Harden Furniture plans major capital investment

McCONNELLSVILLE — The year was 1844. The 15th quadrennial, national, presidential election, between James K. Polk and Henry Clay, was underway. The great debate in the U.S. Congress was whether slavery should be extended to future states.

That year, the Harden family began making quality kitchen chairs to supplement the work at the family sawmill, located on Fish Creek in McConnellsville. 

For the past 170 years, five generations of Hardens have manufactured solid-hardwood furniture products for homes and businesses, offering desks, chairs, sofas, beds, and tables. The company’s desks and office furniture are featured prominently at the White House and in the Executive Office Building.

“This industry is changing rapidly,” says Gregory M. Harden, current president & CEO of Harden Furniture, Inc. “For a long time, furniture makers have been moving overseas to compete on labor costs. As a result, the industry has seen a lot of mergers and acquisitions among manufacturers, retailers, and suppliers, compounded by the effects of the recession in 2008. That year, Harden lost 40 percent of its business. As our industry shrinks, we have also lost a lot of talented workers who made the furniture and fabrics.

“The consumers’ tastes have also changed,” continues Harden. “I have been with the company 33 years, through the era of the Baby Boomers and now the Millennials. Very few people want formal dining rooms with china cabinets anymore. The younger generation is foregoing the traditional 18th-century look with dark finishes for softer, transitional, and smaller-scale furniture. We need to be responsive and innovative to changing tastes in order to prosper.” 

Harden supplies a startling statistic to note the shrinkage in the furniture business. “Consumers now spend more money just on Apple products than they spend on the entire furniture industry. The domestic market generated only $80 billion in wholesale revenue; Apple’s annual sales are $182 billion.”

Despite the contraction in the furniture business, the company president is optimistic. “I’m just back from the annual High Point Furniture Market [North Carolina], one of the largest furnishings-industry trade shows in the world. There was more optimism there than I have seen in years, because the housing market is making a comeback and it’s driving growth. The consumer is still looking for value, and we’re being helped by a revival of the “Made-in-America” movement. Labor rates in Asia have been rising and so has the cost of transportation, which is leading manufacturers and suppliers to return to America. What has also helped case-goods manufacturers (wood products) like Harden is the introduction of technology in sanding, fitting, and cutting to offset the decline of a skilled labor pool, boost productivity, and compete with overseas wages.” 

Capital investment needed
In 2011, Greg Harden concluded negotiations with the 13 stockholders of the family’s fourth generation to transfer ownership to himself. Harden funded this through life insurance and by selling off the 10,000 acres of timberland owned by the company. 

In 2012, Harden Furniture began a three-year, $3 million effort to modernize the plant. “In order to compete in our current location — to which we are committed — it’s clear that we need to make additional capital investments,” asserts Harden. “Also, if we want to grow, the company needs more working capital to cover expanding receivables and inventory. Even though Harden Furniture is not in financial distress and has a strong cash position, the decline of the furniture industry and the slow growth of the last six years have made the financing of property, plant, and equipment unattractive to many lenders.”

Unable to generate interest among conventional lenders, Harden turned to Tim Stump of Stump & Co., based in Charlotte, N.C., which specializes in selling privately held furniture companies throughout the world. According to Stump’s website, his firm has concluded more than 400 deals. “I have talked with different companies this year and expect to conclude a sale of the operating company sometime before the end of this year. I have more than one option, but probably will select a Taiwanese company that is both a furniture manufacturer and retailer,” Harden says. 

“The manufacturing operation will remain here in McConnellsville, and I will continue to have a vested interest in the operation and manage the plant. The transaction could inject up to a 20 percent sales increase in the short term, because we will sell Harden furniture through the new owner’s retail outlets,” he continues. While Harden did not disclose any details of the deal, he stated that the sale would generate sufficient investment capital to “completely modernize” the facility and operation and to grow sales.

Harden Furniture currently sells its domestic home products through distributors, and utilizes an international distributor network in Canada, Kuwait, Russia, Turkey, Indonesia, and China. It also sells contract manufacturing directly to government entities and to the business community. 

“Our residential business represents two-thirds of our annual sales, but it is growing slowly. The contract business, on the other hand, is growing more quickly, especially in the hospitality industry. Our manufacturing operation is set up from engineering to the shop floor to produce custom products, which gives us a big advantage in the custom-contracting end of the business. Another bright spot is exporting, which now represents 10 percent of total company revenue and 20 percent of the revenue generated from the company sawmill. (Harden Furniture uses 25 percent of the company sawmill’s output; the remaining 75 percent is sold.) There is a growing middle class among developing countries, and they are attracted to ‘Made-in-America’ furniture built with solid woods,” Harden says.

“This company is poised for more growth,” he declares, “because we have talented, dedicated employees and an outstanding management team. We hire people who are looking for a career and who take pride in their work. That’s why we still proudly display a hangtag on each piece of furniture which bears the signatures of the key craftspeople responsible for the piece. Harden has multiple generations of employees working [simultaneously] at the facility, many who have been here more than 20 years, and some who have five generations of historical roots with the company.” 

Management team
In addition to Harden, the management team includes Andy Clark, vice president of marketing; Pete Raynsford, vice president of purchasing; Roxanne Seymore, director of human resources; Joanne Karboski, director of contract sales; and Doug Cleveland, director of residential sales. Harden Furniture also works closely with local professional vendors: Oneida Savings Bank for its banking needs, Hiscock & Barclay LLP for legal matters, and Testone, Marshall & Discenza, LLP for accounting.

Harden Furniture employs 250 people and occupies 450,000 square feet of manufacturing, office, and warehouse space. The company is vertically integrated from saw mill to its fleet of company trucks and trailers; only the woodlands are leased. The Business Journal News Network estimates the company’s annual revenue at between $30 million and $40 million.

Harden received his bachelor’s degree from Colgate University in 1978. Upon graduation, he worked for three years at Huffman & Koos Co., a furniture retailer located in New Jersey. Harden joined the family business in 1981 and assumed his current position in 1992.

The story of Harden is more than the history of a furniture company and a family. It reflects the history of the community, the region, and the country. Harden has grown and changed over the generations to adapt to changing tastes and to a changing marketplace. With a new capital investment, Harden Furniture is planning to continue the company tradition of producing quality, hardwood products for decades to come. 

Contact Poltenson at npoltenson@cnybj.com