Beth Macy's Factory Man (Little, Brown, 2014) is a great recounting of an untold piece of American business and manufacturing history. It begins in 1902, when John D. Bassett (called "Mr. J.D.") started Bassett Furniture in his front yard, using the lumber from his own small sawmill, and then built Bassett Furniture into one of the largest furniture manufacturers in America. It concludes with the great battle that his grandson, John Bassett III, led against Chinese unfair trade over a century later, when Chinese furniture manufacturers dumped their way into the U.S. market.
The book is composed of three interwoven stories. The first is the early history of Bassett Furniture and Mr. J.D. Together with his extended family, Mr. J.D. started many of the large southern furniture companies that came to dominate the U.S. industry. He, his brother, and their children lived a charmed and colorful life on the top of the hill overlooking the company town he founded in rural Virginia, called, quite simply, Bassett. Mr. J.D. never learned to drive and employed a chauffeur, Pete Wade, for many years. When his children teased him about it he responded "I pay Pete 25 cents an hour so I can sit in the passenger seat and think about how to make more money." As to manufacturing, he opined, "You get what you inspect, not what you expect." He was the first of many in the Bassett family to have "sawdust in his veins." One of the many family sayings was "You never know how long a snake is till you kill him and stretch him out." The book does not skirt around early examples of racial discrimination in Bassett. But it also notes that Mr. J.D. was the first southern furniture manufacturer to employ blacks, albeit at a much lower wage than their white counterparts.
The company thrived, surpassing its northern and Midwest competitors by being closer to the main raw material—lumber from the Virginia forests, maintaining an advantage in wage rates, and being run by great manufacturers who understood how to make things and cut costs. Mr. J.D. handed the company over to his son Doug, who built it up even further. Mr. J.D.'s grandson, John Bassett III (JBIII), was the pre-ordained successor. On the day of his birth, Mr. J.D. sent him a letter (along with a check for $1,000) that said "I will not be living when you are grown, but I want to say to you that I am hoping you will do big things, following the pace set by your grandpop and your dad. We are going to expect much bigger things of you than we were able to do, as you are living in a more progressive age…I want you to know that I love you and always will, and expect you to be a great man some day." JBIII kept the letter in a frame on the wall of his office at the imposing company headquarters in Bassett (referred to as the Taj Mahal). The letter was a great vote of confidence to receive on the day of your birth. Many people might also have found it to be a kind of burden, but I don't think JBIII did.
In any case, in an inexplicable moment of Shakespearian poignancy, on his deathbed JBIII's father named someone else to run Bassett Furniture: Bob Spilman. Spilman was the husband of JBIII's sister Jane.
The course of JBIII's life after that decision is the second interwoven story. JBIII hoped to stay within the company and be a good lieutenant to his brother-in-law Spilman, but that proved to be impossible. Spilman unceremoniously moved JBIII's office out of the Taj Mahal, framed letter from Mr. J.D. and all, and relocated him to an abandoned store down the main street of the town his grandfather founded.
JBIII left Bassett Furniture and went to work at a backwater affiliate called Vaughan-Bassett Furniture, down the road 70 miles in Galax, Virginia. He proved himself there, building the company up, starting new lines of furniture, putting in his own money when necessary, and making Vaughan-Bassett a significant manufacturer. All was well until about 2001 when Chinese wooden bedroom furniture started coming into the United States at prices below the cost of Vaughan-Bassett's raw materials. The Vaughan-Bassett team tore down the product and knew there was no way it could sell at that price without dumping, which is basically selling below the cost of production and injuring the U.S. industry. Vaughan-Bassett was losing customers precipitously, and it was time to panic. But as JBIII often said, "it is better to think through a problem than to panic." Macy notes what almost certainly must be true: JBIII's ostracism from Bassett Furniture and the lessons he learned as a result gave him the strength to be the person who could take on China.
The third interwoven story in the book is about that fight and how JBIII formed an industry coalition to file the largest antidumping case ever against China. It is a story of trade and manufacturing in the post-NAFTA, post-WTO, post-globalization world. This is where the book becomes unique in the annals of U.S. business practice and history. There are, in truth, many books that tell the rags to riches story of Mr. J.D. But none I am aware of take a family history to the third generation down, and tell of the fight to maintain a company in the face of the challenges of China and other unfair traders in the 21st century. This is perhaps the more important and inspiring story for our time, past the rags to riches era and the greatest generation. It asks and answers the question, how do we as American manufacturers and people who support them live on now?
There are not many people who have taken up this cudgel. JBIII is a paragon in that he did it without a lot of help from other manufacturers in his industry—many of whom had already started buying from China rather than make product themselves—and without a lot of guidance.
With one caveat. He had a good law firm and a good lawyer. (By way of full disclosure, preeminent trade lawyer Joe Dorn of King & Spalding represented JBIII's coalition in the dumping case). But none of it could have happened without JBIII's determination to make it happen. The dumping case was successful, despite the fact that 53 law firms lined up against JBIII and King & Spalding. Many of the large retailers opposed it. Ultimately, the case resulted in the addition of relatively high duties on Chinese bedroom furniture imports, reversing the market share gain of the Chinese and providing breathing space for Vaughan-Bassett and other U.S. manufacturers. Chinese exports of wooden bedroom furniture were more than cut in half, from $1.85 billion down to $538 million. And at the same time, JBIII kept on making furniture and practicing his favorite skills as a factory floor manufacturer: acting with alacrity and never giving up.
Macy adopts an interesting style in her writing, interlacing the narrative with some of her own feelings and describing how she went about pulling the whole complex story together. It works pretty well. We get a full life picture of the Bassetts and their times, as well as a good sense of Macy's take on it. I wish sometimes she would get deeper into the feelings of JBIII and the other key players. JBIII would not talk to her much about his feelings about leaving Bassett Furniture. So be it. That's understandable. But it creates a sort of "on the surface" feel to some of the drama and lacks internal monologue.
At a broader level, this is a book about how to deal with globalization, a subject that is almost taboo. No one wants to suggest they are not ready for the 21st century. But it's really not a question of not being ready. It's a question of whether our country has set up the terms of trade in a way that is fair for the U.S. manufacturer and the U.S. worker. Shouldn't the President, the United States Trade Representative, and the Department of Commerce take action about Chinese unfair trade before Chinese market share in an industry reaches 20 or 30 or 50 percent and millions of people are out of work? Shouldn't the U.S. financial community encourage and support U.S. manufacturing rather than, as depicted in Factory Man, encouraging U.S. companies to off-shore for short-term benefits? Shouldn't the government and the financial system care about people like Frances Kissee of Henry County, Virginia, who went through six jobs, with plant after plant closing? She finally ended up working in a call center, but then the call center closed when the work was sent off-shore to the Philippines.
Anyway, here we are. Many of the trade deals we have struck do not take care of the manufacturers like JBIII or the workers like Frances Kissee. As the book insightfully notes, when you are unemployed, the unemployment rate is 100%. Given the unfairness of many of the deals we have entered into and the failure of U.S. Presidents and Trade Representatives to stand up to the problem, it takes people like JBIII to do that.
This kind of strong stand cannot be taken without incurring a lot of opposition. The book notes the opposition of economists and trade lawyers who said JBIII's case was a "futile gesture" that only resulted in furniture manufacturing moving from China to Vietnam. The opposition criticized JBIII and other members of his coalition for taking millions of dollars in payments under the so-called Byrd Amendment, a now revoked piece of legislation (revoked because the WTO said it was WTO illegal) that provided that duties collected in antidumping cases would be paid over to the petitioners. It also notes criticism of JBIII and King & Spalding for settlements in the dumping cases, where some Chinese respondents paid significant amounts to avoid being subject to annual reviews in the cases and potentially having their antidumping duty rates raised.
But when it's all said and done, I think Mr. J.D. would be okay. JBIII has done big things. Vaughan-Bassett furniture is still making furniture in Galax, Virginia and reopened a plant there that had been closed since 2006. It is now the largest wooden bedroom furniture manufacturer in America. Galax is still there and other manufacturers and businesses have been attracted to the town by the Vaughan-Bassett economic backbone. Many American manufacturing towns are ghost towns and many American furniture manufacturers are ghost companies. The people of Galax thank him that Galax and Vaughan-Bassett are not among them.
There is no ultimate conclusion in the book, or in the history we continue to live. But as Joe Wilson, a local resident and folklorist said, "John Bassett's boldness will be remembered for generations…John had the faith in the workers here… Free trade really meant that no one was looking out for these little people…He was bright enough to know that what was going on with [globalization profits] was just temporary, and our government was going along with it, and he had to nip some of it in the bud."
At least for now, JBIII has had the last word.
