Carl Hansen & Son found success by trusting in quality and craftsmanship
One of the world’s most storied furniture manufacturers was in dire straits two decades ago, before its current owner and CEO pulled off a remarkable turnaround.
Asked to explain how Carl Hansen & Son has continued to defy the odds and survive as a Danish furniture company making its products in Denmark, Knud Erik Hansen refers to the humble bumblebee. ‘Basically, the bumblebee shouldn’t be able to fly. It’s impossible,’ he says. ‘And yet we manage. But it’s not without extremely hard work.’
Hard work is something Knud Erik knows a thing or two about. The current owner and CEO of Carl Hansen & Son is the grandson of the furniture maker’s original founder and namesake, but it was far from destiny that he would one day run the family business. He began his career in the cutthroat world of global shipping and worked for 20 years in East Asia. It was only in 2002, when his elder brother decided to retire, that the prospect of taking over the family business suddenly became a reality for him. He recalls: ‘I spoke to my wife and she said, “If you want to do it, go for it.” And I did.’
When Knud Erik was handed the reins later that year, the company had, as he puts it, ‘very little future’. With just 20 employees and no recognisable brand presence in the global furniture industry, it was a tiny manufacturer with one highly valuable asset – the rights to make several chairs by the famed Danish mid-century designer Hans J Wegner – but also with intense competition on all sides from brands that were outsourcing production to East Asia and Eastern Europe.
Today, Carl Hansen is one of the most respected furniture companies in the world, employing over 400 people, on the brink of moving into an expanded factory in Denmark, and with a newly opened production facility in Vietnam (to manufacture furniture for contract projects such as hotels and resorts). The company’s turnover is set to reach 1 billion Danish kroner (€133m) in the next few years. Knud Erik has been at the helm for this impressive turnaround. How has he managed such a feat?
“What you have here is a piece of furniture that your children will fight over, when you are gone, and that one day your grandchildren will also fight over. That is sustainability.”
For starters, the owner and CEO has trusted in craftsmanship and stayed committed to quality, even when countless others in the industry were scrambling to reduce costs. ‘Denmark is a high-cost area for production,’ he says, citing the high salaries and taxes. ‘But Danes are very good craftsmen and hard workers. They’re expensive, but you’ll get something for your money, and you’ll have very few mistakes. That’s where we survive.’
Knud Erik and his team have taken a bet that there will always be demand for high-quality products, making an important distinction between quality (focused on craftsmanship) and luxury (more about marketing and brand). ‘It has to be like a Rolex watch: it has to last for generations,’ he says. ‘Because otherwise people lose faith in it and then we’re finished. We compete on quality and not on price.’
With the fashion and furniture sectors increasingly focused on sustainability, it seems that bet is now paying off. Today, more and more wealthy consumers are looking for longevity. Carl Hansen & Son chairs manufactured in 1914 are still in use at one of Denmark’s leading museums, the CEO points out, and are still in production today. ‘What you have here is a piece of furniture that your children will fight over, when you are gone, and that one day your grandchildren will also fight over. That is sustainability.’ (As it happens, the factory in Denmark is also incredibly environmentally friendly, with excess wood shavings contributing to heating 470 local houses.)
Like all companies, however, Carl Hansen & Son is likely to be impacted by the current Covid-19 pandemic and its ongoing economic fallout. Yet Knud Erik is facing the threat with positivity. ‘It’s very easy to take a negative approach and start sacking people and winding down and keeping your fixed costs low,’ he says, ‘but we haven’t done that. We continue at full speed and we have an optimistic way of looking at it.’
“I would much rather see the fourth generation move in and continue the business and see it flourish and grow.”
So far, he and his team have weathered the storm well. The business is set up to take decisions in the longterm interests of the enterprise. ‘We don’t have a shareholder breathing down our neck and we’re not on the stock exchange, where every single day matters,’ he says. ‘We take long-term decisions here.’ The business structure is relatively flat, yet each department is headed up by a real expert in that field, meaning that ‘communication is quite free, and we can take decisions very quickly’ – vital in a fast-moving crisis.
Perhaps most importantly of all, though, as the owner of a family business, he knows that his own commitment is completely unwavering. ‘In a private company, the owner is engaged up to his neck, whereas in a public company, you have a director in place who could actually walk out and find himself another job,’ he says. ‘When you own the company, your reputation would be ruined if things went wrong.’ It is one of the simultaneous pleasures and pressures of having your name above the door.
As Knud Erik approaches his 70th birthday, however, the central question is: Will the Hansen name remain above the door in future? The owner admits that he has received very generous offers to sell the company. But he isn’t interested. Instead, he is looking to hand the business over to the fourth generation – to one of his two sons, currently studying. First, though, this son needs to go out and learn by doing – or, as Knud Erik puts it, ‘to work hard and be in a position where he’ll get sacked if he doesn’t do well. That matures you.’ (A hint of that ruthless streak that was honed over two decades in the shipping industry.)
He’s keen not to place a strict timeline on this succession but imagines it will be sometime in the next five or six years. For Knud Erik, that is a far more satisfying prospect than selling the company to the highest bidder. ‘I would much rather see the fourth generation move in and continue the business and see it flourish and grow,’ he reflects. ‘My goodness, that’s exactly what I want. That way, when I retire, I’ll feel I have done what was required of me. And no harm that I’ve had a lot of fun doing it.’