Woods chips away with niche furniture

By Philip Hopkins - The Age

9 October 2009

The 2009 Age | D&B Victorian Business Awards - Manufacturing category winner

''The average grade 6 kid is much bigger than in the past,'' said Rod Massey, managing director of Woods Furniture. ''That means they need larger school furniture.''

A natural consequence of that is the need to provide furniture that's adjustable - up and down - and even set tables and chairs in different heights.

This attention to detail, and the ability to innovate, is one of the reasons why Woods Furniture, based at Brooklyn in Melbourne's west, has resisted the onslaught of cheap imports and the impact of the financial crisis, and has registered consistently strong sales growth in the past 10 years.

In the past three years, sales have gone from $11.9 million to $14.2 million, and profits have risen accordingly. As well, when unemployment has been rising, Woods has steadily added staff and now has 69 employees.

These have won the almost 60-year-old company the manufacturing category in The Age / D&B Business Awards. The awards began in 1993 with seven categories - manufacturing, rural, building and allied services, IT and business services, retail, export and wholesale - and have a new category this year, ''new companies''.

The awards promote and reward outstanding business achievement among Victorian companies.

Mr Massey cites several factors in his company's success: high competence in a niche market, strict financial discipline, the constant need to upgrade products, close relationships with customers, and in Woods' case, an innovative profit-sharing scheme that helps motivate staff.

The company was founded by Laurie Woods in the early 1950s, with the main focus on body repair work and producing some furniture. Mr Woods believed in equity and employee involvement, and introduced the concept of profit-sharing.

A big change came in 1988 when Mr Massey and some other managers took over half of the company in a management buy-out, eventually taking out the rest of the company in 2001. The business now has five main shareholders. Mr Massey has the biggest stake.

The buy-out, and the high cost of shifting from Richmond to Brooklyn a few years ago, heightened the need for fiscal discipline. ''We needed to get smarter. Financial controls became permanent,'' Mr Massey said. ''We run on a shoestring budget. Each month we fine tune the budget and can predict up to 12 months ahead what the cash flow will be.''

Woods decided to make education its niche market, from primary schools through to tertiary. ''The school market is unique, way under the radar screen of Chinese manufacturers. The furniture needs to be fit-for-purpose,'' he said.

Many companies import furniture with standard sizes and colours, but Mr Massey's emphasis has been on flexibility. Its furniture comes in all colours and shapes. One product, for example, enables youngsters to fidget in their chairs without rocking the chair and banging it on the floor.

It's a seasonal market. Schools put in their order in October, and expect delivery at the end of January. ''That has an impact on cash flow,'' Mr Massey said. Woods has to borrow and cover its costs because it doesn't get a return until February - hence the need for financial discipline.

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