July 17, 2008 / 12:07 AM / in 9 years

In slowdown, chairmaker finds comfort in tradition

PRINCES RISBOROUGH (Reuters) - When the rest of Britain’s furniture trade headed to China for mountains of cheap leather sofas to slake the demand of a raging housing boom, Edward Tadros had a different plan.

<p>A worker sands a piece of wood in a workshop at Stewart Linford's bespoke furniture makers in High Wycombe, about 96 km (60 miles) north west of London, July 2, 2008. When the rest of Britain's furniture trade headed to China for mountains of cheap leather sofas to slake the demand of a raging housing boom, Edward Tadros had a different plan. A third-generation furniture maker from a traditional English chairmaking region in the Chiltern Hills, Tadros opened up a high-tech factory in southern England making wooden chairs in old-fashioned styles. REUTERS/Andrew Winning</p>

A third-generation furniture maker from a traditional English chairmaking region in the Chiltern Hills, Tadros opened up a high-tech factory in southern England making wooden chairs in old-fashioned styles.

He stuck with traditional designs and a choice of custom upholstery, appealing to an older segment of the market rather than first-time buyers in their 20s and 30s with access to easy credit who thronged showrooms during the housing boom.

So far his has been a resilient niche.

“If people are building houses willy-nilly, it’s got to be good for us,” he told Reuters. “But just because they aren’t building or moving, it doesn’t have to be the disaster that people think.”

Home improvement chains across Europe are struggling as shoppers cut back on spending amid rising fuel and food costs. Few have been hit harder or faster than the furniture sector in Britain, now largely made up of the sort of importers that once helped put many British manufacturers out of business.

Sofa firm ScS upholstery, with 96 shops, was bought by private equity firm Sun Capital Partners this month for a nominal sum after its shares lost more than 90 percent of their value this year. Shareholders are likely to get nothing.

Land of Leather Holdings Plc have also fallen by over 90 percent since last August and the company raised 15 million pounds ($30 million) earlier this month.

People tend to buy furniture when they are buying a new house, but the housing market has frozen. Mortgage approvals fell to a record low of just 42,000 in May, 64 percent lower than a year before, and are forecast to fall further.

Yet at Tadros’s factory, one of the last industrial-scale furniture makers in Britain’s old chairmaking heartland, the orders keep coming in.

“We’re ahead of the budget. I think we’re very fortunate,” he said on the factory floor, where workers operate giant computer-controlled machines that saw hardwood tabletops and cut upholstery patters.

“We had an open house in the middle of May. We’ve sold into the retailers extremely well. We’re ahead of our plan.”

TOP END HOLDING UP

Although it is still early days in the downturn, retail analysts say the higher end of the market is so far holding up better than the mid-priced warehouse retailers.

“The lower to middle end of the market has been an absolute disaster,” said Freddie George, retail analyst at stockbrokers Seymour Pierce. “At the mid-end, your ScS upholstery, your Land of Leather, they’re absolutely on their knees.”

Tadros has trouble coming up with an answer when asked why he opened a new factory in high-cost England when most of his industry was moving production to cheaper locations overseas.

“We like making furniture,” he shrugs. “We’re a family business. We don’t have any outside investors we need to satisfy.... When everyone else was closing down, we decided to stay and make a go at it.”

The forests of the Chiltern Hills have been the home of an indigenous furniture industry for centuries.

Woodcutting hermits known as “bodgers” lived in cottages scattered throughout the area’s old-growth forest, building homemade lathes and turning out chair legs and braces.

They sold the wooden parts in the town of High Wycombe, where chairmakers would fashion them into distinctive “Windsor” chairs and sell them on throughout the country.

By the middle of the 20th century, High Wycombe was involved in mass production. The government was investing in “utility” housing for a post-war baby boom and filling homes with giant orders of dependable wooden furniture.

Vocational secondary schools throughout the area churned out young woodworkers who were employed in factories on apprenticeships leading to lifelong jobs as craftsmen. Even the local professional soccer team is nicknamed the “Chairboys.”

Tadros’s business, Ercol, founded by his grandfather, an Italian immigrant named Lucian Ercolani, also expanded to become a mass manufacturer.

But like much of British manufacturing, the furniture industry largely evaporated in the 1980s and 1990s. Tadros watched as family after family shut down and left the business, giving in to the relentless pressure of inexpensive imports.

He decided to stay, closing the old brick furniture works in High Wycombe and moving to an architect-designed, glass-and-steel factory-cum-showroom in an office park in the next town over.

Revenue has stabilized at about 12 million pounds a year, about a third of the company’s size in its heyday.

Most of the equipment is modern, computer-controlled and new. If you went to a factory in China, “it would probably look about the same,” he said.

But there’s still a link to the past. Some of the equipment, like the machine that carefully bends steam-softened ash boards into the curved shape of a traditional chair back, dates back to the original factory from the 1930s.

Many of the staff are veterans with decades of service, who chat to the boss as he shows a reporter around.

OLDER MARKET

Tadros says he isn’t entirely sure why his business seems to be holding up at a time when others are being swamped, but he has a few hunches.

For one, his traditional designs appeal to an older segment: people in “the grey market” may be replacing pieces in a home they already own, rather than kitting out a new apartment, so demand is less tied to house sales volumes.

Also because the factory is local, Ercol can make each piece to order, so there is no expensive overhang of inventory purchased months ago and still arriving in containers from the Far East. He can offer buyers a wide choice of upholstery patterns instead of what happens to be in the container.

He added that retailers, watching the market contract, are expecting a smaller number of sales and hoping to make up for it with higher margin products -- such as Ercol’s -- in their showrooms.

There are plenty of rocks ahead. Costs, such as fuel and transport, are rising fast. Tadros’s wood is mostly imported from North America, and the company’s cheaper lines are assembled abroad in Turkey so the company feels the impact of rising freight costs.

The environmentally friendly design of the factory is now paying off on the bottom line. A giant machine filters sawdust out of the air, then uses it and other waste wood scraps to fuel the boiler.

“Utility costs are a pain. We’re using half as much electricity as four years ago, but the costs have doubled.”

Editing by Sara Ledwith and Keith Weir

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