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Excerpt from Oral History Interview with Bobby Wesley Bush, Jr., June 21, 2000. Interview I-0088. Southern Oral History Program Collection (#4007) See Entire Interview >>

Financial Problems in Corporate Expansion

Bush explains different challenges Hickory Springs Manufacturing Company faced in the 1980s and 1990s as it diversified and sought to establish itself as a national supplier. In particular, Bush discusses how credit was a particularly problematic issue in its expansion. Additionally, he describes Hickory Springs's failed effort to successfully take over a company that had gone bankrupt. In each instance, Bush illuminates the unique problems that well-established regional corporations faced in the late twentieth century as they sought to expand in the national market.

Citing this Excerpt

Oral History Interview with Bobby Wesley Bush, Jr., June 21, 2000. Interview I-0088. 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

KATHLEEN KEARNS:
OK, but economic changes out there and changes in the furniture market out there kind of forced Hickory Springs into diversification.
BOBBY BUSH:
Absolutely. And we had other issues, like credit. When we moved out in '86, we had no real working credit knowledge of our customer base out there. Those companies, particularly the smaller ones, tend not to put money back into their companies. The owners pull out the cash, so therefore they have very little or no net worth.
KATHLEEN KEARNS:
You're talking about customers?
BOBBY BUSH:
Yes, our customer base out there. And if you sell them, you want to get paid. And our credit department looks at net worth. Well, if they have no net worth, how do we know we're going to get paid? And it was quite an issue for a lot of years. We're taking more risk in California from a credit standpoint than we are anywhere else in the country as a region. And everybody knows that up front. It's just an issue you deal with out there. The lifestyle out there is such that our customers want to drive their fancy Mercedes and have a company car for everybody in the family. This better not be in the book. But they spend their company's money, and a lot of times they spend it on themselves and call it company expenditures. But they have no net worth, and it was really a conundrum for our credit department because they didn't know how to deal with it. We're used to dealing with forty-, fifty-year-old companies here that pay their bills like clockwork. You've got guys out there who didn't pay his bills this week because he had to make a payment on his child support or something like that. Or they had to buy a gold chain for their eighteen-year-old son. So it's just a different lifestyle, different world. It's a different country. And if we had to consider going to the West Coast today, if we didn't have any operations out there and it was an opportunity to enter that market, I don't know that we'd do it. [Laughter] I think if we knew then what we know now, I don't know that we would have done it back fifteen years ago. It's tough. We've spent a lot of money trying to be a national supplier, and I don't know that it was all well spent. In fact, I know it wasn't all well spent, and I was involved in a lot of that. Buying a bankrupt company was probably the biggest mistake we've ever made as a company.
KATHLEEN KEARNS:
That being United Foam?
BOBBY BUSH:
Yes. We bought the assets at a bankruptcy, and then we hired the people that helped put in into bankruptcy to run it for us. Hindsight's wonderful, but I'll never be involved in something like that again.
KATHLEEN KEARNS:
I guess that counts as one of the things the company learned by doing.
BOBBY BUSH:
Yes. Well, we used to buy-not just with California-we used to buy companies that were struggling, some a lot smaller, that weren't making money, but thought we could come in and turn them around, through our sales expertise or our production methods, that we could make something out of it. We haven't been successful with that, so I think it was a couple years ago, maybe longer, three years, in one of our managers' meetings, it was almost unanimous, a decree, that we weren't going to buy companies that were losing money any more. We wouldn't even consider them. You find well-run companies that are doing things right, and you buy them. You add them to the Hickory Springs family and you let them run. Highland Fab is the best example of that, up in High Point. They make mattresses for sofa sleepers and they do a little bit of foam fabrication as well. It's still called Highland Fab. The people we bought it from, the owner and his son, are still involved in the business, and as far as I know they're still making pretty good money.
KATHLEEN KEARNS:
What year was that decision made, that we're not going to do this anymore?
BOBBY BUSH:
Probably three years ago, '96, '97, something like that.