Prior to last year, few in the office furniture industry gave much thought to Safco and its parent company, Liberty Diversified International. Safco was LDI's transactional furniture brand, selling mostly through big box stores and Internet retailers like amazon.com. All that changed when the company acquired Focal Upright Furniture, one of the most innovative, new office furniture makers to enter the market in years.
It opened up the mid-market brand to a smartly designed, slightly quirky bunch of products that speak to a different way of working. Later last year, the company purchased Mayline, further opening the contract market.
So what is this company that is making such a push into the contract furniture industry? Given the aggressiveness of its entry into the arena, you might mistakenly think LDI is a faceless conglomerate, intent on squeezing as much profit out of its companies as it can. A hug from Mike Fiterman quickly dispels any such thoughts.
The chief executive officer of LDI is a self-described hugger, an unexpected personality trait for a third-generation owner of one of Minnesota's largest family-owned businesses. But it is a good place to start when trying to understand this business, which has interests in everything from office furniture to corrugated fiberboard, retail displays, plastics and fiber recycling.
LDI is Minnesota-Midwest nice. The company cares deeply about its 1,900 employees. Fiterman believes the company exists to serve them and its customers, not his family's pocketbook.
Maybe that's because of its history, a true American success story of a Russian immigrant who worked hard and built a substantial business. Started in 1918 by Jack Fiterman, the company got its start refurbishing burlap bags and wooden boxes that he collected from area farmers. In the 1920s he realized the potential of the corrugated packaging industry and made the switch to boxes. By 1959 the packaging market was so large the Fiterman family created two more companies to meet consumers increasing needs.
Presentation Packaging was founded to cater to the needs of the decorative packaging market, and Protecta-Pack Systems was founded to serve the needs of the transport packaging market. Jack Fiterman's son, Ben, was named CEO in 1966, shortly after the company moved its production into a new facility in Golden Valley, Minnesota. That same year the Fiterman family founded Safco Products, offering wholesale distribution of office products to local and international businesses. In 1970 Mike Fiterman joined the family business and in 1972, Liberty Diversified Industries was created to handle the marketing, legal, human resources, accounting, information services and transportation services for its manufacturing and marketing operations. LDI experienced rapid growth with Valley Craft joining LDI in 1979 and Diversi-Plast in 1983. During this period Mike Fiterman, grandson of Jack Fiterman, was formally named president and CEO of LDI.
“We've changed a lot,” Mike Fiterman says. “But our legacy of value, being trustworthy and being an innovative company continues. My grandfather's favorite day was March 15 — tax day (at that time it was a month earlier than it is today) — because he thought paying taxes was like paying a debt of gratitude to the country he loved. He was so proud to be able to pay taxes.”
During the 1990s and into the new millennium, LDI has continued its growth with the founding of Liberty Fibres, Liberty Paper, Dreamworks Coating Solutions and the addition of Milltronics CNC Machines. Most recently, LDI added San Diego-based Harbor Packaging, Focal Upright Furniture and Mayline.
LDI is good at managing acquisitions, but the company is still working on how its newfound brands in the office furniture industry will work together. Don't confuse careful consideration with confusion. The company wants to find the best mix of its brands, all of which have value. Regardless of how Safco and Mayline go to market, they will not abandon their mid-market roots. Of that, they are certain.
Here's what we do know: The Focal Upright Seating brand is being folded into the Safco Active line, but will stand alone as a product category. Will the Safco brand focus on the transactional business and Mayline the contract side? That remains to be seen.
Adding two businesses in a single year is never easy, and there have been some growing pains. The Focal acquisition happened just before NeoCon, and Mayline was quickly added. As Mayline was added, the Focal integration suffered, the company admits. With a little time to breathe and a lot of planning time, that has been corrected. Focal and its founding team of Martin and Mary Keen are working hard to make sure their vision of active work remains at the forefront. And the Safco team is pleased they can tap into the Keen design philosophy.
Mayline not only further opens the contract furniture industry, it also adds American office furniture manufacturing. Mayline has several manufacturing locations in Sheboygan, Wisconsin, and a distribution center in North Little Rock, Arkansas.
Safco has traditionally focused more on the office product dealer. Mayline has focused on the contract furniture dealer. Together, Safco General Manager Paul Griffiths says the brands can do better. “(The acquisitions) are strategically important and add more to what we can do for our customers, but we are trying to be true to the mid-market,” he says.
It is important to note LDI is not a fund, nor a portfolio company, says Mark Schumacher, chief operating officer. It is a family-owned business. Still, the additions of Mayline and Focal help “balance our channels so we can be quicker.” The acquisitions were a direct result of the company listening to its customers. “(The acquisitions) give us a little more heft. We are showing up larger (in the office furniture industry),” he says.
Mayline and Safco both have strong brands — one 75 years old and the other 50 years old. Adding to that, the Keens' visionary line of perch seating, work stations and conference products will grow more. Together, they will be better the company believes.
And there are very few duplications in the combined product lines. Together they have 11 product managers, 12 engineers and two designers. The companies also use global-based furniture designers. Though the company hasn't made final decisions on exactly how its brands will go to market, Amy Kiefer, director of marketing, says they are looking at a good, better, best model. Safco has about 70 percent transactional business and 30 percent contract. For Mayline, those numbers are switched, with about 70 percent coming from contract and 30 percent from transactional. Focal has strengths with both contract and online sales.
“We have the insight and innovation, and now we are working on how to take that to market,” says Kiefer, who worked for KI before joining Mayline prior to the acquisition. “Not only do we have to think about different customers, but different markets and e-tail (online retail).”
Whether the company is successful will depend largely on the leadership team, all of whom came from larger organizations. “Working with them has been a joy,” Griffiths says.
Strategy will be critical going forward. “We had been growing in the contract area, but slowly, competing against generic brands,” Griffiths says. “We are going to be a product innovator, but in our own way so we can bring that to the masses, mid-market with good aesthetics.”
Safco and Mayline won't be competing against the industry majors. Instead, Griffiths says the company is “happy to be your No. 2 office furniture supplier” with great products and service.