Industry supplier Hickory Springs Mfg. Co. has developed a two–pronged approach to maintaining the company’s financial stability and fostering growth in a weak global economy.
By focusing its efforts on developing innovative products and expanding its reach into new industries and regions, the Hickory, N.C.–based company hopes to be well positioned to seize opportunities as the economy improves.
“Innovation is the key to where we want to go,” says Don Coleman, president and chief executive officer.
Hickory Springs, a provider of wire, foams, nonwovens and other components, looks at innovation from several vantage points. Because it sells the bulk of its product to mattress and furniture manufacturers, the company is acutely aware of the pressure on those industries to reduce costs—pressure that has caused them to rethink, often from top to bottom, the way they produce and market beds and home furnishings. The fact that Hickory Springs is a one–stop shopping source for many components gives it a significant edge, Coleman says.
Dwayne Welch, executive vice president of sales and marketing, adds: “We have everything that goes into a mattress and that sets us apart. We are now bundling those products together in ways that are meaningful to manufacturers. Our broad range of bundled products allows our customers to reduce their inventories, which improves their sales and ours.”
Hickory Springs has been developing new bedding products it plans to introduce this year.
“The bedding industry is like a pendulum,” says Rick Anthony, director of sales for metal and nonwoven products. “In a recession, you see a shift to lower cost components. In response to our customers’ needs, they will see two new lower cost innersprings and a lower cost wire–formed box spring coming out of Hickory Springs soon.”
The company also is concentrating research and development assets on some post–recession offerings.
“We have two products in development now that will help manufacturers stay ahead of the curve when the pendulum swings back,” Anthony says.
The company’s foam division is taking the same dual–track approach to product development. Hickory Springs began selling bedding foam just eight years ago and has been in “a constant growth mode ever since,” says David Duncan, national sales manager for bedding foam products.
Hickory Springs pours 160 different foam formulations in 11 foam families. By and large, bedding manufacturers look to the company for conventional and high–resilience foams, as well as LatEXcel, which is produced in Italy and distributed exclusively by Hickory Springs in the United States. Other new bedding–specific foam technologies have been in development for more than a year and will be introduced later in 2009, Duncan says.
The company also touts Preserve, a bio–based foam. Developed in a joint venture with Cargill, it’s produced by replacing a portion of the petrochemical–based ingredients with a polyol derived from a sustainable, renewable resource, currently soy. About 20% of Preserve’s composition is derived from the bio–based polyol, but Hickory Springs’ “goal is to replace 100% of the petroleum–based polyol used in urethane foam with Preserve–based foam,” Duncan says.
Duncan acknowledges that the cost premium for Preserve is a hard sell with manufacturers in this challenging economic climate.
But company executives argue that now is exactly the right time for bedding makers to make more environmentally friendly mattresses.
“Consumers are much more educated about what they’re looking for and much more discriminating,” Coleman says. “Preserve gives manufacturers an opportunity to give them an important new product and a compelling story about that product.”
The company is using Preserve to extend its product line, producing Preserve–based mattresses, pillows and toppers through I Care Sleep LLC, a wholly–owned specialty sleep subsidiary. The High Point, N.C.–based company produces two lines—EarthCare, which it sells directly to retailers, and I Care, offered through licensing agreements.
The products were first introduced in October 2008 at the High Point furniture market. General Manager Jim Wall says he has been encouraged by the response thus far.
“We have already developed a customer base of small independent retailers across the Southeast and Therapedic has acquired the rights to an I Care Elite collection that will be distributed only through their licensees,” he says.
Wall is putting together a national sales team and has developed a portfolio of education and marketing materials for them to share with retailers and consumers.
A video shot in the North Carolina mountains touts the products’ “delicate environmental impact” and “rejuvenating qualities.” It can be incorporated into a point–of–sale display or used as a TV commercial. A Web site (www.earth–care.com), brochures, a catalog and foot protectors complete the promotional package.
Welch explains: “We are working hard to promote our environmentally friendly components and believe that education is the key. We are putting together a program that shows their cost/benefits and know that it’s incumbent upon us to give retailers and manufacturers the best story about what is and is not environmentally friendly and ‘green.’ ”
Bio–foam is part of an overall strategy by Hickory Springs to diversify its products and channels of distribution.
Jimmy Bush, vice president of wire products, explains: “Diversification is a very strong goal. Furniture and bedding are basically mature industries in the U.S. and about 25% of our total sales are to those industries. If the market doesn’t grow, we don’t grow. We have core capabilities so we’re trying to get into a position where we can use those in other industries and internationally.”
In recent years, Hickory Springs has been serving customers in the health care, automotive, recreational vehicle and school transportation industries. And it’s pushing hard to expand its global presence. It sells into Asia, Canada, Europe and South America and participates in joint ventures with companies in Canada, China and the United Kingdom.
“We are definitely on an international growth pattern and want it to become 25% to 30% of our total bedding and furniture business,” Welch says.
Hickory Springs also is working on a new generation of products drawn from the science of sleep.
“We’re beginning to come out of the dark ages with bedding and how it can improve the quality of sleep. We want to produce products that take advantage of sleep science and are pursuing relationships and joint ventures with people involved in thermal regulation, audio cues and other methods of manipulating sleep,” says Stuart Spiller, vice president of bedding products. “It’s a huge opportunity and there are so many things that can be done to make people healthier and happier.”
Though Hickory Springs knows its goals are ambitious, it is confident about its ability to reach them. The closely held family business, founded by Parks Underdown in 1944 as a small metal fabricator, now has about 4,000 employees in 60 locations. It still practices the same principles of innovation, financial responsibility and loyalty that Underdown set 65 years ago, according to Bush. And it’s that foundation that will allow the company to meet its challenges.
“Because we don’t have to explain everything to stockholders, we can take a longer view,” Bush says. “Because we’re very well financed, we can do whatever it takes to reach our goals.”
Parks Underdown founded Hickory Springs Mfg. Co. in 1944 to meet the U.S. economy’s post–World War II demand for metal products. His son, Neal Underdown, and son–in–law, Bob Simmons, joined the company in the mid–1950s. Bob Bush Sr., a cousin who was raised by Parks Underdown after the death of his own parents, went to work for the company in 1958.
“They had skill sets that were made for each other and together they took Hickory Springs from a small company to the company it is today,” says Don Coleman, president and chief executive officer.
Hickory Springs grew to more than 60 facilities and, with the advent of urethane, moved into that business, as well. Expansion also came through acquisitions and by diversifying into industries that today include bedding, home furnishings, automotive, school transportation, recreational vehicle and health care.
Hickory Springs continues to be wholly–owned by members of the Underdown, Simmons and Bush families, with a third generation actively involved in running the company. They include Chip, David, Steve and Susan Underdown; Linda and Mike Simmons; and Jimmy and Bobby Bush Jr. Scott Underdown, Caroline Simmons and Robert Simmons hold equity positions, but are not involved in day–to–day operations.