Furniture maker La-Z-Boy debuted a new $18 million innovation center in Dayton, Tennessee, in September, making the state-of-the-art facility the research and development hub for the Michigan-based company.
The modern, 70,000-square-foot center that employs 75 people is located next to La-Z-Boy's massive production plant, where more than 1,400 people work making the company's signature recliners and other furniture. La-Z-Boy also invested about $20 million upgrading its 1.2 million-square-foot plant.
Company Chief Executive Officer Kurt Darrow sat down and talked about the investments recently with EDGE magazine.
Q. What makes this innovation center special?
A. I would tell you that we have learned that space does matter, and how you use the space, think about the space, and design the space makes for a more effective workforce.
Another thing every company in America is struggling with is we all are in a war for talent, and if you offer a mundane experience, real qualified employees have options. We want people to be awed when they come in here and say 'Hey I'm an engineer, I'm a designer, I've interviewed at four other places and there's no better facility for me to work in, where I can be creative, work in teams, and make a difference.
And I think we built that facility here. We actually recruited a number of engineers from Chattanooga to work here and that's real gratifying. We weren't sure how far the reach would be. But again, part of the equation was the center itself.
Q. Is this the North American research and development center for La-Z-Boy?
A. Yes, it's R and D and innovation. All new products that we come out with twice a year at the furniture markets, and all the continuous improvements on how we can improve the quality and have less failures, all the new things we're working on for the future, all the testing, it's all here.
The reason it's here is we believe your innovation center needs to be by your manufacturing, because if they design something really cool and you can't manufacture it, or you can't manufacture it for a price that's commercially acceptable, then as cool as the design is, it won't fly.
Q. You have said that a couple of decades ago, the company wasn't having a great period. Now you are and you're interested in design, innovation and those things?
A. It was an evolution. We got heavily involved in the retail business, too. Today we have 360 stores, and to have a meaningful shopping experience, it's kind of hard to do that if all you have is recliners.
Our vision was to go from selling single items to doing the whole room. That would be more business for us. But the biggest takeaway is that the customers are satisfied. Very few women want to buy a sofa. They want a beautifully decorated room with lamps and tables and rugs, and we provide that today. That was the kind of a vision we had. To do that we had to think outside the box and do different things.
Today, we sell a third of our business in a program we call in-home design. We will go to a customer's home for free, help them think about their space and give them ideas on maybe they should change the colors and carpets, and here's want we can do with all the future layouts. And we're using more technology of room planners and things like that. It's been a big change. Even though we're still the largest manufacturer of recliners in the world, we sell more of all the other furniture today, without giving up our leadership position in recliners. That was something we were conscious about.
Q. You have 12 independent dealers who own stores?
A. We own 160 of them. Dealers own 190. We got in the business because we had dealers initially not doing a good job or wanted to retire. If you have a family business and no family coming up in the business, you don't have the same attachment. We've become the buyer of choice.
Q. You invited independent dealers to Dayton to show them what you're doing?
A. They're our dealer advisory committee. We meet with them once a year, listen to what their thinking, what the challenges and opportunities are. We tell them what we're going to be doing the next year. It really solidified our partnership with our customers.
Q. How is business generally speaking?
A. In general, for La-Z-Boy, it's been pretty good. We seem to be doing a little better than the norm in the business. The furniture business generally was hit pretty hard by tariffs, particularly if you were China-centric. But we're not. We're America-centric. We make all the upholstered furniture in the states. We do have to buy raw materials worldwide. It's a global economy. But because of the way globally the supply chain has set up, the tariffs haven't hurt us as other manufacturers, which has given us a little bit of an edge.
Q. Would you like to see the tariff war go away?
A. I'm not a big believer in the tariffs. But I also think China should play by the same rules as the rest of the world. How do you get their attention or how do you get to a middle ground without having to say let's work this out? I'm optimistic something is going to give on this in the next year. Neither country is winning. It's affecting a lot of industries like farmers and they don't need to be caught in the middle of this.