ARCHBOLD, Ohio — Sauder Woodworking Co., which has been making products for Ikea’s American subsidiary since 2007, said on Tuesday that it has been awarded a new five-year supplier contract by the Swedish home furnishings retailer.
The contract to manufacture four furniture lines currently sold in Ikea stores will create 150 new jobs at the Fulton County ready-to-assemble furniture manufacturer. As Ikea adds more U.S. stores over the next few years, Sauder may add up to 100 more workers to meet increased demand for the four furniture lines, which consist of about about 60 products overall.
The company currently makes more than 700 products. Some are sold under its Sauder brand name, and others are sold under private-label brand names for retailers such as Target and Walmart.
“I’m really excited about this and about bringing new jobs to Archbold. This is good news,” said Kevin Sauder, president and chief executive officer of the Archbold-based firm.
Under the arrangement, Sauder Woodworking will supply bedroom, office, entertainment, and children’s storage furniture.
One of the lines Sauder will produce for Ikea is the retailer’s popular Brimnes bedroom furniture.
Mr. Sauder said the contract will require Sauder Woodworking to invest more than $13 million in new production equipment. Since 2007, Sauder has been manufacturing parts for Ikea’s Akurum kitchen cabinetry line.
“They also renewed the kitchen line as well for another five years under this contract,” Mr. Sauder said. “They are rolling the two in together. It actually triples the size of the previous contract.”
Rob Olson, chief financial officer for Ikea U.S., said, “Ikea strives for long-term partnerships with suppliers to secure efficient production and growth. The relationship between Ikea U.S. and Sauder Woodworking is a good example of that.
“With our planned growth in the U.S., we are looking to expand our manufacturing base here so that we can deliver our products economically and sustainably,” Mr. Olson added.
Ikea is planning to expand its U.S. presence and has announced it will open three new stores in 2014 and 2015 in Miami, Merriam, Kan., and St. Louis.
Mr. Sauder said his company and Ikea have been working on the new contract for several months during which the Swedish retailer outlined the products it wanted made and Sauder officials explained what Ikea could expect from U.S. suppliers.
In February, Ikea’s chief executive officer Peter Agnefjall visited Archbold to tour Sauder’s operations and be assured that Sauder could handle the job.
“Clearly, we have valid experience performing to their specifications. They give us great reviews on all of their performance indicators,” Mr. Sauder said. “And they really liked our culture and the whole quality of our work force.”
Mr. Sauder said Ikea officials explained that because the company is growing its U.S. retail base — it currently has 38 stores with plans to add several more — it wants to reduce transportation costs by having more of its products made in America and reduce reliance on European factories.
“It’s exciting to see the input we can get from a world class retailer like Ikea,” Mr. Sauder said. “It will be a real win-win and the nice thing about an Ikea contract is it’s a five-year contract, so you can be assured you’ll get a return on your investment.”
Mr. Sauder said his company has tentatively been approved for a grant for training purposes through the state of Ohio. It also expects to receive job-creation tax credits from the state’s JobsOhio program and from the village of Archbold for its investment in new machinery.
The company, which employs nearly 2,000 workers currently, expects to begin hiring for the new Ikea manufacturing lines later this year with production of the first products beginning before year’s end.
Mr. Sauder said the company has more than 120 temporary workers who will get the first opportunities for full-time employment on the Ikea manufacturing lines. If production increases, as expected, more workers will be added as needed, he said.
The Sauder CEO said an added bonus is that the Ikea lines will require new technologies that Sauder does not currently have. Those technologies will be used for the Ikea lines, but also benefit Sauder Woodworking’s lines of ready-to-assemble furniture.
“Their technology produces seamless looks at the edges and tops of furniture with wide-panel wrap. It really will benefit all of our products,” Mr. Sauder said.
In 2013, approximately 25 U.S.-based suppliers, including the Ikea Industry factory in Danville, Va., supplied approximately 19 percent of the volume sold in Ikea’s U.S. stores. Another 12 percent is produced elsewhere in North America. Products currently produced in the United States include kitchen cabinets, mattresses, sofas, entertainment furniture, shelving units, and appliances, Ikea said.
Sauder Woodworking’s relationship with Ikea began in 2007 when it was contracted to manufacture frames and shelves for the kitchen cabinetry. The deal was struck after Sauder conducted seven months of negotiations with Ikea on specifications for the cabinetry components, which before 2007 were made in Eastern Europe.
At the time of the 2007 contract, Mr. Sauder said Ikea chose Sauder Woodworking because it had a combination of price, quality, and manufacturing capacity that the Swedish retailer needed.
IKEA operates more than 350 IKEA stores in 44 countries, including 38 in the United States.
The closest store to Toledo is about 50 miles away in Canton, Mich., west of Detroit.
Contact Jon Chavez at: email@example.com or 419-724-6128.