On Friday (October 7, 2016), HNI Corporation approved the closure of its Orleans, Indiana office furniture manufacturing facility which was also known as the Paoli office furniture plant. HNI acquired Paoli in 2004.
About 350 employees will be affected by the plant closure.
“The people there have been great, and they have made quality products,” said Gary Carlson, vice president of community relations for HNI Corp. said Friday morning in a phone interview with the Times-Mail. “It’s a difficult decision, and one we regret making. However, it is a business decision, and we will try to do the best we can by our people.”
Carlson said the plan is to begin phasing out the manufacturing operations in January. Some departments may leave the facility early in the year while others won’t be phased out until next fall.
“We want to be very transparent in this process to help our people transition,” Carlson said. “We are phasing it out, not going in and closing it immediately. We will continue to work with people on the transition and offer severance packages.”
Amanda Hampton of Mitchell, a seven-year employee of Paoli Inc., will be among those affected by the closure.
She said the company told employees Thursday that there would be a meeting this morning. That meeting, which happened about 8:30 a.m., explained the closure process to the employees.
“We’ve heard the rumors for years, but you just don’t know what to believe,” Hampton said. “I think it hit me last night. I’m still kind of in shock. I’m not sure what I’ll do, but I believe that for every door that closes, another opens.”
Carlson said the company will likely move the Orleans manufacturing processes to HNI companies in Iowa, North Carolina and New York. Some portions of the business, such as administration and sales and marketing, will stay in southern Indiana — just not likely at the Orleans facility, Carlson said.
“Some decisions are still not set in stone,” he said.
Shortly after the acquisition in 2004, Paoli launched a new program called inTWO that offers certain made-to-order casegoods and seating shipped within two weeks. In 2007, Dave Gardner became president and stayed with the company for three years. Brandon Sieben became president of Paoli, Inc. in January 2010. Mona Hoffman is the current president.
For its part HNI said that it is making this "network realignment as part of its continued efficiency and simplification activities to deliver consistent, flawless execution to customers and to reduce structural costs."
The Corporation estimates the realignment (aka closure) will generate a cash payback within one year of fully exiting Orleans and drive annual cash savings of $6.9 million beginning in 2018. Estimated cash restructuring and other associated cash costs total $6.7 million, with $3.2 million related to workforce reductions and $3.5 million associated with facility exit, manufacturing consolidation, and production move costs.
"When considering both cash and non-cash savings, the realignment will drive an expected profit improvement of $7.6 million annually beginning in 2018. Anticipated charges related to the closure and consolidation will impact pre-tax earnings an estimated $21.1 million, including $14.4 million of non-cash charges." the company said in a filing with the SEC.
Paoli, Inc. was first organized in July 1926 by Samuel Elsby, Sr. as a consolidation of the previous Orleans Cabinet Company and the Paoli Furniture Company. This new organization started out as the Paoli Chair Company and was located in Paoli, Indiana. The main products manufactured were footstools, vanity benches, and dining room suites complete with chairs.[2]
When the Great Depression hit, Samuel J Elsby, Jr., who was then serving as the Secretary-Treasurer, suggested creating a line of occasional chairs targeted towards the consumer market. These occasional chairs were successful at the Chicago furniture market show. The company began putting a focus on additional occasional chairs, which in turn, kept Paoli alive through the depression.
In 1951, Samuel Elsby, Jr. became president of Paoli Chair Company. By 1954, Paoli employed 300 people and became the largest manufacturer of occasional chairs in the world. Their success continued into the[3] 1960’s and led to two plant expansions. Soon after the expansion and modernization was complete, Samuel Elsby, Jr. died at age 60. His sons, Robert Elsby and Sam Elsby III, stepped up to keep the business prospering. Not long after, the family sold the company to two investors named Joseph Wulfman and Sherman Heazlitt. Robert Elsby stayed with the company as President after it was sold, and ran the company until 1986.
By the end of the 1970s, Paoli made the switch from the residential chair market to the commercial furniture market. As Paoli contracted with other furniture manufacturers to produce desks, the company purchased property in neighboring Orleans, Indiana to build a warehouse to store the desks. Then in 1982, Paoli began making its own desk and casegoods products at the Orleans site. Because of success in the commercial furniture market, Heazlitt and Wulfman adopted the new name Paoli, Inc.
Joseph Wulfman retired and sold his share of Paoli, Inc. to Sherman Heazlitt in 1986. Heazlitt became CEO and Thomas A. Talone became the 5th president of the company. Two years later, Heazlitt sold Paoli, Inc. to Klaussner Furniture Industries of Asheboro, North Carolina. Through the 1990s, the company flourished, expanded, and moved all production and administration to a modern facility built in Orleans, Indiana. In 1999, Paoli, Inc. purchased Whitehall Furniture, an established manufacturer of quality seating. In 2004, Paoli, Inc. was acquired by HNI Corporation.
