August Lotz
Celebrating a Centennial

The logo says Lotz Wood, a moniker that is very descriptive of what you discover soon after arriving at the plant. The company operates out of a modern 100,000 square foot facility in Boyd, a rural, northern Wisconsin town with a population of about 680. “Boyd is right next to Chippawa Falls and Eau Claire,” said Mark Schlichter, company president, “home to Cray Research, Johnson Matthey, and Hutchinson Technology. It’s the ÔSilicon Valley’ of the Midwest.” Schlichter, who has an MBA from Cardinal Stritch University in Milwaukee, and who managed the sales department of a large national construction supplier, Materials Service Corporation, joined his childhood friend, and now partner, Mark Barton in 1991 to purchase the August Lotz Company, a relatively small wooden parts and, (would you believe) beehive component manufacturer. “My background was in the architectural woodworking industry,” said Barton, who is company Vice President and Production Manager. “Wood is a wonderful medium to work with,” says Barton, “and we know wood.”

The evidence for this claim is thoroughly conclusive, and I therefore submit it for your approval. Barton said we would start our tour of the plant at the beginning of the manufacturing process. This would, he said help me “understand the process and the commitment” the partners have made to their company and the futon industry in particular. I assumed we would walk to a receiving dock where the dimensioned wood was delivered (I’ve been to a few factories and felt I knew the routine). Instead we walked past the dock and out to a large open yard behind the plant. Still, never having been told the facts, I expected to see a yard full of stacked lumber. Well, lumber I saw, but my inquisitive eye moved even further back in the yard to the logs. “Oh!,” I said, “What are the logs for?” Barton and Schlichter looked at each other, smiled, and then looked back at me and said, “That’s where we begin. We cut them (the logs) into boards at our saw mill over there.” They pointed to a large shed next to the rail siding. Then I smiled, because I always love a good story.

Not only do they cut and grade their own lumber but they kiln dry it on site too. “This gives us total control over every aspect of the process from forest to finished goods,” Schlichter added. I told them I was glad I was there, (so the rest of the world would have this info) and asked them why they hadn’t ever told anyone about this very unique aspect of their company. The answer was repeated several times during my interview weekend. “We are a manufacturing company by nature, and this is how we do our business. We are focused on building the very best furniture we can at the highest level of efficiency as well,” said Schlichter. “And this is just the most cost effective way to do it,” added Barton. When they can’t get logs, or when buying green lumber is a better alternative, they go that route. But all the wood used in their furniture is dried, dimensioned, and milled on site. More about this later.

A Little History

Barton and Schlichter have been friends since the third grade and had often talked about going into business together. “In the mid-eighties I began to see the potential of futon furniture,” said Barton, who had been the production manager for early frame manufacturer Ed Davis of Davis Furniture in nearby Black River Falls, WI (Futon Life V3N1, Spring 1991). “Ed was making frames for the Company Store, a very successful catalog house. The company was making quality, promotional frames and was also very profitable,” said Barton. Back then, with fine woodworking in his blood, Barton wasn’t satisfied with Davis’ direction. “We had a different direction in mind for this little known product back then,” said Schlichter, who together with Barton made a bid to buy Davis’ company. But the timing and circumstances weren’t right and their deal was never consummated. “We believed back then, as we still do now, that futon furniture is a legitimate and very viable product category. Our interest in becoming a furniture manufacturer lead us to Boyd, and Lotz,” said Schlichter. “We saw in Lotz a machinery rich company with all the capabilities and capacity we needed to produce futon furniture,” added Barton.

In 1991, Schlichter and Barton bought Lotz Wood and proceeded to enter the futon furniture business. Being a pure, vertically integrated manufacturer, the partners sought out a channel for marketing their products. “We entered the futon furniture industry with a single purpose,” said Schlichter, “to build the best furniture in the industry.” A goal many would agree they have achieved. But along the way, as it always seems to do, adversity entered the picture. Lotz Wood and their only marketer and distribution point, the now radically restructured Casual Lifestyles, began to have some struggles. These difficulties eventually ended in a parting of the ways, and a lengthy and difficult legal battle which many observers believed would end with disaster for both parties. In the end, Casual Lifestyles was sold and Lotz remained intact, still growing and serving its customers. “We did all we could to remain focused on our mission,” said Schlichter, who announced an out of court settlement with Casual last spring.

A Real Transformation

When Schlichter and Barton discovered the Lotz Wood company, its main business was making component parts. “When we took over the company we had to react to the business that already existed. Quote this, quote that, we survived during the first months on the ongoing business the company was already doing. That was the basis of our cash flow when we started,” said Schlichter. “We made clock faces, cutting boards for the Kohler Company, all kinds of things, and we still have a very diversified, and very satisfied client base.”
“We had machines to make anything you could imagine,” added Barton, “In fact we had to move out four trailer loads of machinery to make room for our furniture line, and today futon furniture is the main focus of our plan.”
Making the transition from parts production to their ultimate goal took a while, but the company soon began to produce futon frames in solid ash. “We had already made the decision to build real furniture after seeing the potential, years earlier at Davis (Furniture),” said Barton. They now had their own factory and it was time to test their theories in the real world.
They started with some simple mission looks. Back in 1983 Barton was building fine furniture in the Stickley style in his own shop. “I had my own shop back then and I was doing a lot of architectural work in the Stickley style,” said Barton. “When Barbara Striesand bought a Stickley Hutch for $100,000.00 Stickley’s Craftsman or Mission style became very popular,” he said. “That’s where we got our inspiration for the 10,000ª, our most popular frame,” said Schlichter, who quickly added, “It has always been our intention to build real furniture. Why make something that essentially becomes a Ôthrow away’ when you can create a product that will stand the test of time?”
“We both grew up around antiques,” said Barton. “If we could take the products we made this year and project out a hundred years, our futon frames, (the way we build them), the 10,000ª, all our high end futon frames, we believe that they will still be in use. By then they would be antiques,” added Schlichter “And essentially that’s what we want to make; furniture that will become tomorrow’s antiques.”
I asked the partners what they thought it would take for this product category to survive. “In our minds the future will be played out in the traditional retail store,” said Schlichter. “We are now building standard size bed frames and case goods, all designed to compliment our futon frames. We want to be perceived as a full line furniture manufacturing company that has built its reputation on fine craftsmanship and quality, convertible futon furniture.”

“These other products will help convince retailers that we’re for real, and that we understand what it takes to be a supplier to the typical retailer in the home furnishings industry,” said Eddy Botelho, the company’s National Sales Manager. Botelho, a former retailer and furniture rep, heads up the marketing for the company. “We are finding more and more dealers that are beginning to understand what we are all about,” said Botelho, who added, “But when you operate at the top end of an industry that is perceived as a poor cousin by the rest of the world, you really have your work cut out for you.”
“One of the many things that sets us apart from many other furniture manufacturers is our ÔIn-Stock’ program. Operating at a 90% fill rate, we believe we are able to turn orders around faster than anyone else in the industry. This enables our customers to maintain a lower overhead by placing orders more frequently. Our commitment to customer service is also second to none. We always strive to achieve complete satisfaction with our product,” said Erika Alix, Inside Sales and Customer Service Manager.

The World of Lotz

As we continued through the plant, I saw a classic example of a fine furniture factory. “We start with kiln dried, Northern White Ash, rough cut lumber,” said Barton. The wood is then graded for quality and size, and is cut to width. “We don’t waste very much of this beautiful wood,” added Schlichter. The company’s other business ventures also help keep futon prices sharp because they use many of the smaller cuts of wood to create these other products. Beyond that, the company also uses all the small unusable pieces along with tons of wood chips to fire the kilns and even heat the place during the winter time. One of the most impressive aspects of the Lotz process is their attention to detail and quality control. “You cannot achieve heirloom quality without paying attention to every step in the process,” said Barton. Both men told stories about their early prototypes and even production pieces that they have in their homes and also in the homes of parents and friends. “We live with this furniture every day,” said Schlichter, whose lakeside home has become a showroom of Lotz Wood furniture being tested in daily use. We eventually ended up in the prototype department, which is manned by Ken Prill. “This is where we decide on our future direction,” said Barton. I got to take pictures through out the rest of the plant, but this workshop was off limits. I did get to see several new arm designs which will be introduced at the Spring Futon Expoª in New Orleans, next May. I was also able to take a close look at several new Lotz dressers and entertainment units, all designed to accompany the futon frames, but also able to stand on their own merit as superior examples of fine craftsmanship in the classic “Mission” style. Barton and Schlichter were quick to point out that this was only the beginning of many more good things to come. “We don’t intend to rest on what we have already done,” said Schlichter, “We will continue to design new pieces so our dealers will have options and opportunities to grow with us, even as we present our products to a wider audience of consumers. People want things that last and this is the buyer we want to reach.”

The Mattress Plant, Consolidations and Futures

Schlichter and Barton picked me up Saturday morning for the two hour drive up north to Minong, WI, home of their garnetting facility and mattress plant. “We decided to make the move into the futon mattress business two years ago,” said Schlichter. Universal Comfort, a division of August Lotz, is a 27,000 sq. ft. facility, sitting on ten acres in beautiful northwest Wisconsin. Andy Nowack, plant manager and garnett expert extraordinaire, keeps the three garnetts running and also oversees the mattress plant. “We have only begun to tap the potential of this plant,” said Schlichter. “Many of our customers came to us looking for a single source,” added Barton. The partners responded to their customer’s needs and to their competition with their typical all or nothing approach. “Right now we are poised to deliver the best one, two (frame and mattress) package in this industry,” Barton said. “Being able to garnett our own cotton blends, and then go right into mattress production, in the same building, puts us in a unique position in this market,” said Schlichter. Back in Boyd, behind the factory, is a recently completed warehouse and shipping facility. “With this facility in place we will now be able to ship everything we produce from a single building right here in Boyd,” said Schlichter. Slow, steady growth, fine woodworking and craftsmanship, and a serious commitment to the futon’s future is an exciting combination from my point of view. Keep in mind, August Lotz is almost single-handedly holding up the highest end of this category and they are doing it in grand style. I am compelled to congratulate them for their achievements to date. I will also add this: the industry at large should also wish them even greater success, because as they push the “high end” (price point) higher, they make selling the middle and lower points all that much easier. If the high end goes then what remains tends to flatten out. The good news is August Lotz is here for the long haul, and Mark Schlichter and Mark Barton are securely in the driver’s seat.

The Lotz Company outlines what sets them apart Just What Makes an August Lotz Futon Frame Worth the Extra Color Money? 1. Finished Goods are in Stock: This enables our dealers to order fewer items more often, freeing up inventory dollars and warehouse space as well as increasing turn- over rate. A 97% “fill rate” means virtually no back orders. Quick ship time translates into faster deliveries to your customers and faster payment to you! 2. Control Over Dimensional Lumber: Vertically integrated from forest to finished goods ensures that only “A” grade materials are used in our futon frames. Unlike other futon frame manufacturers, August Lotz does not have to take the “good with the bad”. Hence, no returns due to inconsistent wood quality. 3. “Fail Safe” Mechanism: Our patented “auto-lock” mechanism, unique to August Lotz, ensures virtually zero breakage due to improper usage. Fewer service calls, no warranty hassles! 4. “Best In the Business” Packaging: Our boxes and packaging material have been custom designed to our own specifications to help ensure fewer freight claims. No “hidden” damage means you can load the product into the customer’s car and not worry that it’s coming back due to damage. 5. We Don’t Skip the Details: Our quality control is second to none. Because we manufacture “on site”, we can control quality to a higher standard. We manufacture a 100% American Made product, so we don’t have to fly to South America or Asia to control our factory. Quality control weighs each hardware pack on a digital scale. We can tell if a cotter pin is missing! This means fewer returns, fewer service problems, and more profit!