 million, of which $32.7 million was paid to Blount and McCanna, who retained 73 percent and eight percent of the company, respectively. The remainder of the amount was earmarked for capital investments. Another 500,000 shares were sold shortly after.

Company Perspectives:

Why should I buy wrought iron and select Meadowcraft? There are many advantages to wrought iron manufactured by Meadowcraft: primed (undercoated) using an Electrostatic process, which provides superior protection against the elements; powder coat finish; wind will not blow furniture around; fully welded frames; traditional in style; comfortable with or without cushions; cool to sit on, even on the hottest of days; terrific accessories at great values; the look in outdoor furniture that has remained popular for over 50 years; easiest of all outdoor furniture to keep clean.

Meadowcraft began production in March 1998 at a new, 600,000-square-foot manufacturing/office/distribution center north of San Luis, Arizona, that became the largest manufacturing complex in Yuma County. A 175,000-square-foot plant across the border in San Luis, Mexico, purchased in October 1997, was turning out welded patio chairs, umbrella tables, and poolside tables. This unfinished furniture was then shipped to the Arizona plant to undergo a primer-coat process in order to reduce corrosion, followed by an electrostatic dry-paint process. A gas furnace then fused the paint to the metal. These new facilities were intended to reduce transportation costs for Meadowcraft’s West Coast customers.

Meadowcraft begin production in early 1998 of outdoor tubular-steel furniture in an idle Alabama manufacturing facility whose conversion was completed in December 1997. That year the company also added to its Carson Road complex in Birmingham by completing a 520,000-square-foot manufacturing/distribution/office facility. In addition, it was expanding its Selma and Wadley facilities by about 70,000 and 10,000 square feet, respectively. Work on a second Pinson Valley warehouse also was underway in 1998.

Meadowcraft’s net sales grew to $162.2 million in 1998 and its net income to $22.3 million. By this time it was commanding 23 percent of the $1.5 billion outdoor furniture market, according to McCanna. Advertising remained an important component of company success; Meadowcraft’s products were being promoted by Paul Harvey on his daily news-and-commentary radio show.

With Meadowcraft’s sales increasing so rapidly, production was at a record pace. A Birmingham News reporter who visited the new Carson Road plant in early 1998 described it as “a scene from America’s industrial heyday.” Whereas before 1991, workers had, artisan-style, labored over a particular chair, table, or bench from start to finish, the new plant was built in such a manner that the job would be broken down into segments, with workers organized into teams. The new factory was expected to turn out two million piece of wrought-iron furniture in 1998.

Meadowcraft was working closely with its mass-market clients, building enough inventory between June and January to supply them for the February-through-May rush period for outdoor furniture. Orders were arriving electronically in selling season by means of a computer line. Computerized inventory tracking and shipping systems enabled line supervisors to ensure that all goods were sent out exactly as ordered. During the peak of spring selling season as many as 150 trucks and trailers arrived at the loading docks. “They have as sophisticated of an operation as I have seen,” said a securities analyst, who observed of Meadowcraft’s main customer, “Wal-Mart has put people out of business [for not meeting delivery dates]. They can make your life hell.”

The Late 1990s and Beyond

Meadowcraft, in mid-1998, was offering consumers a wide variety of products in three markets: the outdoor mass market under the Plantation Patterns brand name; the outdoor specialty market under the Meadowcraft, Arlington House, and Salterini brand names; and the indoor specialty and mass markets under the Interior Images by Salterini and Home Collection from Plantation Patterns brand names, respectively.

Outdoor products sold through mass merchandisers under the Plantation Patterns name included dining groups composed of action chairs, stack chairs, dining tables, bistro groups, and accent tables; accessories such as chaises, gliders, bakers’ racks, and tea carts; cushions and umbrellas; and garden products. Outdoor products for the specialty market were similar. The company’s outdoor furniture products came in a variety of styles and colors and were being sold at different prices to appeal to a range of consumers. The indoor collections, all in wrought iron, included occasional tables, dining groups and beds, and accent pieces. The garden products included shepherds’ hooks, trellises, arbors, and plant stands.

Meadowcraft was serving the outdoor mass market, including national chains, discount retailers, mass merchants, and home centers; the outdoor specialty market, including furniture stores, specialty stores, and garden shops; and the indoor market, including specialty furniture stores, mass merchandisers, and department stores. In fiscal 1998, the company sold products to more than 1,500 mass and specialty accounts, including nine of the top ten U.S. discount retailers/mass merchants and home centers. Typically, by early fall of each year, Meadow-craft received estimated requirements from customers for about 70 percent of the sales that it would produce and ship during the following selling season.

In 1998, Meadowcraft was ranked first in terms of earnings and sales in Business Week magazine’s June roster of “100 Hot Growth Companies.” As the company name was becoming well-known nationally, Meadowcraft chair and controlling stockholder, Samuel Blount, made moves to acquire all outstanding shares of Meadowcraft under the umbrella of his MWI Acquisition Co. in 1999. Also that year, Bill McCanna retired as the company’s president and was replaced by Timothy Le Roy, formerly the company’s vice-president of sales and marketing. Despite shifts in ownership and leadership on the horizon, the company had a longstanding reputation for quality and was well positioned to control a large share of the outdoor furniture market.