Value Added: "Keeping The Game Going"

By Thomas Heath


One of my basic tenets to having a successful life is living beneath your means. I have my expensive flourishes, but my wife and I drive one car (a $12,500 Honda Civic), I buy some clothes at Sam's Clubs, get no premium cable, still have dial-up Internet access -- and you would not believe the furnishings in my living room.

Hardwood Artisans, a Woodbridge-based maker of high-end furniture, has similar values. Hardwood has zero debt. It didn't overexpand. It reinvests its profits into the business and watches costs like a hawk. The company hires lots of friends and family, so there is little turnover.

Compensation is modest; a top bonus might reach $5,000. There is no health insurance. The co-founder, Greg Gloor, made $150,000 at his peak, a nice living but it won't get him entre into Great Falls or a place on Foxhall Road.

When Gloor decided to sell his half interest in the high-end furniture company, he didn't hire a Wall Street investment bank to fetch the highest dollar. He sold his share of the company for $50,000 to five long-time employees, even though the share was worth $700,000 on paper. And he paid them a bonus the previous year so they could afford the purchase.

Hardwood Artisans makes nice stuff. Their "craftsman style" furniture is simple but utilitarian, characterized by smooth lines and joints that eliminate the need for nails, screws and metal braces. The products are labor intensive, requiring precise measurements and finishings. They are expensive to make. An armoire can run to $6,000 and a bed to around $8,000. Custom-made projects for homes can cost more.

Hardwood Artisans' conservative financial approach has kept it alive while competitors such as Mastercraft and Scan, have closed.

"Nobody is out to get rich quick," said Lois Gloor, Greg's wife and a longtime employee. "We just like to do what we like doing and make it work. The last time there was a soft spot in the economy, five or six years ago, my husband and his partner didn't pay themselves. The important thing was to keep this game going."

Greg, 58, grew up in Pittsburgh in a neighborhood "where if you needed something done, you figured it out yourself."

A self-described "hippie wannabee" who dropped out of Drexel University's engineering program, Gloor started his company in a basement in Alexandria in the mid-1970s. He and partner Larry Spinks patterned their business after similar establishment in New York City.

They called it the Loftbed Store, and it was a shoestring operation. The company grossed $30,000 the first year making loftbeds, a staple in college dorms and similar to bunkbeds without the bottom bed. They sold for around $400 each. Greg paid himself $35 a week and Lois waitressed to make ends meet.

Business was good. The Loftbed Store increased revenues by 100 to 200 percent a year during their early days. It later expanded into other lines of furniture and now features hundreds of items in its catalog. It changed its name to Hardwood Artisans 10 years ago as it morphed from its college dorm image into an upscale custom furniture manufacturer. Its longest continual solid seller is a pedestal platform bed with headboard and nightstand. Price: $6,000 to $8,000, depending on size and wood.

To finance operations the company asks customers to put 50 percent down for furniture, which usually takes eight to 10 weeks for Hardwood Artisans to make. The down payment -- known as a float -- allows Hardwood Artisans to operate without going to banks for short-term loans. Insurance companies and other businesses are built on "float."

"We aren't having to borrow the money because we are getting it at zero interest from the customers," said Greg.

Gloor is an efficiency guru. He can tell you that the optimum backlog of orders for Harwood Artisans is 10 to 12 weeks, which gives him $1 million or so of orders waiting to be filled. That in turn allows him to buy more wood and parts in bulk, saving on costs. It also means he likely has four or five similar items to build instead of just one, which also saves on costs.

Statistics tell him it costs about $75 an hour to keep a furniture-maker -- known as a craftsman -- in the workshop. If he is building 10 pieces on a certain machine instead of two, he can save a couple of hundred dollars, which can be the difference between profitability and breaking even.

Gloor even knows if he advertises in The Washington Post Sunday Magazine 75 percent of the time -- not 74 or 76 percent -- he maximizes his return on investment. "We watch numbers pretty closely and we know our historical norms," said Gloor. "If we are outside one way or another, we ask ourselves why are we doing that."

The company grossed $6 million in 2007. That dropped to $5.7 million last year. Profits come to around two percent of gross revenues, and much of that is rolled back into the company for new equipment. The company gives generously to WETA, Washington's public radio station. (My wife works for WETA.)

Personnel is 60 percent of costs. Wood and parts are another 20 percent. The rest is rent, advertising, backoffice, utilities and fuel for the trucks.

Hardwood Artisans has three showrooms, including Alexandria, Rockville and Chantilly, and employs around 65. Gloor has allowed that number to dwindle due to attrition. There are 35 to 40 craftsmen, 15 sales people, five in administration and half a dozen deliverymen. The company owns three delivery trucks.

If you want to get rich, look elsewhere. Top craftsmen earn $20 an hour, with two weeks of vacation a year and a 401(k) employer match. They can boost than significantly with overtime when things get busy. Gloor dropped health care coverage as it became more expensive. But 20 people have been at Hardwood more than a dozen years.

Gloor said this market is his toughest ever. He said he is introducing lots of new products, including new lines of tables, chairs and living room pieces, to "see if we can find a sweet spot." Gloor is leaving the shop and walking the showroom floors, helping to close deals. Some jobs he is doing at cost in hopes of creating longtime, loyal customers.

"We are a small cork floating on a rough sea," said Gloor, who has reduced his pay to $60,000 a year although he remains general manager. "We aren't large enough to create trends, so we have to be alert to where the ball is heading and try to be there with regards to style, product and space."

The Gloors are building a $700,000 new home after tearing down the old one near Springfield Mall in Franconia. His children are grown and gone. He owns some other real estate and made a nice profit when he sold the land and building where the Woodbridge shop is located.

"I get up in the morning and I look forward to coming to work," he said. He drives to work in an eight-year-old Mazda Miata, which has a rip in its convertible top that he refuses to fix because of the cost.

My kind of guy.

By Dan Beyers  |  January 19, 2009; 12:01 AM ET  | Category:  Value Added
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Comments

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My morning laugh - thanks guys...
A pean to his hand made furniture where a single piece costs a significant fraction of the annual income of most folks - all in homage to how frugal the writer is...

Delusional is the best descriptive term I can come up with at the momment...

dr. o - who does not own a single piece of hand made furniture

Posted by: ad4hk2004 | January 19, 2009 7:34 AM

OK, so the guy who makes furniture no one who is thrifty would buy, is praised by the guy writing the article, who claims to be thrifty, and therefore would never buy his furniture. And the guy making the furniture is thrifty with his company, but, according to the article, is pretty extravagant with building a new house but too cheap to by a decent car, or even an American made car, although he builds furniture in this country. The guy building the furniture won't provide health care to his employees, and most of the employees are his friends or family. He also doesn't take much out of the company in salary, but he's made a fortune in real estate.

The article is filled with inconsistencies. One thing I did get from this article is, I will never buy furniture from Hardwood Artisans.

Posted by: jmangan1 | January 19, 2009 10:09 AM

You write "Statistics tell him it costs about $75 an hour to keep a furniture-maker -- known as a craftsman -- in the workshop." I'd be interested in knowing what those $55 in non-salary costs are; you also tell us that salary is no more than $20 per hour and there are no health insurance benefits.

Posted by: Tschurin | January 19, 2009 10:26 AM

Let's see... he pays his craftspeople $20 an hour without health benefits, charges $6k-8k for a bed, and is building a $700k house... what's wrong with this picture?

Posted by: heinpe | January 19, 2009 10:47 AM

Hummm ... sounds wonderful.
American dream from a conservative republican, no health insurance, point of view.
Couldn't these craftsmen work for the same wages other furniture makers are earning like senators Sellby, Cockerel, and Bedwetter want auto workers to do?

Oh wait, there are no furniture makers left, their jobs were outsourced to China.

Posted by: knjincvc | January 19, 2009 10:56 AM

The furniture is not only expensive, it's exploitive.

Posted by: ronjaboy | January 19, 2009 11:03 AM

Hi, I'm the Director of Marketing for Hardwood Artisans.

Thanks to all the commenters for all the interest in Hardwood Artisans. I do have one quick correction, no fault of Tom's. We've had health insurance available through the company since August of 2007. Employees can elect to take advantage of the company plan, but some have their own plans or get insurance through their spouses. Personally, I have the company plan.

If anyone would like more information or has more feedback, feel free to email me at alison@hardwoodartisans.com or post here. I'm always happy to answer questions.

Alison Heath

Posted by: furnituregirl | January 19, 2009 11:30 AM

As long as you're monitoring this, Furnituregirl, how do you expect upcoming increases in taxes and regulation to affect your business ?

Posted by: cryoungdahl | January 19, 2009 11:51 AM

Hi, cryoungdahl.

Well, we've been in business for 33 years. We've seen just about everything--different administrations, economic ups and downs, political shifts. I think any small business owner just takes things as they come.

Thanks for your interest.

Alison

Posted by: furnituregirl | January 19, 2009 11:54 AM

One more thing. Others may disagree, but I think cost is a matter of perspective. The $8,000 bed we build includes under-bed storage, in-headboard storage and two nightstands. It's also our best-selling bed. It's here: http://www.hardwoodartisans.com/new_page.asp?Platform%20Pedestal%20Bed

When we started building furniture back in 1976, we deliberately set out to do something different from other companies. We wanted to build furniture that would last a lifetime, which takes time, effort, skill, training and quality materials. As a result, we hear frequently from original customers who bought loft beds from us--loft beds that have now been used for three generations.

To back up our promise of quality, we also offer a lifetime guarantee. If anyone is interested in reading our warranty statement, it's here on our website: http://www.hardwoodartisans.com/warranty.html.

Feel free to visit one of our showrooms. We'd love to show you what we can do and explain to you how it differs from what you'll find elsewhere in the market. Or come take a tour of our workshop in Woodbridge. Our craftsmen are very friendly and love to give tours.

Keep the comments coming!

Alison

Posted by: furnituregirl | January 19, 2009 12:02 PM

It sounds like a nice company. High-end furniture isn't for everyone.

But I have to say that health coverage can be really expensive in a small group like this. If one person get sick and has something major -cancer, a premature birth- premiums can go through the roof. Since the buyers of really nice furniture aren't legion a company like this doesn't have endless ability to raise prices to cover these kind of costs. Not the way that say a government employer does!

I hope the new administration will go easy on taxing small businesses like this and work on ways they can pay their own way in an environment where risk can be spread over a large group.


Posted by: RedBird27 | January 19, 2009 12:17 PM

Thanks, RedBird27. That's a really good point. We're lucky that we haven't had to raise our prices since we started offering the employee health care plan. You're correct that it can get expensive for a small group, but those of us who use the company plan split the costs with the company. It seems to have worked out well thus far.

Alison

Posted by: furnituregirl | January 19, 2009 12:24 PM

I wonder how many employees live 12 to a house down near their production facilities in Woodbridge? I counted at least 25+ Latino's in the photograph. This question is not racist it is merely a question, but also would be interested in knowing if any of these valuable employees were sponsored by this company to become US citizens?

Posted by: Sideswiped | January 19, 2009 12:29 PM

I bought a couple of pieces from Hardwood Artisans last year, partly because I wanted to support a local employer, and partly because their furniture is not made to wear out in 5 years like a lot of the mass produced furniture. This article disillusioned me -- $20 an hour and no health benefits for skilled craftsmen? I'm glad there is the option to join an employee health plan, but if you are not a retired admiral, can you really afford insurance premiums on $20 an hour in this part of the country? Recently, some good friends of mine were driven to bankruptcy by their medical bills and lack of insurance. Too many companies regard health insurance as a frill that can be cut when their profits dip. As long as we tie health insurance to our jobs, this problem is only going to get worse.

Posted by: n_mcguire | January 19, 2009 12:38 PM

Hi n_mcguire. You're quite right that tying health insurance to jobs does present a problem. For employers and employees alike. When Alan Greenspan left the Fed, he said that health care would be our single biggest challenge in the coming years. Without the option of single payer, however, I think everyone is just doing the best they can, us included.

Feel free email me if you have further concerns. I'd love to discuss the issue with you. My email is alison@hardwoodartisans.com

Alison

Posted by: furnituregirl | January 19, 2009 1:03 PM

We have been buying furniture from Hardwood Artisans for twenty years. The furniture holds up really well. One thing we loved is that the king sized bed easily disassembled when we moved. A thing of beauty.

The furniture is pricey, but well worth it. It looks as good now as it did when we brought it home, which is more than I can say for the department store veneer stuff.

Good work.

Posted by: hestia1 | January 19, 2009 2:33 PM

Having suffered through the "assembly" of a substandard loft bed my wife and I purchased that took months to arrive, or perhaps more accurately be found in the back of a warehouse or container from China I wish I had heard of this before - tempered by a no small bit of sticker shock :)

Still, if nothing else, my hat is off to Alison for being willing to step into the lion's den to answer questions

Posted by: perfgeek | January 19, 2009 3:33 PM

I've been a client of HA for over 15 years, and I do consider myself thrifty. What is the cost of replacing your furniture every 10 years, and having no value in the end? These guys build stuff my grandchildren will later fight over.

As for the worker benefits - HA has very little employee turnover. I would assume if health insurance was a problem, the employees would vote with their feet. Whenever I return to the showroom, I'm greeted by the same passionate craftsman I've been working with for years.

Thank you HA for keeping some jobs in the US. If your too cheap and don't care about employee welfare or the environment, go buy something from Pottery Barn - hand made in China.

Posted by: jonGlobal | January 19, 2009 5:06 PM

I was very disappointed when I read Heath's article on Hardwood Artisans. Even more so when I read some of the disparaging comments, but I believe those were a direct result of the over all tone of the article. If he had been interviewing other brand-named furniture retailers, such as Mastercraft and Scan, do you think their owners would have been so candid about the pay rates, company benefits and/or personal financial information of the owner. There is no comparison. As a customer, one who has severe arthritis and purchased a mahogany king sized bed with light bridge, I would not hesitate to ask the Washington Post to come back (at some point in time) and do a re-write or offer a substantial discount on some advertising in the Magazine. Hardwood Artisans represents a locally owned, hand crafted, artistic woodworking company and should be treated with more respect. I know they have a better reputation than what was represented in that article. In these harsh economic times, specialty companies deserve better coverage.

Posted by: netsy1 | January 19, 2009 8:09 PM

My wife and I became customers of Hardwood Artisans for the first time last year.

We are very thrifty. We lived on Ikea furniture for years and lived in apartments -- in other words, delayed our gratification -- in order to pursue our education and long-term career successes while our peers took well paying jobs, bought houses and consumed away.

Although we have achieved financial success at last, we still live waaaaay below our means. Part of that way of life is doing a careful analysis of value of things we buy over time.

Our Ikea furntiure were literally falling apart and breaking in pieces. "Upscale," "brand" alternatives we examined were rather low quality still (just pretty design, but shoddily made).

Out of sheer luck, a former employee of a competitor (now defunct) to Hardwood Artisans recommended the company as a producer of high quality, long-lasting items, albeit at high prices (but certainly not the highest).

We took a gamble and spend what was to us, only years ago, a fortune. We are very pleased with the products.

Hardwood Artisans furniture we bought are beautiful in that elegant, natural and understated kind of way. They are also extremely sturdy. One can take out a drawer from a Hardwood Artisans dresser part-way, stand in it and the piece will be none worse for that wear.

Everyday, we derive a great deal of pleasure from touching, using and looking at the furniture.

If one is primarily interested in low cost disposable furniture, this is not the place. But if one would like a long-lasting furniture that one's children might inherit one day and perhaps even grandchildren, then this is the right place.

There are certainly places that charge even more than Hardwood Artisans. I do not think they offer higher quality than it does, however.

In that light, Hardwood Artisans offers an unbeatable value for my family. We will likely purchase more furniture from this company this year (yes, we know there is a recession, but we have saved just for this kind of rainy days).

I might add, by the way, Hardwood Artisans delivery people were simply top-notch. Polite, pleasant and extremely knowledgeable (some of them help out with finishing the wood).

I wish there were more companies like this. Too often nowadays, there is nothing between Ikea-type low quality mass-manufactured items on the one hand and stratospherically priced custom-made goods on the other hand.

Posted by: jamesjna | January 19, 2009 10:58 PM

I come from a small business family. Saw my Dad work 100 hours a week for 30+ years. I know what it takes to run a small business. I get hot when I read/hear peoples comments about how no health insurance or $700,000 house. Let see you work those hours, lets see you save every penny, not buy the new car every four years, NOT go out to dinner 5+ times a week, or have the latest whatever! Lets see you take over a 50% cut in pay to keep the company going. I am from out west and never heard of this company, but it is on my list to see when I go back east, the furniture is beautiful! Lead the way small business man.

Posted by: Countryman1 | January 20, 2009 10:29 AM

While it is certainly important to the keep the game going, one way businesses and even homeowners can make the most of their furniture is to look at refinishing existing wooden pieces. For instance, those who invest in solid wood furniture, it's important to extend the life of the asset by refinishing rather than buying new. Buying new is creating a larger carbon footprint for the environment rather than reducing it. We need to look to save our forests rather than cutting them down.

Posted by: therefinishingtouch | January 23, 2009 5:40 PM

That $20 an hour figure is not out of line within the industry; it's not a reflection on this company. Furniture making is a pretty low-paying profession, despite the high prices. Even the big names in the profession say that they have barely been able to support their families. It's the craft, and being able to provide a very high quality and unique design for their clients, that keeps them in the profession. Between offshore competition at the low end and (increasingly) the mid-market, and very high quality (and high priced) factory furniture produced domestically (with the help of a whole lot of computer-controlled machinery), the market for custom furniture is a pretty small place.

Posted by: Stuart3 | January 24, 2009 4:21 PM

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