American Seating Company

views updated

American Seating Company

401 American Seating Center
Grand Rapids, Michigan 49504-4499
U.S.A.
Telephone: (616) 732-6600
Toll Free: (800) 748-0268
Fax: (616) 732-6502
Web site: http://www.americanseating.com

Private Company
Incorporated: 1887 as Grand Rapids School Furniture Company
Employees: 895
Sales: $93.2 million
NAIC: 337214 Nonwood Office Furniture Manufacturing; 337127 Institutional Furniture Manufacturing; 337211 Wood Office Furniture Manufacturing

American Seating Company is a private company based in Grand Rapids, Michigan, that has been involved in the seating business since the 1880s. Markets include education, sports and entertainment, transportation, commercial business, government, and renovation. The company's original focus, the education division, offers a wide variety of seating products, desks, and tables for classrooms, lecture halls, and common areas. American Seating is also well known for its sports and entertainment work, its chairs installed in such venerable institutions as Boston's Fenway Park, Chicago's Wrigley Field, and New York City's Radio City Music Hall. For more than half a century, American Seating has also been involved in the transportation industry, providing seats for buses and rail travel. Since the 1970s American Seating has provided contract office furniture products for both the commercial and government markets. Finally, American Seating offers refurbishing services to restore its older seating products.

ORIGINS

According to company lore, American Seating was conceived during a long Grand Rapids school board meeting in 1886. For two hours board President Gaius W. Perkins gained firsthand knowledge of the uncomfortable chairs and desks students had to endure several hours a day during the school year. He also had plenty of time to calculate the total hours many would have to suffer before completing their schooling. He told fellow board members Seymour W. Peregrine and William T. Hess that from kindergarten through college children sat for more than 15,000 hours. "The desks that these children sit in are shaping their bodies," he added. To address this problem, the three men formed Grand Rapids School Furniture Company, forging a partnership in 1886 and establishing a factory on the corner of Prescott and Ionia streets in Grand Rapids. In May 1887 they incorporated the business with a capital stock of $100,000, and used the money to build a new factory, which opened in August 1888. The company quickly introduced a major innovation in classroom furniture, the combination desk, which fixed a desktop to the back of a chair for the use of the child sitting in the rear. The chairs also encouraged good posture. This combination of efficiency and comfort would become the hallmark of the company. Grand Rapids School Furniture soon ventured beyond the classroom; in 1889 it provided the seats for the Tabor Opera House in Leadville, Colorado. This contract led to more work in the entertainment arena, fueled in large part by another innovation, the 1893 introduction of the tilt-back opera chair. By now Grand Rapids School Furniture had emerged as the leading seating manufacturer in the world.

While success came quickly, the company's independence was also fleeting. In 1899, Grand Rapids School Furniture and 18 other furniture manufacturers merged to create American Furniture Company, the headquarters of which resided in New York City. Although the products were now made under the American Seating banner, the innovative spirit of Grand Rapids School Furniture remained intact. For the school market, the company in 1901 introduced the Model101, a tubular steel standard desk. It then developed the Friction Side, an adjustable chair and independent desk. This led to the Universal Desk in 1921, which joined the adjustment chair and desk. The company also did considerable business in the entertainment field with the introduction of the squeak-free theatre folding chair. It also took advantage of a wave of baseball parks that were built in the early years of the 1900s, as old wooden ballparks, prone to fire, were replaced by concrete and steel edifices. In 1912 American Seating installed the seats in Boston's Fenway Park, followed later by Wrigley Field, Comiskey Park, and other ballparks. In the 1930s it began producing seats for buses, as well as church pews and related furniture.

The company regained its independence in 1927 as publicly traded America Seating Company, and then moved its headquarters back to Grand Rapids in 1932. Like many companies during the Great Depression of the 1930s, American Seating endured difficult times. It suspended the payment of dividends in 1930, then lost money for three straight years before posting a profit of $134,075 in 1934 and $330,262 in 1935. The company had turned the corner, but it would not fully regain momentum until the economy revived the business of its customers. It would require a world war to make that happen. During the war years of 1942 to 1945, American Seating devoted much of its energies to supporting the military effort. Not only did it produce tables and chairs for Navy war rooms and other military uses, it also made spar caps for the Douglas A-26 dive bomber, wooden training models of antiaircraft guns, seats for tanks and ejector seats for airplanes, airplane and glider wings, and ammunition boxes. The company produced five million folding chairs alone during the war years, on average 10,000 per day.

POSTWAR POPULATION BOOM SPURS BUSINESS

After the war and a brief recession, the U.S. economy roared to life and American Seating took full advantage. It closed the decade with sales in the neighborhood of $25 million. For many years the company continued to serve the military, producing aluminum airframe components and inertia safety reels for airplane pilots. But military sales accounted for a modest part of American Seating's revenues, which were more impacted by the rapid growth of the school market, a function of the country's rising population. From 1941 to 1950 the U.S. population increased by 19.3 million to more than 151 million. Moreover, from 1950 to 1954 another 10 million people were added. As servicemen returned home from World War II, married, and began raising the baby boom generation, they moved to the suburbs, where schools had to be built and furnished. Aside from providing chairs and desks, American Seating would also distribute a wide variety of school supplies manufactured by other companies, including chalkboards, paper, and pencils. By 1954 the company's annual revenues topped $35 million, of which 60 percent were school related. In1956 sales exceeded $40 million. According to a Barron's National Business and Financial Weekly article, "Since 1939 its sales have increased 30% faster than the Gross National Product. Perhaps more impressively, the past nine years have seen American Seating boost its volume at a rate nearly comparable to that of hard-driving General Motors, and faster than either Standard Oil of New Jersey or du Pont."

COMPANY PERSPECTIVES

American Seating has followed a common sense approach for over 100 years: Design the best, build the best, be the best. That tenet positioned American Seating as an industry leader early on, a tradition that continues today.

Aside from new schools, the baby boom meant expanded or new churches, and American Seating thrived during the 1950s on the increased sale of pews and folding chairs to the religious market. With more people to transport, the United States also needed more buses and trains, and American Seating stepped up its efforts in this area as well. In 1951 it acquired the bus seat division of S. Karpen Co. American's product development efforts helped to serve this sector as well as the company's other markets. It developed a fiberglass-reinforced plastic seat for the New York Transit Authority, considered radical at the time. It also used the material to make classroom chairs. In addition, American Seating introduced the cantilevered bus seat in the 1950s, a development that lead to the company's emergence as the industry leader in the heavy-duty bus seating market, a position it would maintain into the next century.

Business leveled off in the late 1950s and early 1960s as the school building boom curtailed. By the mid-1960s classroom furniture sales would account for just one-third of all sales, as the company faced increased competition in this and its other markets, resulting in depressed profits. Despite the cost, American Seating took steps to adjust its business mix, achieved through acquisitions as well as startups. In 1960 it bought the Pacific Northwest School Supply Company to expand its school supplies operation. American Seating also looked to the hospital market, establishing a hospital furniture unit in Grand Rapids in the early 1960s. Aside from hospital room side chairs and waiting room lounge chairs, the unit's products included bedside cabinets, over-bed tables, and electrically and manually operated adjustable beds. In 1963, in another effort to diversify, American Seating paid $3.5 million for E.H. Shelton Company, maker of laboratory furniture used mostly in high schools and colleges. By 1965 laboratory sales contributed from 15 to 20 percent of American Seating's $53.8 million in revenues. According to Barron's, "Amusement, transportation, church, and hospital furniture contribute the rest, roughly in that order." Sales jumped to $60.9 million in 1966, spurred in large measure to a surge in theater and architectural seating sales. The company installed seats for the New York World's Fair, the Los Angeles Coliseum, and a host of new ballparks, stadiums, arenas, performing arts centers, and convention halls that sprouted up around the country during this period. Once again proving to be an industry innovator, American Seating produced the first molded plastic seats for sports stadiums, in part a response to Dutch elm disease. Stadium seats had previously relied on steam-bent elm.

Through its subsidiary, Universal Bleacher, the company also produced outdoor grandstands, folding gymnasium bleachers, as well as basketball backboards and the football training device, still on the market, called "Smitty's Blaster," which helps teach players to hold onto the ball. In the 1970s American Seating became involved in the contract furniture business, competing with the likes of another Grand Rapids company, Steelcase, Inc., in the sale of office systems to corporations. While Steelcase gave cubicles to the world, American Seating offered the Acton Stacker chair and the Framework family of chairs, table, cabinets, and panels for office and laboratory use. As a result of this new revenue stream, American Seating reached $100 million in annual sales during the 1970s, but would stall at this level.

NEW OWNERSHIP IN 1986

The early 1980s was a period of transition for American Seating, which found itself in a poor competitive position. As the era of new school construction came to a close, the company temporarily exited the classroom furniture business in 1982, selling off the equipment used to manufacture the line. It now depended on the office furniture business to supply the bulk of sales, with auditorium and stadium seating, and mass transportation seating providing the rest. Also in 1982 the company endured a bitter ten-week strike with workers represented by the United Auto Workers Union after the company proposed a two-year freeze on wages. American Seating also went on the block and in 1983 the company was sold to Fuqua Industries Inc., an Atlanta, Georgia-based conglomerate, which in 1982 had acquired a 40-percent stake in the company and gained three seats on the American Seating board of directors.

KEY DATES

1887:: Grand Rapids School Furniture Company is incorporated.
1899:: Company becomes part of American Furniture Company located in New York City.
1927:: Company becomes independent as American Seating Company.
1932:: Headquarters returns to Grand Rapids.
1951:: Bus seat division of S. Karpen Company is acquired.
1983:: Company is acquired by Fuqua Industries Inc.
1987:: Management takes over ownership of company.
1992:: New Transportation Seating factory opens.
2003:: Transportation Seating Inc. is acquired.

In its first year under new ownership, American Seating fared well, but over the next three years the company struggled. In 1985 and 1986 the company lost money, the first time in its history that American Seating experienced consecutive losing years. Fuqua was known to quickly jettison money-losing operations and American Seating proved to be no exception. The parent company also followed a policy of first offering management a chance to buy the company. Hence, Chief Executive Officer Edward Clark was asked if he was interested. "It took me about two nanoseconds to say yes," Clark told the Grand Rapids Business Journal in a1989 profile. "The opportunity doesn't come around too often to buy a $100 million company." Clark had only been with American Seating since being installed as CEO in February 1986. An Ohio State University graduate, Clark had worked for Ford Motor Company before taking a position in 1976 with Haworth Inc., one of the top office furniture manufacturers in the United States. Then, in 1982, he assumed the top job at Hardwood House, a Rochester, New York, woodworking company.

Clark and his managers completed a leveraged-buyout of American Seating in 1987. He soon launched an effort to cut costs and invested about $10 million in a plant modernization program. He also smoothed over differences with the union and negotiated a new three-year contract in the summer of 1988. Business quickly improved, with sales totaling about $140 million by the end of the decade.

Another wave of stadium and arena building provided a steady source of income for American Seating in the 1990s. The company installed seats in Denver's Mile High Stadium as well as Oriole Park at Camden Yard in Baltimore, a baseball park that harkened back to an earlier era and led to a number of similar baseball-only facilities. Football-only stadiums were also built across the country in the 1990s and early 2000s, replacing the multipurpose stadiums of the 1960s. As a result, American Seating had twice as many seating contracts to bid on, and in some cases even if it lost out on a job it could get a second bite at the apple. The New Comiskey Park, which opened in 1991 and was later renamed U.S. Cellular Field, hired American Seating in 2005 to replace the seats installed by a competitor. Other ballparks also hired American Seating to replace their seating, a decision made easier because fans were willing to buy the old seats as souvenirs at a price much higher than the new seats. This period also saw a rash of new arenas being built as team owners and communities wanted facilities that offered tiers of revenue-enhancing luxury suites. And as the boom in professional sports facilities began to wane, business picked up with colleges, which built new facilities and upgraded old ones in order to remain competitive in recruiting athletes for their lucrative football and basketball programs. Moreover, the alumni who gave major contributions to the universities wanted to sit in comfortable luxury suites and not benches from the 1920s. Never at a loss for product development, during this period American Seating also introduced the first heated outdoor stadium seat (employing thin electric heaters in the backs and bottoms), installed in a limited number in Orchard Park, New York, where the National Football League's Buffalo Bills played.

With much of its facilities a century old, American Seating was in dire need of an upgrade. Although a number of sunbelt communities courted the company, offering to build a new plant if it would relocate, Clark turned them down, electing to remain in Grand Rapids. "I couldn't see taking a company founded in the same spot in the 1800s and covering the factory windows with a bunch of plywood," Clark told the Grand Rapids Press in 2004. "Too many people worked hard to build this company. This is our home, and we're staying." As an expression of that commitment to the community—which had experienced a significant erosion in manufacturing jobs—and the community's commitment to the company, a new Transportation Seating factory was built in 1992 with government assistance. In the early 2000s American Seating made a further commitment to Grand Rapids, teaming up with investors and real estate investors to create American Seating Park, a $30-million project intended to revitalize a major portion of Grand Rapids, turning shuttered factories into apartments and offices. Part of the project included a refurbished headquarters for American Seating.

American Seating had found a flexible business mix by the start of the new century. Office furniture sales crumbled following the meltdown of the technology sector in the early 2000s. A number of companies went out of business and the market was flooded with used office furniture and equipment. But American Seating was able to make up the difference in transportation and architectural seating sales. The company bolstered the former with the 2003 purchase of Georgia competitor Transportation Seating Inc., a small company, but one that rivals also wanted. In addition, it also held a patent on a product American Seating did not have, a fiberglass shell-style seat used on military and prison buses. The sports business also continued to offer opportunities. A new potential source for contracts was with NASCAR, the popular stock car racing circuit. Many of its 32 tracks were massive, with seating capacities as high as 200,000. They also featured grandstands of steel benches, made all the more uncomfortable by the length of NASCAR races. Just as it had done more than a century before when it offered theater goers the tilt-back opera chair, American Seating developed a product to appeal to the race fan: a seat with a cup holder and closed-circuit radio/scanner holder to accommodate the scanners fans used to monitor radio communications between drivers and their pit crews.