Dive Brief:
- La-Z-Boy is deploying special teams to help boost production at its own facilities and at suppliers' factories, President and CEO Melinda Whittington said on a Q3 earnings call.
- In at least one instance last quarter, the furniture company deployed the team to help one of its domestic suppliers "increase their production of component parts for La-Z-Boy, as they too are experiencing labor challenges," Whittington said.
- La-Z-Boy is also adding suppliers and sending "SWAT teams" of industry veterans to mitigate the impact of labor shortfalls at its own factories. The company expanded its manufacturing footprint in the past year, but a lack of trained staff has led to production inefficiencies.
Dive Insight:
As the manufacturing sector continues to struggle to find and retain workers, businesses are working closely with suppliers and getting creative to maintain production. John Deere also provided supplemental labor to help suppliers increase components output, according to a company earnings call last month.
Although manufacturing production expanded in February, supplier deliveries slowed at a faster rate compared to the month before, according to a survey from the Institute for Supply Management. Companies surveyed also indicated that hiring progress slowed, with a smaller share of businesses noting greater ease in hiring last month.
"Challenges with turnover (quits and retirements) and resulting backfilling continue to plague panelists' efforts to adequately staff their organizations," Timothy Fiore, committee chair of the ISM Manufacturing Business Survey, said in a statement.
La-Z-Boy is taking a more hands-on approach to labor shortfalls after a lack of components such as electronic chips and actuators disrupted manufacturing of the company's higher-end products.
A rise in omicron cases and a lack of trained staff disrupted production plans at the company's own factories, prompting La-Z-Boy to deploy "SWAT teams comprised of some of our most experienced leaders" to help increase output at struggling factories and assist with training, according to Whittington.
La-Z-Boy said it had as much as 20% of its workforce out at times in January due to omicron, "orders of magnitude higher than our previous worst peaks last winter," Whittington said. Cases have since quickly trended downward, but the company said it will take time to recover from omicron's impact.
"Ultimately, demand for our product is strong and we are already delivering sales at all-time record levels," Whittington said. "But we must do better to weather each disruption, continue to increase our capacity, improve cost efficiencies, work down our backlog, and service our customers and consumers."
