Stanley Furniture Laying Off More Than 500

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STANLEYTOWN - It’s another blow for the Martinsville-Henry County area.

Stanley Furniture announced Wednesday that it expects to lay off 530 people at its plant in Henry County as part of a restructuring plan.

The company plans to move the majority of the manufacturing of its adult furniture line from Stanleytown to several offshore vendors.  Workers heard the news Wednesday afternoon.

A handful will leave immediately, but the majority will be let go between October and December.

Governor Bob McDonnell, Lieutenant Governor Bill Bolling, and Rep. Tom Perriello released statements on the layoffs. Click here to read them.

PRESS RELEASE

STANLEYTOWN, VA -- May 12, 2010 -- Stanley Furniture Company, Inc. announced today a restructuring plan setting a path toward profitability. This plan includes the following major components:

The Company will transition the majority of the manufacturing of its Stanley Furniture adult product line from its Stanleytown, VA facility to several strategic offshore vendors with whom it has existing working relationships. A substantial portion of the Stanleytown facility will become a warehousing and distribution center. In addition, the Company will retain a domestic assembly and finish process in its Martinsville, VA facility to continue offering multiple finish options on certain items across various product lines. These actions will take place over the balance of 2010. The Companys Martinsville, VA facility is currently used for warehousing.

The Companys Young America nursery and youth product line will continue to be exclusively manufactured in its Robbinsville, NC facility, except for certain component SKUs of nominal revenue phased over to the Companys offshore vendors to lower cost.

We believe any sound business must have a strategy which satisfies customer needs and differentiates itself from its competition, said Glenn Prillaman, President and Chief Executive Officer. Domestic manufacturing seamlessly blended with overseas sourcing has been the hallmark of our Companys operations model for over ten years. Over that time period, the driving factors of demand for each of our two major product lines have become increasingly unique and we must adjust to address these changes in the marketplace.

Staffing levels at the Companys Virginia locations are expected to be reduced by approximately 530 positions as the restructuring plan is implemented with most of the reduction anticipated in the fourth quarter of 2010. Weve put up a fight as long as we could; maybe longer, Prillaman noted. Our Stanleytown associates have maintained their belief in our Company and themselves, giving their very best effort even in the most challenging of situations. Our local community has shown a tremendous amount of support for our efforts in Stanleytown as we remained profitable in this, our flagship facility, as recently as late 2008.

This is the ultimate testament to our people as well as their skills, craftsmanship and dedication. They should all hold their heads high as they accept a painful but necessary decision driven by factors beyond their own control.

Our focus on domestic production for our Young America line remains essential for our quick ship efforts and our overall product offering, Prillaman continued. We continue to serve our Young America customers with differentiating features such as multiple finish options and functional flexibility, as well as new innovations we have introduced to the residential furniture market such as Greenguard® and Intertek® product safety certifications. Our transition away from overseas sources with this product line began late last year and it continues to challenge us. We believe we have dedicated the appropriate resources to improve our efficiencies in our Robbinsville, NC facility where the majority of this product line is made, and we are implementing a price increase charging for the features and benefits we have added to this product. Importantly, we are initially seeing a positive response from retail channels embracing our new brand story. Conversely, the luxury segment of the adult market demands such sophisticated finishes, exotic materials and labor-intensive features that domestic manufacturing in our Stanleytown facility can no longer profitably provide.
After a significant amount of careful planning, we are taking decisive actions to establish a path toward profitability, Prillaman said. Due to the depth and length of this recession and the continued sluggishness of the housing market, many of our end consumers simply are not in the marketplace for premium residential wood furniture. Unfortunately, the decrease in demand for premium residential wood furniture has resulted in a unit volume well below the amount necessary to support a facility the size of Stanleytown. We deeply regret the impact this will have on our associates affected by this decision.

Prillaman goes on to say, We have decided, as we did with our Young America nursery and youth products in mid-2009, to embark on a renewal of our Stanley Furniture adult product line. We still believe there is meaningful sales volume and growth available to a leader in the luxury segment of the marketplace. We have worked diligently to secure strong partnerships with our overseas suppliers as we have sourced a substantial portion of our current adult product line with these suppliers for some time.
We believe we can differentiate our products by creating more tasteful fashion and styling at an accessible value for todays changing consumer without merely utilizing Asian manufacturing to source commodity furniture and market solely on price. We believe our remaining domestic manufacturing efforts will add substantial value and further differentiate our products from competitors in our price segment. We think an increasing number of affluent consumers around the world seek choice and customization. Additionally, our retailers need timely product support and service. It is very difficult to face the fact that consumer demand will no longer support the livelihoods of so many, but our Company must move forward. With our new plans, we believe Stanley Furniture will thrive once again, playing an influential role in our segment of the furniture industry, Prillaman concluded.

The Company also announced that Albert L. Prillaman will retire as Chairman at the end of the year. I am confident in the Companys strategy with the restructuring plan announced today, Albert Prillaman said. Now that the transition to a new CEO is complete and we have developed this restructuring plan, the end of the year is an appropriate time for me to step down as Chairman. Albert Prillaman, who turns 65 in December 2010, will continue to serve as a director.
The Company also announced that its Board of Directors has elected Michael P. Haley as lead director. Mr. Haley has served as an independent director since April 2003 and is Chairman of the Corporate Governance and Nominating Committee of the Board of Directors.

To ease the transition for affected associates, Stanley Furniture will work closely with the Virginia Employment Commission and the West Piedmont Workforce Investment Network to provide career counseling, job placement, skills assessment and job referrals. The Company also has a petition pending with the U.S. Department of Labor for Trade Adjustment Assistance. If certified, associates may be eligible for training programs, job search allowances, potential relocation allowances, income support and health care tax credits.

Established in 1924, Stanley Furniture Company, Inc. is a leading manufacturer of wood furniture targeted at the accessible segment of the luxury wood residential market. Its common stock is traded on the Nasdaq stock market under the symbol STLY.

Forward-Looking Statements

Certain statements made in this report are not based on historical facts, but are forward-looking statements. These statements can be identified by the use of forward-looking terminology such as believes, estimates, expects, may, will, should, or anticipates, or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. These statements reflect our reasonable judgment with respect to future events and are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include our success in transitioning certain Young America products to our domestic manufacturing facilities, our success in transitioning our adult product line to offshore vendors, costs relating to the transitioning of the Stanleytown facility to a warehouse and distribution center and transitioning the Martinsville facility for domestic assembly and finish processing, the cyclical nature of the furniture industry, business failures or loss of large customers, competition in the furniture industry including competition from lower-cost foreign manufacturers, disruptions in offshore sourcing including those arising from supply or distribution disruptions or those arising from changes in political, economic and social conditions, as well as laws and regulations, in countries from which we source products, international trade policies of the United States and countries from which we source products, manufacturing realignment, the inability to obtain sufficient quantities of quality raw materials in a timely manner, the inability to raise prices in response to inflation and increasing costs, failure to anticipate or respond to changes in consumer tastes and fashions in a timely manner, environmental, health, and safety compliance costs, and extended business interruption at manufacturing facilities. Any forward-looking statement speaks only as of the date of this press release, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

SOURCE: WSET ABC 13