Founded: 1941 as Krueger Metal Products
Sales: $600 million (2002 est.)
NAIC: 337211 Wood Office Furniture Manufacturing; 337212 Custom Architectural Woodwork and Millwork Manufacturing; 337214 Office Furniture (Except Wood) Manufacturing; 337215 Showcase, Partition, Shelving, and Locker Manufacturing
KI is one of the leading designers and manufacturers of contract furnishings in the United States, producing several lines of desks, tables, workstations, chairs, filing cabinets, and wall panel systems for commercial and institutional settings. Customers include corporations, healthcare facilities, government agencies, schools, and colleges. Furniture designs combine contemporary styling and a practical attitude toward customer concerns for ergonomics, flexibility, and the requirements of electronic office tools. KI is involved with many known designers, including chair designer Giancarlo Piretti and textile designer Lori Weitzner. KI products are available through interior designers, architects, and furniture dealers, as well as the company’s own sales representatives. Showrooms are located throughout the United States, and, internationally, in London and Kuala Lumpur. KI caters to the specific needs of its customers, following a philosophy that each customer is “a market of one.” For maximum flexibility and responsiveness, the company is structured for decentralized responsibility and decision-making processes.
Company Origins: From Metal Folding Chairs to Office Furnishings
Al Krueger founded Krueger Metal Products in 1941 to manufacture basic metal folding chairs. The demands of war-related manufacturing created a scarcity of steel and other metals, however, forcing Krueger to be innovative in procuring and using raw materials. Based in Aurora, Illinois, he purchased excess metal from manufacturers in the Chicago area and designed a unique manufacturing system adaptable to the kinds of materials available. Krueger Metal Products became the world’s largest manufacturer of metal folding chairs and operated profitably by efficiently manufacturing folding chairs and multipurpose tables and chairs for institutional and commercial customers.
In the early 1970s the company entered the market for contract office furnishings, fulfilling special orders for office furniture through interior designers, architects, and other agents. Through a licensing agreement the company manufactured and sold office furniture designed by Italian furniture maker Castelli. The company opened a factory in Treviso, Italy, producing goods for customers in Europe and the United States. Krueger Metal Products took the name Krueger International to reflect the company’s new product and geographic range.
In 1977 Krueger International introduced the Vertebra office desk chair by renowned Italian chair designer Giancarlo Piretti and Emilio Ambasz of Argentina. The Vertebra chair became famous, being the first desk chair to provide passive ergonomic body support. The Vertebra was a precursor to the future of office design, which took into account the repetitive motions of office workers, especially as the desktop computer became an essential office tool.
1980s: Shift to Employee Ownership Corresponding with Changes in Business Philosophy
In 1980, 12 years after the death of Al Krueger, the Krueger family decided to sell its ownership in Krueger International. Richard Resch, then vice-president, led a management buyout of the company. Resch, who started working at the company in 1964, risked his personal financial security in order to fund the acquisition. Company managers obtained a 49 percent stake and Northwestern Mutual Life Insurance held a 51 percent stake. In 1986, management bought Northwestern Mutual’s interest in Krueger International through another leveraged buyout. The company, renamed KI, became 100 percent employee owned.
By 1990 KI factory employees became eligible to purchase stock, available on a cash basis rather than through options. Later, KI extended ownership opportunities throughout the company, for some employees, through retirement and 401K plans. Resch hired a New York investment firm to determine stock value for KI’s internal stock market. For Resch employee ownership was integral to his plan to initiate quality circle management practices on the factory floor as well as in company offices. In a democratic, rather than a bureaucratic, work environment, employee-owners took responsibility for quality service, productivity, and efficiency and had a stake in the success of the company beyond receiving a regular paycheck.
The management program required Resch to decertify the machinists union, which strictly limited the roles each worker could perform. In team-based management, cell (manufacturing unit) members performed whatever work was required based on where an order was in the production process. The rigid job description and financial security offered by the union was replaced with multiple tasks and pay incentives. Through the pay-for-knowledge program, factory employees obtained raises based on new knowledge and skills acquired and everyone was expected to learn how to read the company’s financial statement, to use a computer, and to drive a forklift. “Gainsharing” provided monthly bonuses when workers met quality and budget standards.
In addition to greater manufacturing efficiency, the team management manufacturing process provided more flexibility in production. Resch advocated a philosophy that each customer is “a market of one,” with unique requirements for organizing office space and new electronic tools. Rather than manufacture a mass of goods and then market them, KI adjusted to the changing needs of business, created by the newly computerized office operations.
Influence of Desktop Computing: 1980s
During the 1980s, office furniture designs increasingly accommodated requirements created by widespread installation of desktop computer systems for general office use. A horizontal, flexible desk arrangement provided space for computer and electronic equipment and adjusted to actual use. KI’s COM System, designed in Italy, provided a system of wire management and modules that could be clustered for collaborative work situations or an open space office, such as that common in Europe. In the United States workers tended to prefer individual spaces, so KI unveiled wall panels that offered cubicle-style privacy for individuals or small work groups. In 1989 KI introduced Systems Wall, a movable, multi-changeable, fullheight panel system utilizing frames for wall panels and doors; Systems Wall allowed for office reconfiguration without having to destroy and rebuild permanent walls. KI developed the Data Board line of computer workstations, which featured slide-away and adjustable-height work surfaces for efficient body movement in the electronic work environment. For instance, keyboard drawers slid under the desktop when not in use and adjusted to the chair and body height of the computer user.
Sales at KI tripled during the 1980s, exceeding $180 million in 1990. To accommodate growth KI built a new factory in Manitowoc, Wisconsin, for the production of moveable walls and furniture systems. Opened in 1985, KI expanded the facility two years later. KI formed Pallas Textiles in 1988 to design and market upholstery, textiles, and fabrics for use in the manufacturing of chairs and wall panels, as well as for window treatments and wall coverings.
By 1990 KI had become the eighth largest manufacturer of nonresidential furniture in the United States. The company produced 50 different lines of chairs, primarily designed by Piretti, and a variety of desk workstations. KI operated three factories in Wisconsin and two in Mississippi. KI marketing involved advertising in magazines, such as Interiors and Interior Design, and displaying goods through showrooms in New York, Boston, Washington, D.C., Chicago, Dallas, Houston, Los Angeles, and San Francisco. Prominent customers included Shell Oil Company, Sun Microsystems, Northwestern Mutual Life Insurance, and J.C. Penney.
Furniture by renowned designers contributed to KI’s success. In 1991 KI introduced the popular Perry chair, designed by sculptor and architect Charles Perry. The Perry chair involved a flexible, single-piece frame that supported the lower back by adjusting to the user’s weight and forward and backward movements. For ease of transport and storage, the chairs were designed to be stacked up to 25 high and moved on a dolly. One of the unique features of the chair, as a stackable chair, was the option of a comfortable cushion, available in seven colors. Several publications featured short articles on the Perry chair, including Time and Fortune magazines, the Wall Street Journal, and the New York Times.
Every member of the KI team is committed to being customer focused and quality driven. Because KI is employee-owned, we all have a vested interest in helping our customers attain their goals and objectives through the creation of technically innovative solutions. KI is a member of your team —working for you.
1990s Growth Through Manufacturing Expansion and Acquisitions
During the 1990s KI’s internal growth created a demand for increased manufacturing capacity. On the urging of an employee, Scott Deugo, KI purchased the Storwal International factory in Pembroke, Ontario, Canada, in 1992. Storwal manufactured steel file cabinets and drawer pedestals for several years, until the factory closed in 1991. Deugo worked at Storwal as a designer, but Storwal rejected his ideas. Deugo persuaded KI to renovate the factory and to create new designs for the burgeoning home office business.
KI invested $7 million in Pembroke operations, including product design. Renovation began with the removal of comfortable offices located in the center of the factory floor, originally placed there for management oversight of production workers. KI implemented its quality management structure of self-directed teams and planned to initiate stock options five years after all debts of the facility were paid, including a $750,000 loan KI received from the city of Pembroke. In early 1993 the factory reopened with 140 employees, manufacturing nine lines of steel filing cabinets, many in attractive contemporary designs.
Investment in the Pembroke facility proved worthwhile as employees, many of whom had worked for Storwal, effectively operated the factory and won the Canada Award for Excellence in 1996. The award was based on three years of financial results, in which time Pembroke fulfilled furnishing contracts for Microsoft, Sun Microsystems, and banks in the United Kingdom; a contract with Office Depot provided office furniture for the home office market. In 1995 sales at the facility reached C$60 million. Employment peaked at 400 in 1995, declining to 320 jobs after completion of a large manufacturing contract.
KI increased its manufacturing capabilities in the United States as well. The company expanded the Manitowac plant, adding 68,000 square feet and creating 100 jobs to produce two lines of computer furniture; production began in May 1997. In 1998 the company relocated its Gillett manufacturing to a former pickling plant in Bonduel. The 220,000-square-foot plant represented a 50 percent increase in production space for new product lines.
KI pursued a strategy of acquisition to complement the company’s existing product lines. In 1998 KI acquired AGI Industries of High Point, North Carolina. AGI produced tables and soft lounge seating for institutional and commercial customers, including the healthcare industry. AGI brought to KI the award-winning Gorka line of stylish desks and stackable chairs, designed by Jorge Pensi. KI further expanded into the healthcare seating market with the acquisition of ADD Specialized Support Technology in Los Angeles. In 1999 KI acquired Period Furniture, of Henderson, Kentucky, maker of solid wood furniture for college dormitories and U.S. government housing.
KI’s largest acquisition, in July 1998, involved the Space-saver Corporation of Fort Atkinson, Wisconsin. A manufacturer of rolling shelf systems, Spacesaver products provided efficient use of storage capacity by constricting aisle space and using that space for movable shelves; at the push of a button, the electronic system activated shelf movement to create an aisle where the materials desired would be accessible. Spacesaver systems suited situations where ample storage space was required for books or files, including healthcare facilities, offices, libraries, and museums. KI expected to open new markets for Spacesaver products. With $43 million in revenues in 1997, Spacesaver would make a significant contribution to KI’s revenues as well, at $450 million in 1997.
Continuing Innovation Amid Economie Downturn: Early 2000s
As the national economy expanded during the late 1990s, high technology and rapid growth companies made new demands on office furnishings. A contract with Sun Microsystems during the mid-1990s led KI to develop new systems adaptable to rapid changes in office structure prompted by mergers, downsizing, or new projects. Led by Niels Diffrient, the KI design team visited the Sun Microsystems headquarters in Mountain View, California, to assess the company’s needs, primarily to eliminate cubicles in favor of open space for team collaboration. KI custom designed and manufactured modular, freestanding tables, moveable shelving, and a wall panel system that provided flexibility in reorganizing workstations.
In an open office, wire management became more of an issue in office furniture design. Wires could no longer be hidden behind desk panels, so KI designed PowerTowers, a unique overhead wire management tool. A floor-to-ceiling tower allowed power and data catalysts to be connected or disconnected easily. The towers, which managed wires and cables for up to four workstations, and wire-free panels facilitated a flexible, nonlinear process of office reconfiguration and allowed customers to easily reconfigure office space with a minimum of power disruption. KI branded the new office system Flexible Workspace. In 1998 the product won the Best of Competition award at NeoCon, the contract furnishing industry’s largest annual trade show.
- Al Krueger founds business to produce metal folding chairs.
- Sales to commercial and institutional customers near $4 million.
- The first passive ergonomic desk chair, the Vertebra, is introduced by KI.
- The Krueger family sells ownership in the company to management and investors.
- Senior management obtains 100 percent ownership of KI.
- A system of employee stock ownership is implemented.
- The Perry stackable chair is launched, gaining much media attention.
- Flexible Workspace office system wins Best of Competition at NeoCon, the contract furnishings trade show.
- KI products win six awards at NeoCon.
For the education market KI designed Einstein brand furniture, primarily for the elementary and high schools (Einstein was renamed Intellect in 2003 for copyright purposes). Introduced in 1998, the products involved tables and chairs that were lightweight, durable, flexible, and functional, to meet the needs of group and individual activities. Available in a variety of sizes, the furniture accommodated everyone from preschoolers to adults. Other products included Torsion on the Go chairs, with movable arm tablets, which were deemed good for student posture and featured a leg base design that made them difficult to tip back on. All Terrain mobile tables included larger tables for art classes. KI offered the furniture in a variety of colors, as well as in curved designs for lobby areas.
With much of the contract furnishings business dependent on high-technology companies, KI experienced a sudden drop in new orders in early 2001 as activity in the high-tech economy slowed. KI management made a strategic decision to continue developing innovative furniture to maintain a competitive edge despite economic uncertainty. At NeoCon 2002, that decision resulted in KI winning six awards. In the Architectural Products and Finishes category, KI won the Gold award for its Genius Full Height Movable Wall. Constructed with aluminum, the three-and-a-half-inch thick panel provided excellent sound absorption while being light in weight for ease of movement. The Genius walls were designed with contemporary aesthetic qualities, including rounded shapes and smooth finishes. Spacesaver’s Designer Series won a Gold award in the Files & Storage category for its wide variety of design and finishing options. Spacesaver also won a Silver award for its TouchPad Release, which utilized a four-digit pin security. Pallas Textiles received a Silver award for innovation for its new Alloy panel fabric. Designer Michael Laessle looked to military technology to interlock polyester crepe with aluminum, creating a durable, textured fabric with a beautiful sheen. The Wharton Lectern, designed as a technology hub for classrooms and auditoriums, won a silver award for the Workplace Technologies category.
While economic difficulties continued in 2002 and 2003, KI endured better than some of its competitors. KI laid off few employees and temporarily cut employee hours in customer service and finance. The company experienced a sales increase of 15 to 20 percent in healthcare seating in early 2003 and maintained its number one market position in institutional furniture. New product introductions for 2003 included seating in minimalist designs. The Piretti Dance Chair, a lightweight, flexible-back, folding chair, provided easy stacking and nesting for compact storage. AGI introduced Grand Salon lounge furniture, designed by David Allan Pesso and inspired by 1930s and 1940s styles.
ADD Specialized Support Technology; AGI, Inc.; Pallas Textiles; Period Furniture; Spacesaver Corporation.
Haworth, Inc.; Herman Miller Inc.; HON Industries, Inc.; Kimball Office Group; Steelcase, Inc.; Trendway Corporation.
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