Framing Homecrest for the future
When owner Mike Bullinger looks at Homecrest, he sees promise.
When owner Mike Bullinger looks at Homecrest, he sees promise.
"I think our future looks exceptionally bright," he said.
Bullinger said his optimism is based on more than just blind faith or hope. The Fargo entrepreneur visited the Wadena plant last week and talked about the Homecrest that was, the Homecrest we see today, and his vision for the plant for the future.
A big investment, and some big problems
In late 2007, Homecrest was about to go under, be chopped up and sold to a Chinese company. Financing had dried up, and the company was about to fold for the second time.
Bullinger, a former CPA with a talent for turning around troubled manufacturing businesses, stepped in and took the company over on Jan. 2, 2008, keeping it in Wadena.
There were issues right away.
"We fired the plant up in about mid-February," Bullinger said. "Then in July we went to pre-market in Chicago."
The dealers who carried Homecrest furniture in the past were skeptical.
"Every customer, the conversation was consumed by them saying, 'So how long are you guys going to be in business this time?'" Bullinger said.
Not only that, some of the better customers had experienced problems with the company in the past, and vowed not to be fooled again, Bullinger said.
"Bigger dealers and little dealers were burned so many times by Homecrest, they had decided not to come back and do business with Homecrest," he said. "These customers have now agreed to come back and do business with us in 2009 and 2010."
There were other behind-the-scenes obstacles, too. The sales department needed to create a dealer hotline, because their calls were sometimes not getting through because of a heavy volume of furniture owners who were concerned about the company going out of business tying up the phone lines.
"You can imagine, a company that has gone out of business -- consumer calls were just overwhelming the system. We had to come up with a way for dealers to get through," Bullinger said.
Also, Homecrest was being sued by a Minneapolis ad agency which claimed the company was improperly using the agency's images on its Web site.
"We weren't, but we took our Web site down for about a month and a half in the heat of the season, which was not good," Bullinger explained.
He also said the furniture collection had grown "old and tired," and needed updating.
The problems were in front of everyone's noses.
"It was like a business that was sick -- had cancer," Bullinger said.
Rolling up their sleeves
The revived company faced a lot of obstacles, and Bullinger said the management team made a list of what it wanted to accomplish.
First, the company wanted to resolve the lawsuit. It did. It set up the hotline for dealers to get through. Homecrest created a new Web site, and a "killer" catalog, Bullinger said, which was both attractive and relatively inexpensive to produce.
Product lines got upgrades, including three new collections. A new management team was put into place. New sales reps were brought in. The manufacturing process was improved. Painting facilities were improved.
"We had a list of items to bring this company back and make it be healthy again," Bullinger said. "And of the list of items, only one of them was 'increase sales.'"
One by one, the company is checking off its goals from that list made in the early days of its rebuilding.
Bullinger said one of the most important improvements was to institute a "quick-ship" program, a key selling point for furniture dealers in a changed economy.
"What's happened in the economy is people don't want to stock a bunch of furniture anymore," he explained. "They'll put your displays on the floor, and you try to get as much of their real estate as possible as far as square footage on their floor. And then you put together certain mixes of that, and you tell them that's available in one-week shipping. And we've been shipping in three days."
Bullinger said the dealers love the quick-ship program because orders can get to the consumer quickly without tying up warehousing space.
"We had 99.9 percent complete orders shipped in three days," he said. "Hats off to the manufacturing side of this business for getting that done."
Blessing in disguise?
While Bullinger said the economy has been tough for Homecrest, it's been even worse on some competitors who have lost 40-60 percent of previous years' business.
"We would have enjoyed a couple million more in business," he said. "It's not the end of the world that we didn't have it. But it wasn't like we took a huge drop in that respect, because you're dealing with smaller numbers trying to bring this back.
In fact, Bullinger said the down economy may come with a silver lining. He said he isn't sure all of the behind-the-scenes improvement could have been accomplished if the manufacturing end had been busy the whole time trying to keep up with orders. At least, he said, the list of goals wouldn't have as many items crossed off at this point.
"We took advantage of the slower time," Bullinger said.
He said as the economy now improves, he has a well-trained, efficient and nimble team that can react quickly and has a lot of its problems already worked out. Bullinger said he knows there are no guarantees in this economy, though.
"The furniture business is no different than any other industry," he said. "It's disposable income."
A purchase that made a statement
While customers saw very little of the behind-the-scenes improvements made at Homecrest, a purchase of a well-known company in the industry raised a lot of eyebrows, and sent the message that Homecrest is a player and is here to stay.
This year, Homecrest purchased and moved the operations of Phoenix-based Innovative Surfaces to Wadena. The company, which manufactures high-end table tops, is operating out of the old Homecrest plant. It supplies the table tops not only to Homecrest but some of Homecrest's competitors.
In the industry, Bullinger said, it was a clear signal of Homecrest's seriousness. He said those old questions about how long Homecrest planned to stay in business this time quickly went away.
When Innovative Surfaces moved to Wadena, it created new jobs locally.
"We didn't bring any employees with us," Bullinger said. "They were all from the area."
Some of the employees of Homecrest moved over to Innovative Surfaces, which now employs 10 people, and may soon employ more.
"As this thing grows, we expect that to be 20-plus, just at Innovative Surfaces," he said.
A new leadership team
There have been many changes in the organization, but one of them brings back some familiarity.
Mark Fillhouer, who worked for Homecrest from 1998 to 2005, returned recently to take over as chief operating officer (see accompanying story). A new director of sales and marketing, Scott Corman, also joined the management team.
A brighter future
Bullinger said he had no interest in buying a company like Homecrest to sell of its parts, or for a tax write-off. For him, it's about products -- and jobs.
"My intent in buying Homecrest was putting people back to work," he said.
That's not to say the company is aggressively hiring right now, but he sees a future where Homecrest stands for American-made quality, a message that's already resonating with dealers.
First, Bullinger said he wants to eliminate seasonal layoffs by getting other products that can be manufactured at the plant, keeping employees in work the whole year.
"My goal is to go into the season and not have layoffs -- the core workers work year round," he said. "The people who hang with us will be rewarded in the long term."
Bullinger said he's proud of what his employees have accomplished in a short time.
"I think we have a great workforce," he said. "They're good people. They're busy working and they're putting out a great product."
He still predicts a soft 2009, but expects big things once the next selling season starts in early 2010.
"We need to get to next February," Bullinger said. "Once we're at next February, we'll never have to look back again."