American Textile Co. develops new products, grows to new heights

 

In its 92 years in business, American Textile Co. hasn’t made a single acquisition. But that’s not to say the bedding manufacturer hasn’t grown.

Since the early 1990s, its revenue is 41 times larger and the company has gone from about 90 employees to more than 1,000 by diversifying its channel and product offerings. It has factories in four states, a cut and sew center in El Salvador and a sourcing office in China. American Textile products can be found online, in more than 40,000 stores across the U.S. and in at least 14 countries.

“Our go-to thinking has always been what would it take for us to build this ourselves versus buying that company in the way of equipment and the way of people. Time and time again, we come back to ‘let’s try and do it ourselves,’” says Lance Ruttenberg, president and CEO. “We think that’s a more cost-effective way. It’s slower to get to the place you want to get to, but in our opinion, it’s the most cost-effective way to enter a new space and to completely control it.”

Some of that organic growth came under the leadership of Jack Ouellette — a nonfamily member who ran the company for 20 years until he retired in 2013 and the third generation of Ruttenbergs, which includes Lance and his brother Blake, could step up.

Lance says their father got sick in the early ’90s. Ouellette had been with the company since 1976, so he was named president in 1991.

The third generation wasn’t ready to lead the entire company and didn’t have the qualifications to do the job. So, rather than default to a family member, it was the right move to let the leadership fall outside of family control.

“In hindsight, it was a very, very effective way to bring in the third generation without rushing them into the roles that we now have,” Lance says, who became president in 2011 and CEO in 2013.

Blake is the company’s executive vice president of sales, marketing and product development. He is also the president of AmeriFill, the contract manufacturing division of American Textile.

“A business family is about, for us, putting the business before the family. We take care of our customers. We take care of our employees. And that’s the business aspect of it. If those two things are taken care of, everything else takes care of itself,” Blake says.

Ouellette helped shape Lance and Blake into the leaders they are — and create American Textile’s culture today — with a selfless outlook where it’s about making everyone around you better.

Expanding with purpose

For more than 80 years, American Textile was primarily a private label supplier of utility bedding products, such as pillow and mattress protectors.

Today, it also sells sheets, pillows, mattress pads, comforters, blankets, throws and accessories, as private label and branded goods, both through retailers and e-commerce. It supplies hotels and motels, and contracts with noncompetitors for things like filling pet beds, stuffed toys or decorative pillows. The company has relationships with Sealy and Tempur-Pedic, and it produces its own brands, AllerEaseÒ and MyTempä.

“The average consumer might not know, necessarily, that they came from American Textile, but hopefully that didn’t impact the decision to buy or not. It’s the product itself and the things that go with the buying experience,” Lance says.

In fact, he says the company takes pride in having a relatively low profile.

The need to diversify, however, came from the consolidation of retail.

“We had to adjust accordingly, and part of that adjustment was knowing that there were fewer customers that we are going to be able to sell to and we had to be really important to those ones that were left,” Lance says.

That sentiment goes both ways because the retailers that remain desire to be more strategically aligned with their suppliers.

American Textile was an expert in a small category, mattress covers and pillow covers, and that became the most profitable four feet in the bedding area in many of the company’s retail partners, Blake says. By being focused, it was able to, over time, draw market share from larger companies and become the dominant player.

When American Textile expanded beyond pillow and mattress covers, it moved from commodity-based items to using innovation and technology to build a portfolio of products that solved a problem.

“We didn’t just go in with a commodity item into those other categories. We had a story to tell, and we had a need to address,” he says.

Do it right

American Textile created a line of allergen barrier products to protect against dust mites and a line of temperature balancing products for people who sleep too hot or cold. The AllerEaseÒ brand, for example, started with allergen barrier pillow and mattress protectors, which were built out into bed pillows, mattress pads and comforters.

“We started using technology as a tool and as a mechanism to really broaden our share within those categories,” Blake says.

Ideas like these come from understanding trends and spending time talking to consumers and suppliers.

“Our objective is to be on the front end of innovation, and to have unique technologies that are proprietary that have strong claims that can be supported by real science,” Blake says.

American Textile makes sure it validates any data itself, even if the technology was created by someone else. It often develops new products with a strategic partner.

American Textile also does a lot of product research and fact-based selling, which increases success.

“In the ’90s, we just used to say, ‘This looks like a good idea,’” he says.

Today, every six months, Blake says the company uses trends across its seven product categories to create ideas, and then validates the ideas through focus groups, concept evaluation, and market research and analysis.

“We’ll typically start with about 12 concepts for one of our market launches every March and every September. We’ll end up with about six. So, we’ll kick out half of the ideas that we have, that we’ve built up,” he says.

When you’re diversifying into new products, Blake says be careful, responsible and have a point of view that’s different from what’s being done in the market.

“I love to say that we like to watch things that are disruptive in the marketplace,” he says.

Retailers know that American Textile has done its homework with unique technology that serves a need, and that reputation and track record is why customers give the company new opportunities.

If you take something to market without doing the research, when it doesn’t sell, the retailer is upset because it has to mark the product down, which costs them money, Blake says. You also have to get rid of the excess inventory, which costs you money.

“Nobody’s happy. So, there’s an old saying, ‘Do it right the first time,’” he says.

A smart use of resources

But as you diversify, it’s important to keep to your core competencies. Lance says don’t lose your focus.

“I mean, we are a bedding company and there have been times when we dipped our toe in things that were non-bedding — (and) very quickly recognized that that was not something that we knew or understood, and we should walk that back,” Lance says.

When American Textile wanted to grow into supplying the hotel and motel space, it found a strategic partner to help make the introduction.

“It’s not like they’re introducing somebody who has no idea, you know, how to make a pillow,” he says. “Even though our pillows are sold to retail, we are very much capable of selling them to a hotel.”

Once somebody gives you an opportunity to develop a product specific to that channel, you can build upon it.

But not every new product worked out as well. One example was when American Textile looked to expand beyond from its core market of North America to Europe.

“Europe was a disaster,” Lance says. “We found that every European country had its own language, it had its own standard bed sizes, it had its own likes and dislikes. We wound up with tremendous SKU proliferation.”

When you pull back the curtain, you realize it’s a dozen smaller markets rather than one large European market. Consumer preferences varied, and insurance was sometimes utilized for specific kinds of bedding products in one country versus another.

“We, after we were there for a few years, recognized that maybe there was a better way for us to use our resources. It doesn’t mean that we wouldn’t love to be in Europe, and we would love a European partner, but it is a much different market or channel than the markets that we are in,” Lance says.

Protect the culture

As American Textile invested in itself, hired more people and built factories, it has had to learn to protect its culture.

Lance says if they made a hire that wasn’t a cultural fit, it could become problematic, sort of like a cancer to the culture.

“That was probably the biggest lesson along the way, as we grew, is to protect that culture above all things,” he says.

The culture has gotten more sophisticated in how it manages the employee base, such as holding people accountable, but it’s still about making American Textile a great place to work and build a career, Blake says.

“You could argue that when companies get bigger, they lose their culture. I would argue, as we got bigger, our culture got better because we made it important. It was a priority for us,” he says.

For example, the company didn’t used to have career pathing. Now, it is creating training, education and career pathways, so its employees know what they need to do to advance themselves.

To keep the culture consistent across multiple locations, the business follows some common strategies.

“There are all sorts of things that we do, up to things as simple as making sure that the painting and the carpeting and the physical appearance of the offices and factories resemble one another,” Lance says.

American Textile has companywide communications and award and recognition programs. The executives make an effort to ensure the other facilities feel like they are a part of what happens in Pittsburgh, including making regular visits.

And when a new hire doesn’t fit the culture, it’s usually obvious quickly, Lance says.

“We have hired senior executives that had a great resume that had a way they would manage people that was inconsistent with the way we would. It doesn’t mean their way was wrong or not effective; it just wasn’t the way we were comfortable with,” he says.

You can’t settle for less, because it doesn’t take but one bad person to disrupt everything you’ve spent all your time working for, Blake says.

“If you’re an incredibly talented individual, but you’re going to be disruptive to our culture, you’re not going to work at our company,” he says.

 

Takeaways:

  • Build a portfolio of products by solving a problem.
  • Put in the market research to do it right the first time.
  • Protect and strengthen your culture by focusing on it.