Innovation and technology yield financial success
In this snapshot of business adaptation and success, Phillips describes his ascent through his textile business and his business's ascent through the world of textiles. Textiles in North Carolina were, and are, connected to the state's thriving furniture business. Phillips realized that to profit, he needed to vertically integrate and update his business; he did so, transforming his company from a converter focused on American business into a technologically advanced business that exports a great deal.
Citing this Excerpt
Oral History Interview with S. Davis (Dave) Phillips, January 27, 1999. Interview I-0084. Southern Oral History Program Collection (#4007) in the Southern Oral History Program Collection, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.
Full Text of the Excerpt
Mr. Phillips, I thought we might start with just a quick sketch of your early involvements in the furniture business say coming out of school and going to work in your family's company. I'm going to ask sort of what the furniture industry looked to you like, looked like to you in that year.
DP: Well, I came from Chapel Hill and was able to join my father's textile business. The name of the company was Phillips-Davis at the time. It was a company that he had started forty some years previous. It was a converter, meaning you would buy and sell product. He had gone to certain mills like Cannon Mills and would buy it by the large contract and be able to sell it by the roll, which meant fifty yards, to the different furniture companies, not only in North Carolina but also in America. We didn't export a lot back then. North Carolina was known as the upholstery furniture capital along with the regular furniture, meaning casegoods. Since that time, the upholstered market has expanded all over to where it's from a transportation standpoint the pieces are bulky. So it's easy to set up an upholstery shop all over America. You have a strong upholstery market, not only in North Carolina but also in Mississippi in California and what have you. It's different than casegoods. Casegoods is when you're making wood products, the investment is so enormous, the brick and mortar and machinery. The amount produced at one time is necessary to make it competitive and that's where North Carolina really got its reputation as the furniture capitol because of the companies, Broyhills and Bassetts and Thomasvilles and what have you.
Then also North Carolina now maintains its reputation as the furniture capital of the world because of the showrooms in High Point. About eight million square feet are located in High Point that show furniture twice a year for about ten days, which seems an enormous investment, which it is. But there used to be lots of regional markets, New York, Chicago, Los Angeles, San Francisco, Dallas, and Atlanta. All of those regional markets now have basically disappeared or become very small in their particular region. Now High Point is sophisticated enough to where people can come, have a drink, stay in a decent hotel and can accommodate all the people from around the world.
High Point when I first got into business in 1966 in the textile end of the business, my father had been in the foam business and the spring business, which are suppliers to the furniture industry. He was also in the factoring business. But you might think what commonality is there among all this and it is simply the customer. That client that you get to know, you sell them all these different products. So it's that relationship. Then the showroom business is a part of it. My family has been involved in many aspects of the furniture industry as suppliers. We've never manufactured furniture per se. I was thrilled to get into the textile end of the business because I thought it was very creative, very dynamic. The foam business wasn't as exciting. It was more of an engineered type product as was the spring business. The factoring business is almost an engineered product. Anyway, I had the opportunity to get in the textile end of it.
Over the next ten years I learned that the need to be vertical, to control your own manufacturing was going to be very important. That's where you're going to make the most money, but also the need to simply survive. The old days of being a converter were limited in my opinion. I was the first quote converter to go out and buy a manufacturing plant. I did that in the mid-seventies. My father died in '75. He was ill for several years. In '74 is when I actually bought into a manufacturing plant. Within the next few years I bought control and a hundred percent ownership. That's been the basis of our evolution from Phillips-Davis the converter to Phillips Mills the vertical textile mill. Then we bought other plants. We started exporting. We computerized. We had state of the art machinery. It became a very sophisticated, stylish but commercial product. We sold the likes of the Broyhills and Bassetts and La-Z-Boy who in turn sold to the Sears, the Wards, the Levitt's. So it was mass America. By the time I sold the business a year and a half ago, we had become the tenth largest, within the top ten, ranked eighth or ninth largest upholstery fabric mill in the world. We export a lot of our products, up to one-third, to the world markets: the Middle East, a lot of business in places like Turkey and Saudi Arabia, a lot of places in the old Soviet Union, Poland, Russia, very little to the Far East, some to Australia and New Zealand, very little to South America, Latin America. At one time we had a manufacturing plant in Canada. When free trade came about, we sold that plant because we couldn't compete with ourselves. Prior to that we would simply manufacture in Canada what we had created in America and had already sold and had commitments to the Canadians for. They simply made it up there. With free trade, all that changed. But anyway that was a very exciting episode in my life to where we took a small business and built it up to doing a substantial amount of business and sold it for a lot of money. It took good people, quality people. They are all still a division of Culp. Culp has retained the name of Phillips, which I'm proud of, which my father would've been proud of.