WINSTON-SALEM, N.C. (AP) — Linwood Furniture LLC is returning to the basics in trying to ride out of bankruptcy on the wave of more consumers wanting American-made furniture.
The company, based in Lexington, filed for Chapter 11 bankruptcy on March 5, when it listed nearly twice as much debt ($6.89 million) as assets ($3.65 million). It had 101 employees as of March 31, according to a report filed Thursday.
Linwood was formed in March 2006 in large part to follow artist Bob Timberlake's express wishes that his best-selling World of Bob Timberlake collection be made domestically.
Linwood launched its own wooden-furniture line during this past week's High Point Market.
Up front is a new "basics" division that Jeff Schwall, its president, says incorporates "best practices in global manufacturing."
The division debuts with a customized casual-dining line that features 16 in-stock, painted finishes, six wood stain finishes and more than 500 special-order colors. Linwood plans to source most of the parts, then finish and assemble the pieces here.
Linwood has pledged to produce and deliver customized high-end furniture in a range of four to six weeks after receiving an order. That timetable, according to analysts, can be a significant advantage because it is quicker than most lower-cost importers can do.
"Linwood is different from the majority of companies that are touting made-in-America product in that our facility has built quality product uninterrupted for 40 years," Schwall said.
Before Linwood acquired its plant in Linwood, it served as a plant for Lexington Home Brands and Lexington Furniture.
"As the American people reassess their priorities and the issues that led to the recession in the first place, the made-in-America movement is being emotionally embraced by the American consumer more than ever," Schwall said.
Consumer interest in American-made furniture has picked up in the past 18 months as furniture prices from China have gone up because of higher shipping, raw material and labor costs.
That has led some domestic manufacturers to believe their product is not only competitive but also relevant.
Foremost in the Buy American campaign is Vaughan-Bassett Furniture Co. Inc. of Galax, Va., the largest domestic wooden-bedroom manufacturer. There also are smaller players that are bringing innovative, eye-catching designs to a market weighed down by lookalike imported furniture.
Mike Mebane, Linwood's chief executive, expressed confidence in March that Linwood would have a relatively quick stay in bankruptcy. The company sought bankruptcy protection primarily to reduce its debts and refocus its operations more around residential furniture and less on hospitality pieces.
However, Linwood faces a significant challenge in accomplishing its goal, according to an April 13 filing by a consultant to a U.S. bankruptcy administrator.
The company's monthly losses increased from $273,360 in November to $666,989 in January. However, it turned a $62,470 profit in March.
Linwood had been operating at 15 percent production capacity before the bankruptcy filing and was considered too dependent on a single customer.
"The debtor indicated that its line topology was somewhat unique and gave it the ability to provide custom finishing in an efficient manner, which was an advantage upon which they hope to capitalize," the consultants said.
"It would appear that getting their own line into works and out to the market is a major challenge at the present time. In my opinion, the debtor should be allowed a reasonable period to see if it can work out its problems and confirm a plan."
Schwall acknowledged the crucial need for Linwood to shift production focus.
"Simply put, to maintain efficiency in our 500,000-square-foot plant during the economic downturn of the past three years, Linwood made a concerted push into the hospitality business, which by its nature, demands high-volume production of low-cost product," Schwall said.
"Unfortunately, we moved too far into this area, too quickly, and were not able to effectively service our growing dealer base of residential-furniture customers with the quality product that has always set Linwood apart."
Mebane said that "to compete in the current furniture environment, especially as the 'Made in the USA' sentiment picks up, we have to be very nimble and quick.
"We expect to come out of bankruptcy well positioned to do both."