Falcon Products, Inc.

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Falcon Products, Inc.

9387 Dielman Industrial Drive
St. Louis, Missouri 63132
Telephone: (314) 991-9200
Fax: (314) 991-9227
Web site: http://www.falconproducts.com

Public Company
Employees: 3,631
Sales: $222.5 million (1999)
Ticker Symbol: FCP
Stock Exchanges: New York
NAIC: 337127 Institutional Furniture Manufacturing; 332332 Sheet Metal Work Manufacturing

Falcon Products, Inc., is a fast-growing international manufacturer of commercial furniture products with significant shares of the fast-food service and contract office markets. The company focuses on providing its customers with high-quality products that address a wide range of both functional and aesthetic needs. Falcon manufactures such items as conference and training tables, fast-food restaurant booths, table bases, wood and metal chairs and seats, bar stools, and many other items. The companys headquarters is located in St. Louis, Missouri, while its manufacturing facilities are spread across the states of Arkansas, California, Mississippi, and Tennessee. In addition, the company has large manufacturing operations in China, Denmark, Mexico, and the Czech Republic. Although overseas markets provide a small percentage of Falcons annual revenues, company management is committed to increasing its volume of international sales significantly during the next ten years.

Early History

Falcon Products was founded in 1959 by Franklin A. Jacobs, a young man with an ambitious agenda. Jacobs had been schooled in the St. Louis area and worked a variety of odd jobs after graduating from college. He had always wanted to own and run his own firm, but had neither financial resources nor even an idea for establishing a business. After a number of years spent working in the retail furniture industry, however, Jacobs hit upon what he thought was a grand idea for a business. The young man decided to open a furniture sales organization with one product: table bases. Opening a sales organization didnt require the large amounts of investment capital normally needed for the construction of manufacturing plants, for example, and thus Jacobs was able to gather enough money from his own meager resources to underwrite his firms start-up expenses. Jacobss experience in the furniture industry had convinced him that success depended on meeting the needs of highly specialized markets. One of these niche markets was table bases for commercial use, and Jacobss company began selling a wide variety of such items for businesses in the restaurant, hospital, and corporate sectors. Finally, Jacobs needed a name for his new company, and he settled on Falcon Products, Inc.

From the very first day the firm opened its doors for business, Jacobs realized that it was going to be a success. By focusing on a single product line of table bases, and by using his contacts already established in the retail furniture industry around the greater St. Louis metropolitan area, Falcon Products was soon receiving a small but steady stream of orders. For five years Jacobs worked tirelessly and patiently to build up his companys customer base. As the style of office furniture and restaurant decor began to change from old-fashioned, heavy, dark wood to the sleek, modern streamlined style that became phenomenally popular during the mid-1960s, Falcon Products was well positioned to take advantage of the trend. Table bases were seen as primarily functional rather than decorative, and the small product line that the company sold fit nicely into the modern, more functional, style.

By 1965 Falcon Products had grown large enough to begin considering additions to its product line. Revenue was increasing, and Jacobs confidently expected his company to expand. Adding new employees and moving to a more spacious location, Jacobs cautiously decided to enter into the design and manufacture of laminated tabletops and bases. Having been until this time a sales organization, Jacobs was very methodical in beginning to design his own products and developing the manufacturing facility to produce them on a tight schedule. Once again, however, Jacobs had enough savvy and experience in the furniture industry to recognize the need for and growing trend toward laminated tabletops and bases, and was one of the first entrepreneurs to take advantage of this market. Easy to clean, lightweight, and portable, laminated tabletops fit in well with the functional style that was at the height of its popularity.

Expansion, 1970s

The decade of the 1970s was one of the most important for the company. Always wary of expansion, Jacobs was cautious about designing and manufacturing an entirely new product, but in 1970 he gave the approval for Falcon Products to start making a line of wooden chairs, and, once again, he had correctly assessed the market demand for the products. Once he had three items in his product line, with each of them selling strongly, he began to seek further opportunities. At first he considered adding additional products by designing and manufacturing them in house; however, this was a lengthy process, and Jacobs was ready to make a major foray into the commercial furniture products industry.

After extended consultations with his board of directors, and after listening to industry experts about trends and growth areas within the industry, Jacobs and his management team laid out a detailed plan of strategic acquisitions for the entire decade. In a departure from his earlier, extremely cautious management style, Jacobs embarked on an aggressive strategy of growth through acquisitions. In 1971 Falcon Products made its first purchase, acquiring a small but well-known company called Duro-Chrome that specialized in the design and manufacture of metal stack chairs. The company had established a reputation for solid craftsmanship and the use of high-quality materials. Metal stack chairs fit in well with Jacobss vision for his companys line of functional furniture.

Throughout the rest of the 1970s, Falcon Products continued to purchase other companies as a means of gaining market share. The acquisition of Duro-Chrome was followed by the purchase of William Hodges & Company, a firm that manufactured wire shelving primarily for corporate offices. This acquisition, finalized in 1973, enabled Falcon Products to take advantage of the burgeoning need for office accessories, which was quickly developing into a multimillion-dollar market. Since Chicago served as the center of the commercial furniture products and accessories industry, Jacobs knew that Falcon Products would be best served by gaining some exposure in that city. As a result, the company opened a showroom in the Chicago Merchandise Mart, a prestigious location frequented by industry professionals.

In 1975 Falcon Products acquired the companys first overseas facility. Located in Juarez, Mexico, the facility produced iron castings, which were then made into table bases at Falcons plants in the United States. One of the most important reasons for the acquisition of the facility in Juarez, besides the lower operating costs, was the availability of the raw materials in the Juarez area used in the manufacture of table bases. In 1980 the company acquired a manufacturing plant in Lewisville, Arkansas, in order to consolidate all of its wood chair manufacturing capabilities. Initially, Falcon made most of its wood chairs in house, but in time management discovered it could reduce costs by importing previously machined parts and then assembling them according to customer specifications.

During the 1980s Falcon expanded geographically as well as expanding its product line. Falcons main manufacturing plant in Greenville, Tennessee, was relocated to a much larger space in Newport, Tennessee. After the move, the firm was able to increase its output in table bases, table tops, millwork, case-goods, and booths. The majority of the cast iron table bases made at the Juarez facility were shipped to the Newport plant and completed to customer specifications. Table tops, which sometimes were combined with table bases to make a complete product, were provided with a wood veneer or laminated surface, and painted and sealed with a durable topcoat. Casegood and millwork were produced from lumber purchased in large quantities, while booths were manufactured from the same rough lumber cut in the millroom of the Newport plant and then finished and colored according to customer specifications.

The 1990s and Beyond

While Falcon Products continued its acquisition program with the purchase of a domestic firm, Kay dee Metal Products, which manufactured metal chairs, Falcons most significant acquisitions during the 1990s occurred overseas. One of the most important moves the company made was the purchase in 1994 of a controlling interest in Miton A.S., a firm located in the Czech Republic that produced wood chairs and wood chair parts for both domestic consumption and export. Under the leadership of Falcon Products, within two years the Mitón plant was shipping nearly 50 percent of its wood chair parts to the Lewisville facility for assembly and distribution. Finished chairs and chair components were soon shipped to an ever-increasing customer base in Europe and on the Pacific Rim.

Key Dates:

Falcon Products, Inc., established in St. Louis.
Company begins producing laminated tabletops and bases.
Falcon acquires Duro-Chrome, Inc., a manufacturer of metal stack chairs.
Company acquires manufacturing plant in Greenville, Tennessee, to produce booths and table products.
Kay dee Metal Products Company, a maker of metal chairs, is acquired.
Company reaches agreement with Kitazawa Sangyo Co., Ltd, in Japan, to distribute its products.
Falcon acquires Decor Concepts, Inc., a producer of fiberglass, wood, and metal products.
New manufacturing plant in Shenzhen, China, is set up for making metal seating.

In addition to purchasing U.S.-based firms such as Charlotte Company and Decor Products, the company continued to expand overseas by opening a manufacturing facility in Shenzhen, in the Peoples Republic of China. Manufacturing table tops and millwork, the new plant was soon selling its product line to customers throughout the Pacific Rim. At approximately the same time, Falcon Products opened a new facility in Middelfart, Denmark, to assemble and market table tops and chairs specifically for the conferencing, training, and executive dining market in Europe. All of these acquisitions and facility expansions achieved a vertically integrated manufacturing process, which enabled Falcon Products to compete more readily and gain market share in an extremely competitive industry that was growing more intense with each passing year.

In 1998 Falcon Products made an acquisition with major implications for its future success. The company spent $18 million to acquire Johnson and Howe Furniture Corporation, one of the largest and best-known firms in the industry. Located in Trumbull, Connecticut, and selling its product line throughout the United States and Europe, Johnson and Howe specialized in manufacturing a wide variety of tablesincluding meeting, dining, training, conference, seminar, and banquet tablesfor the hospitality, contract office, and institutional markets. Johnson and Howe, which had been in existence for more than 70 years, brought a new prestige to Falcon Products. Johnson and Howe had developed the folding table early in its history, and had recently introduced the 40/4 chair, which was purchased and used for major state occasions at St. Pauls Cathedral in London, England. In one swoop, Falcon Products increased its volume and reduced its operating costs. The result of the acquisitions and expansion strategy was impressive by any measure. From 1990 to 1998, revenues increased from $31 million to $143 million. Having acquired Johnson and Howe, consolidated and its domestic chair production facilities, restructured its sales and marketing operations, and vertically integrated its manufacturing, management believed that Falcon Products was moving forward with an enhanced position in a highly competitive marketplace.

Principal Subsidiaries

Shelby Williams Industries, Inc.; Johnson Tables St. Louis; Howe Furniture Corporation; Falcon Beky (Slovakian Republic); Falcon de Juarez S.A. de C.V. (Mexico).

Principal Divisions

Falcon Western Region; Falcon Midwest Region; Falcon Eastern Region; Falcon International; Falcon Government; KD/context; Decor Concepts.

Principal Competitors

Mity-Lite, Inc.; Virco Manufacturing Company.

Further Reading

Advisors Hired to Examine Possible Sale of Company, Wall Street Journal, December 3, 1996, p. B4(E).

Definitive Pact to Acquire Shelby Williams Is Struck, Wall Street Journal, May 7, 1999, p. A17(E).

Falcon Building Stock Surges on Talk of Sale, New York Times, December 3, 1996, p. D4(L).

Falcon Products Says It Will Acquire Shelby-Williams, New York Times, May 7, 1999, p. C4.

Falcon to Acquire Shelby Williams, Weekly Newspaper for the Home Furnishings Network, May 17, 1999, p. 22.

Leggett & Platt to Purchase Assets of Unit for $17 Million, Wall Street Journal, August 21, 1997, p. B2(E).

Shepley, Carol, Falcon Products, Inc., St. Louis Business Journal, September 22, 1997, p. 37A(11).

Vespereny, Cynthia, Falcon Refocuses, Sinks Its Claws into Europe,St. Louis Business Journal, March 23, 1998, p.3A(l).

Thomas Derdak