WoodDigest.com |

Northway’s business model had been supplying large quantity laminate and melamine components to customer companies to use in their products, as well as custom display products.
Their idea of Lean manufacturing was to set up and run a lot of the same part, and then go to the next customer or part.

Things were good … Then Northway discovered that they competed in a world market!

Don O’Hora, Northway president and COO, relates, “Northway’s downturn started fast with one major company only giving a 30-day notice that it was going offshore. The second company phased its supply move to Asia over a longer period, but the loss was about 50 percent of our volume in less than two years.”

This level of loss has put many companies out of business.

“Our first reaction was to find more customers like the ones we had just lost,” says O’Hora. “What we found out is it is extremely difficult to replace that type of business when much of it is going off shore at a much lower cost.”

In order for Northway to survive, the company had to look for other things to do. It had to look for other markets where its knowledge, experience and manufacturing capability could continue to be its strengths.
The company had done some cabinet work for the architectural woodwork market. On the upside, it looked to have long-term opportunity for Northway since it was quicker turn, semi-custom work. On the downside,

it didn’t fit with the mass production mentality and processes Northway had been employing for the customers they had lost.

This change meant developing a new business model for Northway. It needed to change the way the factory built product from mass parts to much smaller custom product orders, even one piece.

Now Northway’s business is split roughly 50/50. The company’s focus has changed from mass-produced components to case work, multi-media and customer-proprietary specialty furniture. Some of these items are produced one at a time as Northway’s customers, who are Internet marketing companies with no manufacturing capability, receive individual Web orders. Then the semi-custom product order is scheduled into production, manufactured, then shipped assembled or RTA, as requested. This is a growing portion of Northway’s furniture business.

O’Hora explains the company’s philosophy: “We prefer not to compete with our customers.”

This means that Northway sells cabinets to woodworkers who use Northway as a supplier: It doesn’t sell directly to contractors. Along with protecting its woodwork customers, the company also avoids issues like AIA contracts, jobsite conditions and project management. Northway remains a material vendor.

These differences in philosophy and approach help to delineate Northway from other case work companies in the customers’ eyes.