Furniture maker cuts pay of all employees to help cash flow

LAMAR, Mo. – One of southwest Missouri’s largest employers will reduce the pay of all

employees by 6.6 percent in March for an indefinite period.
O’Sullivan Industries Inc., which makes ready-to-assemble furniture sold by large retail chains nationwide, announced the decision Friday to its 800 employees, saying it needs to improve cash flow. Production workers and management will be affected, the company said.
Company contributions to employee savings and profit-sharing plans will also be suspended effective March 5.
The news comes less than a week after the company faced a deadline from the city of Lamar to either pay its electric bill or lose power to the plant. The $219,000 bill was paid on Jan. 26 with two hours to spare.
City officials had denied O’Sullivan’s request for a six-month delay in paying utility bills.
O’Sullivan emerged from Chapter 11 bankruptcy protection in April 2016 and later closed its smaller plant in Virginia, consolidating all manufacturing at the Lamar plant. Employment at Lamar has varied widely since the company moved to the town in 1964 from the eastern Missouri town of Owensville, where it was founded in 1954.
Kelly Terry, senior vice president of operations, said Friday the company was progressing well in its restructuring program. The temporary pay cuts were a last resort, Terry said in a written statement.
“We investigated every possibility we could to avoid reducing the compensation and benefits of our employees,” Terry said. “However, our turnaround plan requires additional temporary cuts to enable us to maintain the liquidity we need to operate efficiently. We plan to increase salary and wages to their former levels as soon as financial results allow.”
Plant manager Paul Britton declined Friday to say how much the measure was expected to save the company. He said he didn’t want to connect the pay reduction to the utility payments.
“We had a need to improve our liquidity across the board,” Britton said. “This is one of several initiatives.”
O’Sullivan is the largest employer in Lamar.
“We hope they survive,” City Manager Lynn Calton said. “They’ll do what they have to do to stay in business.”
A $245,000 utility bill is due to the city in two weeks, but company officials said on Jan. 26 that they would not have a problem making that payment on time.