Keeping the temper down: with a historic brand and tight-knit culture, Mebane-based Kingsdown wants to give its larger mattress rivals nightmares.

• Author: Martin, Edward
• Position: Cover story

At the loading dock of a windowless industrial building on a side street in Mebane waits a 40-foot Evergreen shipping container. "Russia, or maybe China," Kevin Damewood speculates as he approaches, unsure of its destination. Inside the building, those soon to be stuffed into the container are tortured to see how much abuse they can stand before breaking down. Machines inflict the pain. "Hey, Tony," Damewood yells to a technician, "can you operate this thing?"

Tony Nelson settles at a computer. "He can set this up for any type of body," Damewood explains, "a 112-pound person or a 250-pound person." Hydraulic arms rhythmically prod the head, back and groin regions. Another device called a Rollator has a 250-pound barrel that relentlessly advances and retreats, squashing everything in its path.

Sleep is a tough business at Kingsdown Inc., North Carolina's largest mattress maker. Punishing mattresses to test performance and endurance respects no rank. Some Kingsdown products sell for about $16,000. They get beat up no less than models that retail for about $900, the low end of the premium, handmade-mattress industry. Damewood, an executive vice president overseeing marketing, pauses at the roller. "This emulates 10 years of you tossing and turning," he says.

Mattresses have it tough here, not unlike the competitive outlook facing Kingsdown. Until about 15 years ago, mattresses were a commodity: "just a white rectangle" in the words of a trade-association executive. Branding wasn't emphasized. Everything changed as Lexington, Ky.-based Tempur Sealy International Inc. and Minneapolis-based Select Comfort Corp. convinced millions of sleepers to switch to foam bedding, turning mattresses into status purchases. It's a dramatic shift for Kingsdown, which long focused on making luxury bedding with innersprings, a technology dating to the 1860s. Competitors have consolidated, with the two largest companies having a 70% market share, dwarfing the North Carolina company.

"It's a bit of a David and Goliath approach for us," says Frank Hood, CEO of the nation's 11th largest mattress maker. The Furniture Today trade journal estimates the private, employee-owned company had sales of $84 million in 2013. Hood won't say officially, but hints they were closer to $130 million. That's nightstand change for its two largest rivals. Hoffman Estates, Ill.-based Serta International and Atlanta's Simmons Bedding Co., jointly owned by a private-equity group, had combined sales of $2.8 billion in 2013, while Tempur Sealy posted $2.1 billion, according to Furniture Today. The latter company was formed in March 2013 when Tempur-Pedic International Inc. bought North Carolina's then-largest mattress company, Trinity-based Sealy Corp., for $1.3 billion. "Some people picture these guys as big, lumbering, slow-moving players, but they clearly dominate," says David Perry, the magazine's executive editor.

Kingsdown is not intimidated. In late February, Hood said it will forge into China, licensing Hong Kong-based mattress maker Roth Bedding Technology International Ltd., to open 500 Kingsdown-branded stores there by 2020, including 65 this year. Roth will make mattresses that carry the Kingsdown name. The venture follows three years of testing its Sleep to Live and other brands in China. "We've enjoyed a fantastic reception in China over the past few years," he says. It's Hood's largest imprint on the Mebane company since he replaced a veteran CEO in a messy succession three years ago.

PARTIAL TO OPEN-COLLAR white shirts and fashionable face stubble, Hood, 48, initially held information-technology jobs at several textile companies, then hit his stride in fast food, joining Winston-Salem-based Krispy Kreme Doughnuts Inc. in 1997, and Denver-based Quiznos Subs LLC in 2005. He arrived at Kingsdown in 2008, serving as chief information officer and in other positions before rising to...