My take: Things are not always as they seem

Home Editorials My take: Things are not always as they seem
by Steven Feldman
Here I was, planning to write a column about this very insightful presentation given by Fox Business News personality Stuart Varney two weeks ago at the North American Association of Floor Covering Distributors conference in Nashville. It was one of the best 45 minutes I’ve sat through in quite some time.

We’ll have to put that one on ice. The more immediate need is to talk about Beaulieu. Why? Because we’ve heard some competitors, specifically the reps, are spreading ugly rumors about the company. Geez, make the requisite moves to align capacities with today’s business realities and the vultures begin to circle!

It’s not that I don’t see the foundation for the chatter. The company closed some plants and a few top executives depart. So I called Ralph Boe, who has always been transparent with me, and ask him to ’splain.

As for the plant closures, other carpet mills, as well as Armstrong, have also closed plants this year—and last. This fall Beaulieu announced the shutdowns of its Eufaula, Ala., spun yarn processing facility, and Dalton Model and Riverbend tufting and dying plants. The truth is the closings would have happened sooner but the company first needed to go through its financial restructuring. As Boe pointed out, many people don’t necessarily realize it costs money to close plants, as incongruous as that may sound.

This is vintage Boe. He made some tough decisions when he arrived at Beaulieu some 12 years ago in leading its turnaround, and what he is doing now is in anticipation of next year’s business climate. “We don’t see 2012 as much better. So we had to get some of the fixed costs out. We needed to consolidate and make sure our facilities are running most efficiently.”

He also noted that many facilities owned by Beaulieu came through various purchases of other mills through the years. In certain instances, it would not be the optimum setup if one were starting a company today.

On the people side, there was a great deal of conversation Nov. 18 with the departures of chief marketing officer Jeff Meadows and James Leslie, who was running operations. The latter was said to be soon surfacing at another manufacturer. Boe would only say that things change over time and that people sometimes find opportunities that are better for their own livelihood. “You don’t want to stand in the way of people moving on to better themselves. I have been in the same boat.”

The bottom line is that despite these recent developments, Beaulieu still has much going for it.
1. The company is on much sounder ground now that it has gone through the refinancing (FCNews, Oct. 24/31). “We have a facility in place that will carry us through the next several years,” Boe said.
2. It has a strong sales team led by the charismatic Casey Johnson.
3. The Bliss franchise, particularly the 2011 introductions, have been doing very well for the company. Boe noted that for 2012 a whole new lineup of polyester products and Stainmasters will be introduced at Surfaces and select regional markets, all infused with Magic Fresh.
4. Positioned for the future. Despite closing the plants, Beaulieu is not selling off the equipment. It has moved some tufting machines to other facilities, but most of the equipment has remained in place so they can be restarted when the market does come back.
5. Surfaces. The company remains prominently displayed at Surfaces in the same location as last year with no discernable difference in the size of the space.
6. Business. The top line is down only slightly from last year with growth in the independent dealer channel and all aspects of commercial.
And those are the facts.

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