Fifteen Years - and Still Going Strong

"Corona recently celebrated its 100 year anniversary," said Leichter. He told me several stories about the city's past including one about race driver Barney Oldefield who sped around the ring like road that circles the city (hence the name Corona) in 1914 at one-hundred miles per hour, while crowds of thousands cheered him on in the warm California sun.

We soon arrived at one of those football field sized buildings. Leichter pulled over and said, "This is where we were last summer but it was just too small to handle our in-stock inventory." He explained the company's philosophy of carrying three months of finished goods at all times. "We also had some inventory over there," pointing to another building across the street, "but it was still getting too tight for us to be able to service our customers in a timely fashion."

We drove around a few more corners and into the parking lot of another huge facility. "This is our new home," said a smiling Leichter. They had just moved in, two months earlier, in September. "We are very proud of what my dad started fifteen years ago," he said. "We plan to keep it up for at least another fifteen."

Steve Leichter, Harlee president, is a man committed to his business and the futon category.

Harvey Leichter had started his professional career working as a furniture importer during the fifties. "I remember my dad telling us the stories about post-war Japan. He would go in and buy up the teak decks of Japanese war ships being broken up by the US Navy. That weathered teak made some great furniture," said Leichter. After twenty or so years in the furniture business, working his way up through the ranks, for someone else, Harvey decided to venture out on his own. "My dad had a simple plan when he started Harlee in 1981. I can still hear him talking about, 'quality, dependability and service'. We will never move away from those basic values," he said.

The company actually started on a coffee table in Leichter's childhood home in Long Beach. Several months later they moved to a store front location in Los Alamitos as a small industrial fastener company. "Our first building was an 800 square foot storefront space in a strip mall. In fact we still have a small industrial fastener business to accommodate those customers who are still with us from back then," said Leichter. He reminisced about unloading that first container of screws, nuts and bolts, and also shipping the first order for the fledgling company.

During the waterbed boom of the mid eighties Harlee began to expand into hardware for waterbed frames and also began to manufacture vinyl waterbed liners for the rapidly growing category. In fact, Harlee continues to supply several different products to a still shrinking flotation customer base. "I also remember my dad commenting that we were only a $12 part of a $1500 waterbed retail sale. Furniture, the wooden part of the product, was where he really wanted to be. That's why it was such a natural transition for us to move into the futon furniture business. It's real furniture," he said. As things grew and the company expanded they moved into a space in Garden Grove and then into what they thought was a huge space in Corona. "Our first space in Corona was so big it looked like you could land a plane in it. Six months later we had outgrown it."

My tour of the company's new digs began as we walked through the front door. I was in a futon furniture showroom - a Harlee futon furniture showroom. "When we designed the layout for this space we planned everything for expansion and our continuing vision of growth through innovation. We thought about every square inch of space and how it would serve us five years down the road," said Leichter. He showed me a huge closet which I quickly discovered could become an office, if needed. "Every space is wired for telephones and our computer network," he said.

This computer network is vital part of the Harlee vision. "Anyone on the network can instantly know anything about inventory levels, shipping details, billing issues, etc.. We wanted to bring this company into the twenty-first century so we would always be ready to deliver those basic values of quality, dependability and service that my dad had instilled into this company, as well as bring this industry to a level of design leadership it sorely needs," said Leichter.

Harlee's new tag line, "The Design Leader" tells the story of Steve Leichter's perception of his company's future.

Jim Woll is company GM and is a driving force in new product development

Jim Woll, the company's General Manager, came to Harlee five years ago. He joined Steve and me on the tour. Jim came to Harlee through the waterbed industry. "I've known Steve and his family for years," said Woll. "When I was with American National Watermattress, we did a large amount of business with Harlee. The trust factor was definitely at work in that relationship as it is now in my role as General Manager," he said. Trained as an engineer Woll is the product development guru for the company. Rounding out the Harlee team is controller Jim Seltzer and inside sales associate Jim Murphy.

Company Controller Jim Seltzer

The Distribution Factor

At the very end of Raiders of the Lost Ark, the first Indiana Jones movie, there is a scene which has always stuck in my head. Indy has just struck out with the government bureaucrats who refuse to let him pursue a further study the Ark. As he kisses the girl on the steps of a non-descript government building the shot shifts to a close-up of someone nailing down the cover of a huge wooden box with the Ark inside it. The man then begins to push a cart with the large box on it through a warehouse. The camera then pans back to show an enormous warehouse filled with thousands of similar looking wooden boxes. Well that's how I could best describe what I saw, and the feeling I got when I walked into the Harlee warehouse.

"Each row here is one container or one truckload," said Leichter. "And right now, with this entire 51,000 square feet full of product, we are talking three to four months of inventory on hand. We keep that level of goods available at all times," said Woll. "You can never tell what is going to happen overseas," added Leichter. "We've made a commitment to ourselves and our customers to ship orders in twenty-four hours and we mean to keep it," he said. At first I thought he was kidding but I then realized he was serious. Harlee regularly ships futon frame orders in twenty-four hours. Leichter also shared that it is not uncommon for a truck to arrive at Harlee's dock before a customer has even placed an order. "We are able to have the order on the road in only a few hours," he said.

The Harlee warehouse is a clean modern facility boasting over 50,000 sq. ft. of floorspace

Everything in the warehouse was stacked about twenty to thirty high with no pallets anywhere. I began to ask myself how they moved this mass of inventory without pallets, when around the corner came a fork lift truck. "These trucks are fitted with carton clamps," said Woll, who added, "We needed to put these in about a year and a half ago so we could eliminate the wasted space that pallets use. The clamps allow us to go thirty high and still be able to move product to the staging area easily." The shipping and receiving area is enclosed inside the building and had four docks for unloading containers with inventory and loading trailers for shipping deliveries.

Another interesting feature about this area of California is the fact that it is a major trucking hub. A fact that serves Harlee well. "We get some of the best shipping rates available because of the huge number of truckers here in the Corona/Ontario area," said Leichter. "And because we have the real estate we can stage our deliveries right here at the dock. This allows us to load quickly and get our trucks on the road," said Woll. The company's ability to quickly move product from inventory to the staging area also affords them a reputation as the people to call when there is some space left on a trailer traveling to the city or region of a Harlee customer. "With this system in place truckers see us as a true distributor. They can call us in the morning with an unfilled twenty foot space on a truck going to an East Coast city, and we can have a shipment ready to go that afternoon," said Leichter. By early next year Harlee will be putting in a full bar coding system as well.

The Orleans is a Harlee original and is one of the most popular frames in the line.

Transitions

"My father was well respected and liked in the furniture and waterbed industries," said Leichter. "Because of this, dealers would listen to him when he said they should try this or that. He would go into our regular retail customers and convince them to give him a little floor space for a product, and they would. That's how we made the transition from waterbed products to futon furniture. It's actually been seamless," he said. With the shrinking of the waterbed market, many of Harlee's customers have become sleep shops who carry flotation, innerspring, and futon products. "During the waterbed boom times we were the generic company everybody used for those types of products. Now we are trying very hard to transition into a company that people look to for design leadership. We want this industry, and our customers specifically, to understand that what we offer is not just a 'me too' frame but something they can get from us that gives their store a unique product for their market," said Leichter. Harlee has been moving in this direction for almost three years now and has experienced its share of design knock-offs. "At first it was frustrating to go through the design and R&D process and have a competitor knock-off our design," said Leichter, who added, "But then we discovered that very few of our dealers would drop us for a copy that lacked our quality and delivery just to save two or three dollars. The years we've spent building our reputation as a quality vendor with a commitment to innovative design have paid off." Woll added that the company now views the knock-offs as a compliment and a confirmation that Harlee is the design leader.

To back up this commitment Leichter and Woll promised a program that would offer four to eight new arm styles per show, and with four shows per year they're talking sixteen to twenty-four new styles per year.

"This is an ambitious undertaking, but we have made the assessment and the decision for our company to move in this direction," he said. "Our plan meets several needs at once," added Woll. "We can give large customers products that suit their needs and also give smaller specialty dealers unique products that will allow them to easily differentiate themselves from their competitors. Its the best of both worlds for them," he said. Leichter added that this was the company's philosophy. "We won't cross that line. What we design and build for the bigger dealers will not go to the smaller ones, and vice versa. We won't make the mistake some of the other suppliers have and neglect the smaller specialty shops. Those stores will be around for the long haul," Leichter said.

Harlee is also bringing a new oak line to market in January.

Importers, Exporters, Distributors & Manufacturers

"We've been doing this import thing for so long that there is simply no problem we have not encountered and there isn't a problem that we haven't solved," said Leichter. The company is also very different from most pure distributors, in that they not only drive the manufacturing process but they design and create products as well. "Most distributors order product from factories, store that product and then sell it in smaller quantities to someone else. At Harlee we are much more pro-active throughout the entire process," Leichter said.

Harlee, as a company, is active in its business community as a knowledgeable source of information on both the import and export disciplines. "We were honored to have been invited several times by the State of California to attend government conferences on international trade. The most recent one was specifically on Pacific Rim trade," he said. People come to these conferences from both sides of the border to discuss and work out the many facets of the import and export business. "Our experience in international trade allows us to be very competitive and also to give our customers, who are now all over the globe, the confidence they need to do business with us," Leichter said.

Harlee has customers on the export side in Taiwan, Korea, Australia, Scandinavia and Western Europe, Africa, Turkey, and a large group in Canada. "We are very lucky to be able to take advantage of the position we are in and the contacts we have made over the past forty years (with my dad's history) and specifically in the past fifteen years with Harlee International."

This experience is also the source of some concern, on Leichter's part, for the industry-at-large. "We also see some real mistakes being made along the way," Leichter said. "Harlee makes all its frames, manufactured in Indonesia, from selected hardwoods, primarily a wood called 'ramin'," said Woll. "Ramin is a wood that has been used in furniture for many years, and its beauty and durability is well known. We have seen some products recently that are made from soft woods, and we know from experience that some softer woods will not hold up in a convertible frame. Some look like hardwoods on the surface and could be used as a table top but when you put it through the stress factor, in a convertible frame, they simply fall apart. This isn't good for any of our futures," he said. Woll said any retailer could discover if they are getting frames made of a wood that is too soft, by simply weighing them. "Our typical full size ramin frame weighs about sixty-five to seventy-five pounds in the box. Most imported hardwoods should come in at these weights. Soft wood frames weigh in at as little as forty pounds," he said.

Harlee is also expanding their presence nationwide. "Our Dallas operation has been going strong for several years and we intend to explore other distribution centers this year as well," Leichter said. The company is also linked to their bank for Visa® and MasterCard® purchases, "which is unusual for a wholesaler," he said.

Harlee Futures

Steve Leichter made it very clear to me that Harlee is into futon furniture for the long haul. "One reason we've been so successful of late is because we've been around so long. We've made a lot of friends along the way and they believe in us," Leichter said. He is very proud, in the best sense of the word, of what his father began, and he intends to push on, by expanding on that plan into the future. "Listen," said Leichter, "we are a well financed, dedicated, design innovator who has the experience and integrity to deliver on our promises. We're not perfect. But we stand behind what we sell, and we care enough, integrity-wise, not to put inferior goods on the market, and it shows in our 1% to 2% return rate."

Leichter added that I wouldn't find anything patentable in his company's conversion mechanisms. "We aren't trying to create excitement by demonstrating our ability to design the perfect mechanism. Consumers don't see all those little springs and thing-a-ma-jigs in the back. What they see is the style. My father always said, 'Nobody makes their decision to buy a piece of furniture with their brain. They make it with their heart and with their back side.' If they like the way it looks, and it feels good when they sit on it, then they'll probably buy it. And that's the same direction we are taking now."

With fifteen years under their belt, and an industry rapidly growing around them, Harlee International is a company to watch in 1997.