Ron Wanek: From Farm to Forbes 400
An interview with Matt Kirchner and Ron Wanek, Founder and Chairman of Ashley Furniture Industries
This episode is the first in a two-part series with Ron and Todd Wanek of Ashley Furniture Industries. This week we will be hearing from Ashley Furniture’s Founder and Chairman, Mr. Ron Wanek. And next week we will be joined by the company’s CEO, Mr. Todd Wanek. Their families and their company are 100% dedicated to the future of tech ed at all levels of education – from K-12, to technical and community colleges, to university engineering and STEM programs, and to the lifelong learning of their company’s employees as well. Now, Ron, I have to admit that I’ve been looking forward to this episode for many reasons, not the least of which is that you never fail to tell me exactly what’s on your mind. And we know we can expect that today as well. For me, that’s always refreshing. It is fantastic to have you on our program. And welcome to The TechEd Podcast.
Well, great to be here, Matt.
Where Did Your Career Start?
And thank you so much for taking the time. I was reading through, not too long ago, your biography, Ron. And I read the story about starting out in rural Minnesota- and you’re not too far from Winona, Minnesota. I read the story about you collecting a 25 cent a week allowance at the age of eight. And from that somewhat humble beginning on a small family farm, to the work that you’ve done over the course of your career – to building the largest furniture manufacturer in the world, huge retail footprint. It really is in so many ways the story of the American Dream, is it not?
We’re pretty proud of what we’ve accomplished and what our team has accomplished, Matt. In growing up, I had a great uncle and a grandfather who built furniture. And I always thought that furniture would be something that I would like to do. And I would like to manufacture furniture. I started out with a startup company called Winona Industries in 1961. They were in Winona Minnesota. They manufactured cabinets. They grew to be the largest manufacturer of cabinets of their type in the world at that time. So it was a startup operation. And I was a part of it. I started out as a laborer there. I became a supervisor, later on got promoted to a superintendent.
But I worked for three great people who were my mentors. One was an engineer. One of them was a – call it a futurist – always figuring out where the company was going to go. And the other was a great administrator. There wasn’t any straight line of authority there. I worked for all three of them.
I got to learn the business in a nine year period. So I learned all facets of the business including design and understanding that you always have to – Todd has a Wayne Gretzky quote that he likes to use: you’ve got to skate to where the puck is going, not to where the puck is at. You know, always looking at where the business was going to be going and figuring it out.
Now, Winona Industries was a contract business. In other words, they made cabinets for the Admirals, the General Electrics, the Magnavoxes, the Zeniths, all the majors at that time that controlled the electronic business in the world. You depended upon their success. And if they weren’t successful, you didn’t have any business, any work from contract to contract. At that time, I wanted to have our own brand name because our business would be up and down depending upon the contracts that we would get and the success of whatever they introduced. I always wanted to have a strong brand and control our own destiny. And so the first nine years of my career, I learned that.
And then obviously, we’re in the cabinet business and that business started to go to Asia, to Japan. With the Panasonics, the Sonys started to take over that business. And eventually those manufacturers, including Korean manufacturers, wiped out the business in the United States. So we learned that when the business changed, you had to change or your business was going to go away. And Winona Industries did go away, after about 16 years it went away.
How Did Ashley Furniture Get Started?
And isn’t that a great message for our listeners that if we don’t adapt, especially in this day and age, that we run the risk of our business, of our organization, going away? Ron, would you tell us about the transition from Winona industries to Ashley Furniture Industries?
So I had the opportunity to start a small company and do contract work at that time for Ashley Furniture. It was a very small company. It was only in 1970 doing a million and a half dollars worth of business, but we produced their furniture ’til about 1976. Then in 1976, we bought their interest out, and shortly thereafter merged it into Ashley Furniture Industries. So effectively, we grew our business from a million and a half dollars, which was what seed had, which they had.
Ashley was not a manufacturing company, they were a sales company. They were what was called a jobber. A jobber is somebody that has something built to their specifications, and they sell it. We did that with Ashley ’til 1976 when we purchased Ashley, and then merged it into Ashley Furniture Industries. But also I had another good mentor from 1970 to 1976, who taught me the furniture business and the merchandising and understanding how you had to treat customers, which was a different environment in furniture store retailing, versus dealing with a big manufacturers like General Electric or Magnavox, or one of the big companies.
So I – early in my first 15 years of my career – I had great mentors that taught me everything about the business. And that’s so important. And we were very successful. I was very successful. And, and our companies did very well. And later when we needed investors, they also invested in the company because they had confidence in what we did. So yeah, we’re proud of what we’ve been able to accomplish and the opportunities that we’ve had.
What Advice Would You Give to Young Entrepreneurs?
So what an incredible run of success that you’ve had at Ashley Furniture Industries – tremendous, tremendous growth. And I’m sure you’ve learned tremendous amounts of lessons and numbers of lessons. What advice might you have for our listeners, especially those with an entrepreneurial bent as they consider their future?
So if there’s anything that I can give as recommendations is, when you first start your career, you have to have great mentors. A mentor being a friend and also somebody that understands the business. And so early in my career, I was very fortunate in that respect.
But also, I saw the many changes in the business: the ups and downs of the business, and how you had to always be futuristic. And understanding that you could have the best factories in the world, but if you didn’t have a market, and you didn’t understand where the market was going, your business wouldn’t be successful.
And again, with the ups and downs that we have in business, and every year, we would basically shut our factories down about December and start to pick up in about April. It was a cyclical business, and we wanted a business that would be year-round. So we learned really good manufacturing techniques in the electronic business and electronic cabinets when we would run thousands of a given model or whatever. And so we really learned a great, great assembly line automation, in a simple matter when you look back and set up some jigs and fixtures and how you do things really efficient.
So we applied that to furniture later on. And the furniture industry really didn’t operate that way in North Carolina and Virginia, which probably 90% of the furniture was located in Virginia or North Carolina. So that gave us a big leg up, as far as technology and what we did in furniture. We also had to design our own equipment, and build our own equipment, because from contract to contract, the models would change. And we needed to design our own equipment because it wasn’t available in the market. And as I said, one of my mentors was a great engineer who was really good at that. And that was a great advantage for us because not too many people understood that part of the business.
But for anybody that’s getting started in the business and wants to grow in the business, having a good mentor is probably the most important thing that you can have early in your career.
The 1982 Moment – Innovating to Stay Competitive
Now you had a moment that has come to be known as the 1982 moment. I had a conversation with somebody that you know extremely well, certainly better than I do. A gentleman by the name of Jim Dotta, the man who eventually became Ashley’s Vice President of Case Goods and Engineering Support. I’ve been able to work with Jim very closely the last several years. He is the epitome of a world class gentleman, there’s just no question. And he told me the story once, and it goes back to the early 80s, where you recognized that you needed to fundamentally rebirth or change the way that you were looking at Ashley Furniture’s growth in the wake of huge international competition. Can you tell our audience a little bit about that moment, now almost 40 years ago?
You know, we went along and our business was growing pretty good. In 1979 we had about four business expansions, facility-wise, up until about 1979. We were in a severe recession at that time; we were really struggling. So we had to change a lot of things in the business. But we had built probably the best occasional table manufacturing plant in the country.
And we went to a market in 1982. And guess what? The Taiwanese and the Koreans were there with products that were far superior to what we were manufacturing. And when I say far superior, the materials that they were using – the solid oaks, the workmanship that they were able to put in it – because they were in a very favorable environment there from a tax standpoint, and also, from a weather standpoint – a lot milder climate than in Wisconsin, for example. And they were able to produce these products for about half or 40% of what we were able to produce them for.
So we know that we had to change, and our people didn’t want to change and go from occasional tables to case goods – bedroom type furniture, dining room type furniture – they didn’t want to do that. They fought it like you wouldn’t believe.
And I think that’s one of the most challenging problems in business, is it not? Is change management, helping the members of our teams to understand the importance of continuing to evolve the business model. And that can be really, really difficult. Now, I recall you telling me at one point about a trip you took to Asia that really opened up the minds of your team and helped them understand how important it was going to be to change, whether that change was comfortable or not. Can you tell us about that trip?
So I had to take, I had to take our key people to Asia, and show them the competition. And believe me, they were shocked, like I was, because I really didn’t expect to see what I was gonna see. The technology that they had. They ran their plants three shifts a day. They ran 28 days a month, where in the United States, we ran one shift a day. And we ran five day weeks. Again, very different. And obviously, when they ran 28 days a month, 24 hours a day, they really lowered their overhead costs. And the equipment that they had – far superior to any equipment that was available in the United States. The Japanese and the German equipment that they had – far superior.
So it was really, really a shock to see all of this. And Jim was along on one of the trips. And, you know, I was basically tending to overseas manufacturing and that sort of thing. And Jim really had to change the culture, change the culture in the United States and change your manufacturing. But we analyzed where we could compete and made the necessary changes. And here we are today. We’re still manufacturing in the United States. About 60% of what we do is still made in the United States. And that changes from time to time, sometimes a little bit more, sometimes a little bit less.
And over 450 factories, furniture factories closed, and about 300,000 furniture jobs left the United States. And then the furniture factory jobs and the support jobs to 300,000. And we’ve been able to survive, because we’ve always been able to change. But again, doesn’t do any good to have the best factories and the best technology in the world if you’re not reacting to what the market needs are and what the market wants.
What Accomplishment Are You Most Proud Of?
You know, Ron, you mentioned world class manufacturing, designing your own equipment, changing the mindsets of your people, changing an entire culture of a business, taking people around the globe to show them best practices, still manufacturing in the United States, largest furniture manufacturer in the world, a huge footprint of retail stores; I’ve been to Soldiers Walk, that is an incredible park that you’ve put together there in Arcadia, Wisconsin. Ashley for the Arts, university buildings named in your honor…so many accomplishments over the course of an amazing career, in a career that continues – you’re still so active in so many ways. What accomplishment of all of those or others, Ron, would you say you are most proud of over the course of your career?
Well, of course, I’m proud that our business has been perpetuated. As you know, Todd took over the business in 2002. We started out with a million and a half dollars worth of business, and my goal was to grow it to a billion by 2001. And we accomplished that goal in April of 2002. I turned the business over to Todd. Todd became the President in 1996, and obviously had been involved in the business many years before that. But really learned every facet of the business, including living in Asia, personally with his new wife for five years, because obviously, that’s where the competition is. And that’s what you have to understand. We also had factories in Asia, and he ran those for a period of time, and had to make the necessary changes there.
But what I’m most proud of is the fact that we perpetuated our business, and we’ve remained a family business and been successful. And that’s the thing that I’m most proud of. I’m also proud that all of my children are are not only productive, but they’re also charitable. And you didn’t mention our heart research program or diabetes research program which we got going for cures for diabetes and cures for heart defects. So those are the things that I’m most proud of, Matt.
Horatio Alger Award and Legacy
Excellent, and certainly that philanthropy should not go unmentioned. And it’s just tremendously amazing how in so many ways, Ashley Furniture and in the Wanek family has given back to so many elements of our society. I want to talk a little bit Ron, if we can, about the whole the whole idea of legacy and maybe starting by I saw on social media last week that you were awarded the 2020 Horatio Alger Award. And for our audience members who may not know, that award symbolizes the Horatio Alger Association’s values, which include personal initiative and perseverance, leadership and commitment to excellence, belief in the free enterprise system and in the importance of higher education, community service, and the vision and determination to achieve a better future. Certainly no better individual to be included on that list of awardees than their Mr. Ron Wanek. Ron, can you share with us in our audience what that award means to you?
Well, it’s indeed an honor. Obviously, there’s 14 people that are selected from the United States and Canada. So it’s a very small group of people were honored with this Horatio Alger award. So I’m very proud of that. But the fact is that they recognize – call it the American Dream – coming from a humble beginning. When I grew up, my father was a sharecropper. And I didn’t have indoor plumbing or electricity ’til a very young age of about nine when I got electricity, and about 12 when I got the indoor plumbing.
So my father always had a saying: “You fix the barn before you fix the house”. In other words, you better make sure your business is in good shape. And he was successful in farming. Before we started out, he eventually bought his own farm and became successful. So that’s the kind of environment that I grew up in. And to be recognized where, you know, growing a business and being successful, and being able to contribute to society and others, and education, those are the things that I’m most proud of.
And certainly well deserving of that award. And you mentioned the story of the American Dream, and how you’re such a great example of what that American Dream can look like. And coming from humble beginnings with a father as a sharecropper, going on to create an incredible company like Ashley Furniture, along with so many other individuals that have been part of that. But as you kind of think about the legacy that you leave behind, is legacy important to you, Ron? And and if so how would you like your legacy to be defined?
I’d like to have a little bit of something. You know, when I grew up my father told me, you could never build a big business. And we used to look at businesses that were quite large and talk about it, because I always had that as a goal. But he told me, you can’t build a big business back in that day. You know, that high tax rate back then was 92%. It was a graduated tax rate. But then Kennedy became President, and they dropped it from 90-some percent down to – the highest tax rate – down to 52%. And later on, when Reagan became President, they dropped it down to 28%.
So we’ve always invested everything that we’ve earned back in the business. And fortunately, the environment had changed to my favor from my father’s era when we started to become successful. And we had money to invest in the business because we were able to reinvest our profits. So that’s something that changed in my lifetime, the right way. And anyway, had a lot to do with our success.
But fix the barn before you fix the house has always been our model. And invest in your business. Make sure that you’ve always got the best equipment as my father did when he was farming. And continue to invest and make sure that you’re on the forefront of design and engineering.
How Has Technology Changed Your Business?
So fixing the barn before you fix the house that, obviously just an incredible lesson for just about any any element of society, but certainly for the world of business. Talking about the changes in tax policy that have certainly benefited not just business owners, but more important their employees, their communities, their suppliers and in how tax policy can have such a huge impact on the ability to grow a business and to grow a community. And those changes were obviously very important. As you look back at the long history of Ashley Furniture, what aspect of the business has technology changed the most?
Well, I think that right now, we’re probably going through the biggest change that we’ve had. When I see what our robots are doing and some of the heavy lifting that they do. And some of the repetitive motion that we’re now doing with robots, and how much easier many jobs have gotten. When I go out and look at what they’re able to do with robots today. And again, in some of the areas where people were handling a lot of heavy lifts today, how that’s improved.
When I look back through my career in the business, that’s probably one of the things that’s changed most and is poised to change in the future. You know, I sometimes forget that when we use expressions like, “fix the barn before you fix the house,” a lot of people don’t know what the barn was for anymore. The barn is where you made your money. Back in the day when you raised cattle and milked cows, got your cash cows – you always fixed the barn before you fixed the house.
So it’s even more and better because obviously, we’re getting better and better at this, and we’re going to be be investing more and making it better.
How Does Education Need to Adapt?
Absolutely. And whether it’s reinvesting in a barn, reinvesting in a business, reinvesting in education – making sure whatever fuels that engine is cared for and stays cutting edge is such an important part of running any successful enterprise. And certainly I would concur. As we look at the investments that Ashley has made in the world of technology, automation, robotics – I’ve seen it firsthand in working with your team. As we close out our time together -what a great discussion it’s been – I would love for you to offer some final thoughts to our audience about the state of American education, of technical education, and about how education needs to adapt as we move ahead.
Well, you know, Matt, we’ve been studying this for five years. Five years, and we’ve spent a huge amount of money, probably in the neighborhood of $10 million in the last five years on just research. And we’ve had a large staff, including Jim Dotta for three or four years that spent the bulk of their time on this and traveling the world and looking for technology. And then we have requests from universities and tech colleges for funds. And obviously, the most important thing that we can do is advise them on how to spend their funds. And, you know, if it’s a worthy project, then we’ll participate.
Regarding education, you know, we feel real good about the fact that we kind of know where it’s all at globally. So that helps us direct a lot of the educational institutions. I also work with some of the states like Florida and Mississippi and trying to assist them on improving their technical education programs in other states. But, you know we’ve talked about this – Indiana by far has the best technical education – by far – in the United States. And so, those are my comments.
Well, Mr. Ron Wanek, thank you so very much for spending time with us today on The TechEd Podcast. It’s been a great discussion. We really, really appreciate your time. Mr. Ron Wanek, Founder and Chairman of Ashley Furniture Industries. Next week, we will be joined by the company’s CEO, Mr. Todd Wanek to talk about today’s operations at Ashley Furniture and to talk about his perspectives on technical education. You won’t want to miss that episode of The TechEd Podcast. Thanks so much.