How this North Carolina furniture manufacturer is thriving amid intense pressure from global competitors.

From the couch in your living room to the chair in your office, chances are the furniture you use everyday was made in North Carolina. According to a statistical study by Richmond, Virginia-based advisors Mann, Armistead, and Epperson, Ltd., more than 50% of this nation’s wooden furniture is manufactured in the Tar Heel State.

But that number is a far cry from the historic highs North Carolina furniture manufacturers experienced during the 1990s. Throughout that decade, it’s estimated that roughly 75% of America’s wooden furniture was built in the state. Since 1999, economic recession and rapid growth of the furniture manufacturing industry in China have proved to be difficult obstacles for many companies to overcome. According to the Bureau of Labor Statistics, the number of jobs in furniture manufacturing in North Carolina has plummeted from roughly 90,000 in 1990 to just over 60,000 in 2003.

But at Sherrill Furniture in Hickory, North Carolina, vertical integration, synergy with sister divisions, and retention of a highly skilled, flexible work force have helped the company not only survive, but thrive. Today, Sherrill is 1,400-strong and generating an estimated $90 million in revenue, making it well positioned for future growth.

For more than 60 years, Sherrill has been building every piece of its furniture by hand. While most competitors have moved to automation and outsourcing, Sherrill, led by CEO Harold Sherrill, still believes the best way to produce quality furniture is to allow its North Carolina craftsmen do what they do best. It’s estimated that an average of 75 people contribute to each product the company makes.

“That’s 75 experienced men and women whose pride, livelihood, and reputation depend on how this one piece of furniture looks, feels, performs, and lasts,” company materials state.

So how does Sherrill compete in an era when competitors can outsource labor to Asia for pennies on the dollar? According to information published by Furniture Today, Sherrill’s 1997 acquisition of Hickory White, one of North Carolina’s most historic furniture makers, exemplifies the company’s strategy.

Sherrill acquired Hickory White out of bankruptcy and immediately began combining the best of both companies. Sherrill got Hickory White’s 500,000-square-foot plant humming at peak levels and created efficiencies through shared use of production at sister-company plants in the Sherrill organization, including CTH-Sherrill Occasional, Motioncraft, Precedent Furniture, Theodore Alexander, Althorp Living History, and Whittemore-Sherrill.

And Sherrill began taking advantage of the unique skills and equipment offered by Hickory White. Hickory White’s lathe making, turned components, and veneer pressing have become increasingly valuable as the number of domestic producers performing those functions has declined. Hickory White not only puts those skills to use for Sherrill, helping the company to significantly cut costs, it also does outside contract work to generate additional revenue.

Further, Hickory White has its own lumberyard, kiln driers, and rough mill that processes 10 wood species, again providing Sherrill with significant cost savings. The facility provides 100% of the lumber for CTH Sherrill Occasional, which in turn runs a routing division that feeds components to Hickory White and frames to Sherrill’s upholstery operation.

By developing these synergies, Sherrill became a vertically integrated manufacturer, improving its own operations while pulling Hickory White out of the red. And by 2005, Hickory White’s sales were up nearly 24%—roughly 20% of Sherrill’s overall revenue.

To ensure Sherrill keeps its evolving facilities operating at peak efficiencies, the company recently partnered with North Carolina State University’s Wood Machining & Tooling Research Program (WMTRP).

Founded more than a decade ago to stem the steady erosion of North Carolina’s once dominant furniture industry, WMTRP is the only program of its kind in the US. Founder Dr. John Stewart and director Dr. Richard Lemaster develop better equipment for tool manufacturers and improve production processes for furniture companies.

“Some people think Elvis has left the building as far as a good portion of the furniture industry in the state goes,” Stewart said in a statement. “But there are many firms that still have success here, and they are thriving because of lean manufacturing and technological innovation.”

Sherrill turned to WMTRP when its humming production line was slowed by repeated breakdowns in machinery. Researchers from WMTRP found Sherrill was pushing its systems beyond the breaking point and determined the facility would operate at greater efficiency if the production line were slowed slightly. Sherrill followed WMTRP’s advice, and the problem was solved. A partnership was formed, and WMTRP will continue to play a role in Sherrill’s success as the company evolves.