How A Factory Man Fought To Save His Furniture Company

Transcript

TERRY GROSS, HOST:

This FRESH AIR. I'm Terry Gross. Visit the town of Basset in Southern Virginia and you'll find some of the downtown streetlights are dark. The lamps, maintained by the once prosperous Bassett Furniture company are now funded by voluntary contributions from residents and businesses when they can afford it. Bassett is just one of many towns and cities in Virginia and North Carolina where scores of furniture making plants have closed in the past 20 years, mostly due to competition from China and other foreign countries. Our guest, Beth Macy, has a new book which documents the collapse of the American furniture industry and its human cost and profiles one determined owner who fought back against the foreign onslaught - both by filing anti-dumping charges against Chinese firms with the U.S. International Trade Commission and by making his own company more competitive. Beth Macy worked for years as a reporter for the Roanoke Times and she's also written for national magazines. She's received several national awards, including Nieman Fellowship at Harvard. She spoke to FRESH AIR contributor Dave Davies about her book "Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local And Helped Save An American Town."

DAVE DAVIES, HOST:

Beth Macy, welcome to FRESH AIR. You know, this is a story of - a remarkable story of reporting. But it's clear you feel a personal connection to it in a lot of ways. Tell us a little bit just about your parents, your background, your childhood.

BETH MACY: Sure. I grew up in a factory town - Urbana, Ohio. I was the fourth of - by a long shot - of my parents and my mom worked in the airplane light factory called Grimes. And my dad was a house painter. He was often unemployed by the time I came along. And he was an alcoholic and my mom really kept the family together by working in the factory when the economy was good. You know, this is like the '70s and when the economy wasn't good, she would get laid off and so I, you know, I know what that felt like to some of the conversations around the dinner table about, you know, whether our gas might be cut off or, you know, how the bills were going to get paid. So when I became a journalist, I gravitated to those kinds of stories of what I call outsiders and underdogs. I didn't, like, intentionally gravitate to them but after about 15 years, it hit me that, you know, those were the stories I wrote the best.

DAVIES: Now, the man at the center of this story, John Bassett III, is a descendent of a long established family of Virginia and North Carolina furniture makers - that is to say factories that made furniture's. Tell us a little bit about the Bassett company - kind of what it made him - what kind of relationship it had with its employees over the decades.

MACY: Sure. It began in 1902. It was started by John D. Bassett Sr. and they came out of the Civil War sort of cash poor and land rich. He was a very kind of wily saw-miller. He had a lot of land, a lot of trees on the land. And he decided when he heard the railroad was coming through Henry County, that he would open a sawmill so he could sell the railroad the ties for the land. And he built a little store and had a boarding house where the railroad workers could stay and buy their food and whatnot. I mean, he was always kind of one step ahead and as, you know, the railroad was built, he realized that hey - why are we sending all of our lumber up to the furniture companies in New York and Michigan? I think we could do that ourselves. And actually he and his wife were on a buying trip in, you know, 1900 - the family lore is that it was actually his wife Miss Pokey's idea to kind of poke around and see how the factory there was organized and come back and try to do that in their own front yard. And as it turned out, they built a factory in their front yard.

DAVIES: Right, Miss Pokey - short for Pocahontas - which was her name. And so he runs the factory for decades and there are other factories and they are run by descendants of this family for decades. And there's the town of Bassett. What was its relationship with the company?

MACY: Right. The town of Bassett was never incorporated. So it's a classic company town, built to support the company. I mean, they had to bring workers in from the countryside to work in the factories and they had to provide housing - so they built houses. The rent was deducted from their paychecks. And, you know, there wasn't a town Council - there was Bassett Furniture industries. And you actually paid your power bill up until the '70s, I think it was, at Bassett Furniture industries. The company ran everything.

DAVIES: They ran the church, right, the post office?

MACY: (Laughing) There were two churches. The family started out Baptist but they quickly realized if they were bringing all these people in from the hillside, that they better branch off and have Methodist too, just to give them a little variety. So C.C. went off and started the Methodist church and J.D. Bassett started Pocahontas Bassett Baptist Church and, you know, just for a little variety.

DAVIES: And these weren't owners that lived far away and clipped coupons. I mean, they were very much involved in the industrial process, knew workers' names, right?

MACY: Exactly. One of my favorite stories is during the depression, a lot of the North Carolina furniture makers were going out of business and one of the things that J.D. Bassett vowed to do was not to lay anybody off - and he didn't. And he knew these workers. And one of the things he did was he went around to all of the factories because he knew he had to cut people's hours back, but he didn't want to do it willy-nilly. So he found out how many people were in your family, so he cut back your hours according to that so you could still make a living and, you know, eke out an existence. You could still have a job and when the economy came back, you know, they were all ready for, you know, the postwar boom. Then they could really take off. But, you know, during the depression, instead of bonuses, everybody got a ham.

DAVIES: Wow. So they were tough people but they did care about their folks - resolutely opposed to unions and kept them out.

MACY: Right, right. There's some good shenanigans stories in the book about that. And, you know, sort of agreeing with the competitors down the road. If somebody's picketing at Stanley Furniture, then, you know, quietly shipping it in the middle of the night over to Bassett where it can be made because they realized that if the unions got a strong foothold, then everybody's wages are going to go up.

DAVIES: Now, the industry grew up here in the Jim Crow South. What was the company's practice when it came to hiring blacks?

MACY: Yeah, this was really interesting to me. There's a local historian here named John Kern who had did some work interviewing old black Basset Furniture workers. And he had put together that - one of the astonishing things was that right from the very beginning, J.D. Bassett hired African-Americans. His competition in North Carolina were sort of relegating them to saw-milling and sharecropping but he hired them to come in, which was - you know - it was better than sharecropping. It was better than working out in the fields. It was work indoors and it paid money. And he paid them at the beginning, according to the research, paid them half as much as the white workers made but it was - it was more than they had made before. And as a lot of people - a lot of the older black people in Henry County today will tell you, you know, it wasn't sharecropping, it was something and it allowed me to send my kids to college.

DAVIES: The heart of this story, of course, is about the competition that these furniture manufacturers felt from overseas, particularly China. And that begin in the '80s I guess, as of course the Chinese Communist Party adopted a different posture towards capitalism and entrepreneurial activities in China. And when these Chinese firms started competing with these furniture manufacturers in Virginia and North Carolina, you ran across some folks that said that the American manufacturers let them into their plants and that's how they learned what to do - I mean, what consumers wanted, how the factories ran, even videotaped it in some cases. Was there a lot of that?

MACY: I'm told there was. I mean, anecdote after anecdote - if you talk to just the regular people and the line workers - you know - one of my favorite quotes early on is Naomi Hodgmuse's (ph) mom coming home from work one day at Bassett and saying Naomi, what were all those little people doing at work today? You know, they were Chinese middle-managers. They were taking pictures of the line and trying to figure out how to replicate it back at home.

DAVIES: And the American manufacturers let them in, why, because they were thinking there might be business with them?

MACY: Well, yeah, they let them in - yeah - they let them in because - especially the finishing process, which is what separates a low-end from a medium and a high-end, you know, the more coats - they did need some expertise on that end. And it just became sort of this slippery slope. Once they let them in, once they started making it and then once the companies got sort of dependent on this cheaper product, that sort of made the furniture they were still making domestically - it made it less cost-effective. It made them less competitive all around. And then it just became sort of this tipping point, where what was once early on a blended strategy, all of a sudden, you know, then they're closing factories and they're making very little.

DAVIES: When you say a blended strategy, you mean some manufacturers would both make and sell the furniture they make as well as buy - import Chinese furniture - and then sell it as their own, right?

MACY: Correct, yes.

DAVIES: But just back up a second - this furniture was coming in - it was cheaper, I assume, in great part because labor costs were much cheaper. They were underselling the American manufacturers. And how did the American manufacturers respond to the competition as it got really intense in the '90s?

MACY: As it got really intense, I mean, you could look at Bassett Furniture. Their biggest store account JC Penney and they sold $80 million worth of furniture per year. And that was their hugest account and they had won a Supplier of the Year award in 1999 from them. But then their orders started decreasing and one of the things that Bassett did is they reengineered their furniture so they could make it cheaper. They actually cut their costs by a third to keep up with the deflation that was going on in the industry. And as they did that, the orders still kept disappearing.

DAVIES: Now, as the Chinese got better and better at marketing their stuff in the United States, what was the effect on production in Virginia and North Carolina? How many factories closed?

MACY: Yeah, so an estimated 300,000 workers lost their jobs in furniture and related industries. And if you look at Henry County alone, they basically - they all closed. There's one assembly plant that Bassett Furniture runs, where they manage to sort of build pieces - part of the components that come in that are imported and they - they'll do the finishing there. But it's basically gone. If you drive down Bassett today, all of the factories - just about all of the factories have been torn down. Some of them burned - some were burned because people were desperate. People were trying to steal the copper white wiring out to resell on the black market. And they're basically all gone. I mean, it's kind of ghost town now.

DAVIES: Martinsville is a place you write about a lot. It's a city probably not many people know about. Tell us about it at its heyday and what became of it as these changes...

MACY: Yeah.

DAVIES: ...Came about.

MACY: In the '60s, they used to say of Martinsville that it had the most millionaires per capita in the country. And it was textile-based and furniture based. It was booming. I mean, it had the lowest unemployment rate maybe in the whole country. It was like 1 percent or lower. In fact, one of our favorite reporters at the Roanoke Times had gone down and done a series in 1963 that I unearthed and, you know, the lead was - you know - can't find somebody to serve food in the diner - what we really need is some unemployment. And it all just gradually went away - first the textiles and then the furniture. The last big factory to close was Stanley Furniture in 2010. And that's really when I started kind of looking into this.

DAVIES: Yeah, this is a town very near the North Carolina border in southern Virginia. After all of these factories close - what was the impact on Martinsville? What was the level of unemployment?

MACY: It's had the highest unemployment rate in the state for the last 10 years. At one point, it was almost up to 20 percent unemployment. But I asked the mayor of Martinsville - I said - you know - because the unemployment rate doesn't count the people who stop looking for work and whose benefits have run out. I asked and she was very - she wasn't very - she was a bit defensive. She was kind of used to everybody coming up and beating on poor Martinsville and I wanted to be fair. She said don't make us look like tumbleweeds or - you know - blowing through town. It's not that. I promise I didn't see a single tumbleweed. But when I asked her without - I said what do you think the true unemployment rate is? Without hesitating, she said one-third. And so then you go and you say what does that look like? You go to the food pantries and you see the people, you know, lining up two hours before it opens and you talk to them and they're former textile workers and former furniture workers. And, you know, those are the people - their unemployment's run out, maybe they're getting a little bit of Social Security. Maybe they're getting a little bit of food stamps but you don't have to go very far to see a real sort of palpable example of this unemployment rate.

DAVIES: You've done a lot of ground-level reporting about the human impact of this industrial collapse.

MACY: Yeah, yeah. I was looking into TAA, which is Trade Adjustment Assistance, from one of the early newspaper articles that I wrote about this issue. And I was looking at kind of why was it that only 30 percent of the people who qualified for TAA - and that's a long, decades-old federal government program that's supposed to help people get retrained - but only 30 percent, or maybe a little bit more, even actually take the TAA benefit.

DAVIES: Beth Macy's book is "Factory Man." We'll talk more after a short break. This is FRESH AIR.

DAVIES: This is FRESH AIR. And if you're just joining us our guest is writer Beth Macy. Her book about the decline of furniture manufacturing in Virginia and North Carolina and one man who fought against it is called "Factory Man."

The "Factory Man" from the title of your book is John Bassett the Third. A descendent of this, you know, Basset furniture family which of course operated for decades in this area he actually was in a story that you tell us in the book was muscled out by some of the relatives and had a different company - Vaughan-Bassett. But he responded to this competition in different ways. Tell us just a little bit about this guy. He's a fascinating character.

MACY: Sure. The first time I heard about him I was having breakfast with my neighbor who happens to own a furniture store in that region and I just knew I was going to have to get deeply immersed into furniture. So it took him out to breakfast, not to interview him so much, but just to kind of learn what he knew about furniture and he tells me, you know, he tells me the whole story about globalization over two hours. But halfway through he goes, well, you know, there's still somebody making furniture and he's in Galax, Virginia, and he works at Vaughan-Bassett Furniture. I said, Bassett? And he said, yeah he's from the Bassett furniture family. Because I hadn't heard of Vaughan-Bassett furniture at the time - it's not a huge company - and it hadn't been hugely in the news in our paper. And he said, yeah he's still making furniture in America and when China came on the scene, you know. He said, things like the bleeping chai calms aren't going to tell me how to make furniture. I thought, woah, this is a character I really want to learn more about. And, you know, the hair on the back of my neck stood up and then once I heard that, you know, he was from Bassett originally and that there was also this sort of juicy family feud that had resulted in he who was born to run the whole business as a child being booted out in middle-age and landing at this much smaller, more privately held company and that was the perch that he took to take on China, you know, this little mountain hamlet better known for bluegrass and BBQ. You know, thought, wow - there's really a good story there. And then once I met him, you know, he's just an amazing sort of character out of Faulkner. He's just completely who he is. He's very confident, he's got this amazing accent and he's got that sort of like dumb-like-a-fox way of saying something that sounds really simple but it's just super smart, too. And so I got him to just kind of one interview at a time peel back the layers on how he had done it.

DAVIES: One of the fascinating things about John Bassett the third, you write, is that he actually wanted to go to China and find the people that were copying the bedroom furniture - the Louis Philippe style bedroom furniture - that he'd done so well with, they were making it in China. He sends his son and somebody else they figured - well, why don't you tell the story. He ends up over there face-to-face with the guy.

MACY: Sure. There's a dresser that's just come on the scene in the American market and it's a Louis Philippe Dresser. It's wholesaling for 100 bucks and he can't figure out how the heck they're able to sell it. They can't be making money, he says, he his engineer take it apart and deconstruct it piece by piece and price out the pieces and he knows they have to be dumping - which means selling it for the less than the price of the materials. So he sends his son Wyatt who's kind of his head business guy, he sends him and a Taiwanese translator who's a family friend to Dalian, because the sticker on the back only says Dalian China. It doesn't say exactly which factory it's from. And he sends them off to do sort of this secret spy mission - they're pretending that they're looking to buy but what they're really looking for is that one particular dresser and they find it. And, you know, after days and days of searching they finally end up in this remote section of the province almost to the border of North Korea and they find it there - and John says, you know, John has told him don't come home until you find it. And so then once they find out that there's this law on the books that could allow them to file an antidumping petition he says, I want to get eyeball to eyeball with the guy running Dalian Wafun (ph) which was the company. And so then they travel back there a second time and because he's the CEO of the company, the gentleman running Dalian Wafun actually meets with him and he has this sort of very chilly one-on-one dialogue with him that's all translated but the guy says, basically - close your factories - he's got three factories left at the time - close your three factories and let me make all your furniture for you.

DAVIES: And this guy who was determined to close these American factories and quite blunt about it was also a Chinese Communist Party official, right? He was planning to build this huge complex and just saying, we're going to eat you alive.

MACY: Right. And that we consider it the translated word, and John remembered it very well, was tuition. He just said it out loud. This is the tuition of us being able to capture your market share, we're going to sell it so cheap and with government subsidies we're going to be able to make all of your furniture for you. And then they ended up driving him out to this furniture industrial park out in the country - and there's just stacks and stacks of timber. And Wyatt said, you know, you didn't quite know whether to believe it was just a giant billboard expansion where they've got the billboard up and they say this huge thing is coming - but when he saw all that Russian timber there laid out they knew they were serious and they knew, like, whoa they were going to war.

GROSS: Beth Macy will continue her interview with FRESH AIR contributor Dave Davies in the second half of the show. Her new book is called "Factory Man." I'm Terry Gross and this is FRESH AIR.

GROSS: This is FRESH AIR. I'm Terry Gross. Let's get back to the interview FRESH AIR contributor Dave Davies recorded with Beth Macy, author of the new book "Factory Man." It looks at America's industrial collapse by focusing on one family-owned furniture company in Virginia. Unlike the scores of furniture companies that closed in Virginia and North Carolina because of competition from China, John Bassett's family-owned company has managed to stay afloat.

When we left off, Beth Macy was explaining that a dresser manufactured by Bassett was copied by a Chinese factory that was selling it below cost. When Bassett confronted the manager of the Chinese factory, the manager told Bassett, close your factory and let us make all your furniture.

DAVIES: So John Bassett the Third decides he's going to fight back. And there are legal avenues he can pursue. Anti-dumping provisions - this can get a little technical, but what...

MACY: It sure can.

DAVIES: But what did he do? What did he have to prove, and what did he do?

MACY: First, he had to get 51 percent of his industry together to join this coalition to present this case to the Department of Commerce. And then they would decide whether the case would go forward. Just to get 51 percent of his industry to agree that we're going to put some money down for lawyers to help with this - that was hard in itself because by that point, many of these companies were already importing a lot of furniture. And, you know, they were doing a blended strategy we talked about.

And why would they support the petition because that would just result in them having to pay more? So there was that issue. And then, some people that jumped in early then backed out once some of their retailers dropped them because they were also selling imported furniture. So it became this very divisive thing in the industry.

DAVIES: And just to be clear, what we're talking about - we're talking about him convincing the Commerce Department to investigate whether the Chinese were unfairly subsidizing this cheap furniture. And the result might ultimately be tariffs - right? - payments that would raise the cost.

MACY: Not tariffs, but duties, actually. There's a difference. The result would be duties that would be added retroactively to the price of the furniture. But the first hurdle he had to reach - and it was huge - was that he had to convince 51 percent of the bedroom furniture makers to sign on board because the Commerce Department wouldn't even consider it until he had that much on board. And he had a really hard time.

And what I'm trying to get at here is that when he puts his mind to something, he just does it. I mean, he was on the phone for days and days and days. And he loves to play hardball. So for instance, he calls his nephew Rob Spilman, who's the CEO of Bassett and says, you know, sure would hate to see people picketing Basset when they find out that there was a remedy for this the might of helped you keep more of your factories open. I mean, that's his nephew. That's the kind of hardball he plays.

And he was able to get more than 51 percent. And then they had to raise all this money for the lawyers. And then, once the Commerce Department decided there was a case to go forward - then it got really ugly. And people took sides, and, you know, there was - the retailers were very upset about because they said, you know, we've been playing by the rules. We didn't see why they should change. We've invested a lot of money in this importing.

And the same with, you know, the furniture companies that were now heavily, heavily invested. Every month, more and more companies were importing more because it was cheaper and they could make more profit on it. And the prices were going down, too.

And they - a lot of them - they were in kind of tight spots. Like, I mean, Bassett would tell you, look, we're not a social experiment. We have shareholders that have to get profits. And if this is the only way we can do it, we've got to keep our company alive. That's their side of it.

DAVIES: Right. They had a lot of these companies, like Bassett, that had been making furniture. They went to importing it and then retailing it and made profit that way.

MACY: Right.

DAVIES: So did it work? Did he get some duties imposed? Did they get revenue from this?

MACY: (Laughing) Yes. They got duties imposed eventually. The U.S. ITC - International Trade Commission - voted in favor of the coalition in 2005 and again in 2000 because the lawyers convinced them that the Chinese were dumping and that it was harming American workers.

DAVIES: But this happened after scores of factories had already closed, right? And the duties weren't the kind of thing that were going to completely turn around these struggling companies. It helped, but wasn't transformative, right?

MACY: Right, right. It helped people like John Bassett who were totally committed to staying a domestic manufacturer. He - at one point, he was importing eight to 10 percent of his goods, and now he's importing zero. And it's helped him keep his factory going. It's helped him - he's taken the millions that he's gotten through those duties and reinvested them into really high-tech Italian- and German-made equipment.

And he has been able to kind of reconstruct his factory in many ways. Every little corner gets kind of re-engineered all the time, always with an eye toward efficiency and, you know, keeping the prices low to compete with the imports. He's been able to succeed - not hugely successfully, but he's been able to keep his nose above the water. And he's got a lot of pride and a lot of legacy in it, but he's also worked really hard. He's done a lot of other things, too.

DAVIES: So he did all of these innovative things, but we should also note he didn't take a salary for all of these years, right? And when times got tough, he would ask his salespeople to kind of trim their commissions. He would ask suppliers to give him breaks. He really worked hard to keep it all going. How many people is he employing in manufacturing? Do we know?

MACY: He employs 700 people now. And he has promised the town that they're going to be hiring more people. Just last year - maybe it was in '12 - they reopened a vacant plant next door and christened it Vaughan-Bassett II. And they're trying to get ready. The housing market still hasn't come back up from the recession. I mean, it's kind of been the last thing to come back. And, you know, he was telling me this week that he had just read something - that wasn't really going to come fully black till 2017.

Last year, he broke even. This year, I think he's a little bit behind, but as he points out, we have a ballot sheet at the rock of Gibraltar. You know, he's been very frugal. He's - he calls it Bassett 101 - you know, the techniques he learned from his father and his grandfather, in terms of, you know, having a lot of money in the bank and being very careful with his investments. And he's just determined he's going to keep that factory going because when the economy does come back and housing starts to improve, he's going to be poised to be what he calls the last girl standing on the desert island. You know, he's going to out-wait everybody. He's going to be the last guy. And he's going to get the business because no matter how good-looking you are, it doesn't matter. If you're the last one standing, you are going to get the business.

DAVIES: Beth Macy's book is "Factory Man." We'll continue our conversation after a short break. This is FRESH AIR.

DAVIES: We're speaking with Beth Macy, her book is called "Factory Man." So, looking at the big picture here, John Bassett the Third has managed through, you know, dent of lawsuit and an enormous kind of effort and innovation to keep 700 people employed in furniture manufacturing. How does that fit into the overall picture? Is most of the furniture industry gone now?

MACY: Most of the industry is gone, yes. As far as jobs there just isn't much there.

DAVIES: When you look at this region of Virginia and North Carolina where all of these furniture plants were so, so active and employed so many people, you know, they took the business from Michigan which had had it in the mid-turn-of-the-century and the folks in Michigan took it from Boston. And the people from Boston took the business from England before them and, you know, in every case the folks who won the jobs were folks who made products that were better and cheaper for consumers who benefited and in every case the folks left behind experienced, you know, the suffering of unemployment. And I guess it raises the question of - can you have the benefits of a market economy without experiencing some of this kind of pain?

MACY: Yeah, I mean, a lot of people would say, well, they just move elsewhere to a community where there's more work. But a lot of them don't have the money to move elsewhere. And maybe they take care of an elderly relative and they don't have those kind of options to leave that you and I would just think, well, certainly why wouldn't they moved to Roanoke and work there? They don't have those options by and large.

DAVIES: So is it a matter of, you know, government doing a better job of taking care of those who are going through these terrible wrenching transitions, providing the kind of assistance they need? Or is it just a matter you telling these stories?

MACY: (Laughing) I think it's both. I do argue that the T.A.A. - trade adjustment assistance program - could be redone in a way that would fit better with these worker's lives. I went to one of the training sessions and I was just appalled by it by, you know, I remember they were describing the rules, like, if you're taking this T.A.A. money we don't want to call you and find out you've gone on vacation instead of going to school. And the woman sitting next to me went - vacation? I'm worried about I'm about to lose my house. You know, there just seemed to me a real disconnect. And the other point I wanted to make, Dave, was that when there was all of this debate in the late '90s and President Clinton and economists and business schools were saying, you know, we should let China join the WTO because it won't result in job losses, it'll result in, you know, gains because we'll be able to export more goods for the growing consumer class in China. It just didn't materialize because of some of the issues that we talk about in the book - because of the dumping, because of the Chinese subsidies, because they're playing by different rules than we are in terms of EPA and OSHA and it just never happened.

DAVIES: So free trade has to be based on fair competition.

MACY: Legal trade, I mean, I think one of the things we could do is take a hard look at a manufacturing policy in this country the way China and Japan and Germany have done to, you know, they have big government offices that really promote keeping jobs in their countries. Their wages are higher than ours, they have double the manufacturing that we have in Germany because they've realized that if you're not making something, it's hard for your overall economy to be strong. You know, they say every dollar spent by a factory worker you can multiply it by a factor of seven and you could argue that, you know, this really hit big in the '90s and we haven't been on a huge growth spurts since the furniture factory started closing down. It's better for the economy when we make things.

DAVIES: Well, Beth Macy congratulations on the book. Thanks so much for speaking with us.

MACY: Thank you so much, really appreciate it.

GROSS: Beth Macy spoke with FRESH AIR contributor Dave Davies, who's also senior reporter at WHYY. Macy's new book is called "Factory Man." You can read an excerpt on our website freshair.npr.org. Transcript provided by NPR, Copyright NPR.