Furniture-makers hammer out deal to work together
Two established Christchurch manufacturers of high-end handcrafted furniture are collaborating to cut overheads and strengthen their businesses in post-quake Christchurch.
It's a move it would pay others in the industry to consider, they say.
Davies Furniture had to move out of its Blenheim Rd premises in June after a detailed engineering evaluation revealed its building did not meet the new seismic building code requirements.
Davies Furniture managing director Andrew Davies and Southern Creations director Blair Quane agreed Davies Furniture staff and more than half its equipment would relocate to Southern Creations' Bromley factory.
Within a couple of days the pair had reached an agreement based on little more than a handshake, and Davies' staff moved in a couple of days later. Quane said he was a "typical manufacturer" with overheads to pay and too much capacity at his workshop.
"There must be so many businesses like that at the moment.
"So it was an opportunity to cut overheads by not having too much capacity in the workshop," Quane said.
Now Quane runs the manufacturing operations side of what they have named The Design Workshop, and Davies runs the sales and marketing of three brands - Southern Creations, Davies Furniture, and Davies Furniture's new brand, Treology.
The arrangement allowed each to focus on different areas of the business.
Quane has taken Davies' staff on as his own, and Quane bills Davies for a percentage of the sale price of the pieces Davies markets and sells.
It would have been a "nightmare" to have two separate teams operating in the factory, because it would have been impossible to separate costs and materials.
But the businesses remain distinct legal entities and the three brands remain.
Davies says this business model is widely used in Udine, in Italy, where large workshops of artisans craft pieces for a variety of individual brands.
"It just makes sense. We're doing it on a very small scale."
The two agreed there were likely to be teething problems but open communication was key.
"Six weeks ago we were competitors. The reality is, as soon as you start going into this scenario you have to have an open-book situation," Quane said.
There were two key aspects to the business - sales, and making the product profitably.
"And we now have better purchasing power with our suppliers," Quane said.
Davies had had initially looked for alternative commercial premises but didn't find anything suitable - one option he had seen was asking 50 per cent more in rent, for 25 per cent less space than he had to pay at his former Blenheim Rd site.
"It didn't make sense."
Southern Creations' building was modern and purpose-built for furniture manufacturing.
Three years of recession had resulted in many New Zealand furniture manufacturers "dropping off" because of competition from imports.
"When we first introduced the guys it was like that first-form dance," Davies said, with one half of the staff on one end of the room and the other half at the other end. But a pool table and new jackets bearing all three logos had helped unite the 11 staff.
The collaboration also solved the difficulties Quane had been having negotiating with insurers as the business and its premises was now covered by Davies' insurers, for much lower premiums.