Sauder Woodworking Company

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Sauder Woodworking Company

502 Middle Street
Archbold, Ohio 43502
U.S.A.
Telephone: (419) 446-2711
Toll Free: (800) 523-3987
Fax: (419) 446-3692
Web site: http://www.sauder.com

Private Company
Incorporated: 1940
Employees: 3,400
Sales: $545 million (1999)
NAIC: 337122 Nonupholstered Wood Household Furniture Manufacturing; 337214 Office Furniture (Except Wood) Manufacturing; 321219 Reconstituted Wood Product Manufacturing; 337127 Institutional Furniture Manufacturing; 337215 Showcase

Sauder Woodworking Company is the eighth largest furniture manufacturer in the United States and the largest producer of ready-to-assemble (RTA) furniture, a niche of the furniture industry that the company is credited with creating. Sauder Woodworking produces more than 40,000 furniture items each day at its technologically advanced factories, offering more than 30 collections in traditional, contemporary, and transitional styles. The company’s furniture is sold in more than 70 countries and is retailed domestically primarily through Sears, K-Mart, and other discount retailers. Through a subsidiary named Sauder Manufacturing, the company is a leader in the production of church furniture, a line of goods that reflects the company’s Mennonite roots in Archbold, Ohio, where Sauder Woodworking employs 3,400 of the town’s 3,500 residents. Another subsidiary, Archbold Container, manufactures corrugated packaging and displays. The company is privately owned and operated by the Sauder family.

Origins

Sauder Woodworking is the progeny of Erie Sauder, a devout Mennonite cabinetmaker. Erie Sauder had worked at Archbold Ladder Co. in Archbold, Ohio, before he decided to start working for himself in 1934. He initially found work making kitchen cabinets around Archbold. One of his first large orders came from a local hatchery that needed sticks to insert between incubator cages. Erie Sauder and his wife Leona worked together in a small, weather-beaten barn; she sawed the boards while he finished the sticks. Although they earned only $5 per week, it was enough to feed their family.

A few years after he started his business a nearby church burned down. Erie Sauder won the job of building new pews, thus expanding his business into church furniture; Sauder Woodworking eventually become a leading manufacturer of church furniture in the United States. Erie Sauder kept his workers busy during down times by making custom cabinets and taking on other miscellaneous work. For example, he began making small, inexpensive tables from the precious oak, maple, and walnut scraps left on his shop floor at the end of the day, low-priced “leftovers” as he called them.

One day in 1940 a couple of traveling salesmen stopped by Sauder’s shop. They were intrigued by his lowpriced tables and asked Erie Sauder if they could take some samples to a furniture show in Chicago. They later returned with an order for 25,000 tables. Erie Sauder was stunned by the request and doubted the ability of his modest shop to produce so many pieces. But he was able to secure a loan from a nearby bank that he used to incorporate his business, expand his production facilities, and hire more workers. With the help of friends and relatives, as well as “a lot of luck,” according to Erie Sauder, he was able to fill the order. “It’s amazing what you can do when you don’t know it can’t be done,” became Erie Sauder’s motto.

1951: The First RTA Table

Erie Sauder continued to make his custom cabinets, church pews, and tables throughout the 1940s and 1950s. Sauder Woodworking, like many other manufacturers of the time, benefited from the post-World War II economic expansion that began in the late 1940s. Of import to Sauder Woodworking’s success was a request from a furniture retailer in Detroit in 1951. A buyer from the Federal Department Store determined that if he could devise a way to make furniture lay flat in a box, he could significantly reduce shipping and inventory storage costs. He envisioned a sort of snap-together table that customers could set up at home. Erie Sauder designed such a table, and with it the ready-to-assemble industry. The inexpensive tables sold rapidly and strengthened Sauder Woodworking’s business.

Erie Sauder retired in 1974, when the company’s sales had reached $12 million annually. With only an eighth grade education, Sauder had built his company from a simple shop in a weather-beaten barn to a multimillion dollar furniture manufacturer. Erie Sauder’s sons, Maynard and Myrl, took over the company’s management. At age 42, Maynard Sauder assumed the chief executive slot when his father stepped aside, and his younger brother, Myrl, was placed in charge of engineering, research, and development. The combination of Myrl Sauder’s engineering expertise and Maynard Sauder’s business savvy would prove to be a powerful combination during the next two decades.

The majority of Sauder Woodworking’s sales in 1974 came from the sale of church furniture and ready-to-assemble pieces. Most of the company’s furniture sold through a distributor, who branded the product Foremost Furniture. Although Sauder Woodworking was generally pleased with the distributor’s efforts, Sauder Woodworking decided to take on its own sales and marketing efforts in 1974 and continued to sell its products under the Foremost name until it had completely phased in the Sauder Woodworking brand name by the mid-1980s.

Sauder Woodworking emphasized technology during the late 1970s and 1980s as it shifted the focus of its operations to the growing market for ready-to-assemble (RTA) furniture. RTA furniture is usually composed of panels made of particle board (boards fashioned from glue and wood chips or tiny wood particles). The boards are usually laminated to simulate a real wood finish or covered with some other colored protective coating that improves the panel’s appearance. The boards typically are predrilled and routed to accept accompanying screws, fasteners, and other hardware. The customer assembles the furniture at home, usually needing only a screwdriver and/or hammer to finish the job. Maynard Sauder sought to make Sauder Woodworking’s production facilities state-of-the-art, thus improving both quality and productivity. Sauder Woodworking engineers introduced advanced chemical etching techniques, for example, which allowed them to carve ridges into simulated wood grain. They also incorporated new cutting methods to create curved molding and bracket feet from particle board. Significantly, Sauder Woodworking worked to improve assembly instructions and provided consumers with a toll free number that they could call to get help. As a result, returns to merchants were reduced and the retailer’s perceived value of the product increased.

At the same time Sauder Woodworking improved its operations during the 1970s and 1980s, demand for RTA furniture increased. Consumers began to realize the value of RTA furniture; they could purchase an RTA table, desk, dresser, or other furnishing for 25 percent to 50 percent less than they might have to pay for conventional furniture. In addition, because it was easy to ship and store, RTA goods became extremely popular with discount retailers and mass merchandisers. Those distribution channels far outpaced expansion of conventional furniture sales channels throughout the 1980s and early 1990s.

In large part because of the efforts of Sauder Woodworking and its competitors, the public perception of RTA improved significantly during the 1980s and early 1990s. New high-tech laminating processes were developed that made particle board panels nearly indistinguishable from natural wood. Etched paper laminates, for example, closely mimicked both the look and feel of real wood. Improved epoxies eliminated moisture problems and new joints and connections increased the rigidity of RTA pieces. As RTA furniture improved, consumers began using it for everything from kitchen tables and office furniture to living room shelves and stereo cabinets. In fact, Sauder Woodworking sold RTA pieces that were priced as high as $400.

Sauder Woodworking’s technological edge made it the United States’ largest RTA manufacturer. Myrl Sauder had invented or adapted from other industries a variety of highly efficient machinery that made Sauder Woodworking more efficient than most of its competitors and far more cost effective than traditional furniture makers. For example, hardwood furniture makers often lost about 50 percent of the raw material during the production process. In contrast, Sauder Woodworking used high-tech saw lines to cut parts precisely with minimal waste. Scraps were collected for reuse, and even the sawdust was sold as composting material.

To manufacture its RTA furniture, Sauder Woodworking would take raw particle board and fiber board sheets, laminate both sides with veneer-like paper, and then cut the panels and parts to suit the product being made. The company typically produced different products in lots of 6,000 to 10,000 and stored them until time for packaging. By the early 1990s, Sauder Woodworking was processing 50 truckloads of particle board daily in its Ohio factories. It boasted more than 70 acres of production and warehouse facilities and a work force of 2,500, with about 1,850 engaged in building RTA furniture.

Indeed, because of Sauder Woodworking’s strong growth during the 1980s, the shift changes had become the major event in Archbold, a town with a population of 3,500. Sauder Woodworking’s production facilities had expanded to employ the large majority of the local residents, and most of those who were not employed at Sauder Woodworking were directly dependent on its workers. The work force, which was all nonunion, operated in three shifts, 24 hours per day, up to six days per week.

Company Perspectives:

Sauder Woodworking, the world’s leading manufacturer of ready-to-assemble furniture, has provided well-crafted, moderately priced furniture and friendly customer service for more than six decades. This commitment to quality, design, and personalized customer service has helped make us the eighth largest furniture manufacturer in America and one of the most recognized names in the furniture industry. You can find our furniture at retailers everywhere.

Growth of the RTA Industry in the 1990s

During the late 1980s and early 1990s, the U.S. economy dipped into a recession, stifling revenue growth and profits for much of the furniture industry. In contrast, Sauder Woodworking continued to post solid sales gains in excess of 15 percent annually throughout the early 1990s. Sales topped $300 million in 1992 and reached the $415 million mark by 1994. By that time, the company was employing more than 3,000 workers. To keep pace with demand, Sauder Woodworking had invested tens of millions of dollars in production facilities during the early 1990s, including work on a planned facility that would use the wood scraps it generated for its own energy.

Despite the capital required by rampant growth, Sauder Woodworking remained a family owned and operated company during the 1980s and into the 1990s. During this time, Maynard and Myrl Sauder were gradually passing control of the operation to a new generation of Sauders.

Although family members were welcome into the business, they were expected to meet certain standards. “We’ve got three rules for family members who want to work here,” Maynard Sauder told Forbes. “A good education, success working some-place where the family name means nothing, and interest in a real opening at the company.” Maynard Sauder’s son, Kevin, became vice-president of marketing and sales in the early 1990s. He had worked at Northern Telecom after receiving his M.B.A. from Duke University. Similarly, Maynard Sauder’s son-in-law, Garrett Tinsman, was hired to oversee Sauder Woodworking’s new production facility scheduled to open in 1994.

At 89 years of age, Erie Sauder continued to return to Archbold every spring from his winter home in Florida. He oversaw Sauder Woodworking’s nonprofit Sauder Farm and Craft Village, where visitors could watch craftspeople at work and attend fiddle contests and quilt fairs. “It draws 120,000 people to Archbold a year and still loses money,” Maynard Sauder noted in Forbes.

Going into the mid-1990s, Sauder Woodworking benefited from continued domestic growth in the demand for RTA. Although church furniture represented an increasingly small percentage of Sauder Woodworking’s sales, the company remained a leading manufacturer of church pews. Sauder Woodworking also enjoyed solid success overseas. After only a few years in the export business, by 1994 Sauder Woodworking was exporting $40 million worth of product to more than 60 countries worldwide. In 1993, Sauder Woodworking was named the Ohio Exporter of the Year. The company launched a national RTA advertising campaign in 1994, with a goal of doubling company sales by the turn of the century.

With the exception of one cheerless period, the latter half of the 1990s saw Sauder Woodworking move stridently forward, as the company gained ground on its competitors and realized significant growth. The one painful incident occurred in June 1997, when Erie Sauder, at the age of 92, passed away, but the legacy he left behind was displaying encouraging vitality. Although the company fell well short of doubling its sales during the second half of the 1990s, its stature within the industry increased measurably, thanks in large part to the continued growth of the RTA industry. By the end of the decade, Sauder Woodworking ranked as the eighth largest furniture manufacturer in North America, moving up two positions from the slot it occupied during the mid-1990s. The ascension was attributable to the company’s continued leadership of the RTA industry, which gained an appreciable boost in business from the prolific growth of another, much higher profile, industry.

Personal computers rapidly became ubiquitous household fixtures during the latter half of the 1990s, igniting, in turn, the growth of electronic commerce. Few industries were as well suited for shopping via the Internet as the RTA industry, underscoring the importance of Erie Sauder’s creation of RTA furniture that could be mailed in a flat box. Although Sauder Wood-working stood to benefit considerably from the increasing growth of electronic commerce, the company achieved more tangible gains from the proliferation of personal computers themselves. During the latter half of the 1990s, both aspects of the digital revolution—the sale of personal computers and the growth of electronic commerce—worked in Sauder Woodworking’s favor. The increasing number of homes with computers meant an in-creasing need for furniture to house the hottest consumer trend of the decade. Sauder Woodworking moved quickly to reap the rewards to be won in the fast-growing market, introducing nearly 100 new products designed for the home office.

By the end of the 1990s, Sauder Woodworking’s dominant market position befitted a venerable pioneer in the furniture business. The company’s factories, regarded as some of the most technologically advanced in the world, were churning out nine million pieces of furniture, organized into more than 30 collections, each year. As the company entered a new century, its pace of growth internationally and domestically showed no signs of slackening. In 1999, Sauder Woodworking entered the Indian market, establishing exclusive showrooms in Bangalore and Hyderabad, which extended the company’s geographic reach into more than 70 countries. In early 2000, the company’s firm grasp on the domestic market promised to tighten after the debut of a national television commercial campaign, the first for Sauder Woodworking and the first national campaign for an RTA furniture manufacturer.

Principal Subsidiaries

Archbold Container Co.; Sauder Manufacturing Company Inc.

Key Dates:

1934:: Erie Sauder starts his own woodworking company, initially making kitchen cabinets.
1940:: Sauder Woodworking Co. is incorporated.
1951:: Company makes first snap-together table, thereby creating the ready-to-assemble furniture industry.
1974:: Erie Sauder’s retirement passes leadership to his son, Maynard; company assumes control over its own sales and marketing efforts.
1990s:: Company invests heavily in new production facilities.
2000:: First television commercial campaign is launched.