Sauder Woodworking Co.

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Sauder Woodworking Co.

502 Middle St.
Archbold, Ohio 43502
U.S.A.
(419) 446–2711
Fax: (419) 446–2980

Private Company
Incorporated: 1940
Employees: 3,200
Sales: $415 million
SICs: 2426 Hardwood Dimension & Flooring; 2511 Wood
Household Furniture

Sauder Woodworking Co. is the tenth largest furniture manufacturer in the United States and the largest producer of ready–to–assemble (RTA) furniture. Sauder Woodworking expanded rapidly during the 1980s and early 1990s by focusing on its RTA lines, which are sold primarily through Sears, K–Mart, and other discount retailers. Still 60 percent family owned, the company generated sales of about $415 million in 1994 and employed more than 3,000 workers.

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 traveling salesman stopped by Sauder’s shop. They were intrigued by his low–priced 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.

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, ben–efitted 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 weatherbeaten barn to a multi–million–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 comprised of panels made of particle board (boards fashioned from glue and wood chips or tiny wood particles). The boards are usually laminated to simulate either a real wood finish, or covered with some other colored protective coating that improves the panel’s appearance. The boards are typically pre–drilled 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. Importantly, 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.

Largely 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’s 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, about 1,850 of which were 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 that were not employed at Sauder Woodworking were directly dependent on its workers. The work force, which was all non–union, operated in three shifts, 24 hours per day, up to six days per week. 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 someplace 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 benefitted 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 Wood working 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.