Waiting for the tables to turn.

• Author: Scheer, Lisa
• Position: Ron Jones of Masco Corp.

Has buying up Tar Heel furniture companies left Masco sitting pretty -- or in the hot seat?

There is no more concrete evidence of Masco Corp.'s commitment to the furniture industry than the concrete it has poured. A sprawling white headquarters, its outdoor fountains bubbling, rises like the Taj Mahal from the scrubby landscape off N.C. Highway 68 in Thomasville. Four miles away in High Point stands the spanking-new Masco Park office, a red-brick behemoth set on spacious grounds. The bookend buildings are a giddy vision in these gritty furniture towns.

The trouble is, aside from its flashy real estate, Masco Corp. has little to show for its investment in the furniture business. In the past six years, the Taylor, Mich.-based company has poured more than $2 billion into the industry, snapping up such blue-chip companies as Morganton-based Henredon Furniture Industries and Drexel-based Drexel Heritage Furnishings. This building-products company that knew little about furniture a decade ago now is a power: It employs 15,000 in North Carolina, far more than any other furniture producer, and sells more than $1.4 billion a year of home furnishings.

But heavy start-up costs and a ghastly recession have kept Masco's margins under pressure and ended the company's record of 34 consecutive years of higher earnings. Sales at some subsidiaries are falling, while criticism from sawdust-in-their-veins furniture folks is rising. It could be several years before the family-run company's investment pays off.

Masco says it can wait. "We're expecting to stay the course, and we're optimistic about the long-term potential for our furniture business," says Wayne Lyon, president of the parent Masco Corp.

If Lyon's faith is rewarded, the furniture industry itself will be changed in the process, with smallish companies that have long dominated the business giving way to larger, stronger corporations. Don Hunziker, chairman emeritus of High Point-based LADD Furniture, figures the number of furniture companies doing business has contracted from 5,000 in the 1950s to perhaps 1,000 today. According to Henry Howard, business editor of the industry magazine Furniture Today in High Point, the top 25 companies in the industry have upped their share of the market to 46%. Masco is looking to accelerate that trend.

But outsiders have a spotty track record in the furniture industry, which has been an essential part of North Carolina commerce since the 1880s. The landscape is littered with the carcasses of conglomerates eager to consolidate the business, companies that moved in with grand plans but never brought them to fruition. Outfits such as Sperry & Hutchinson, Hoover, Champion International and Mead have all bought in and sold out over the years.

Masco was founded as Masco Screw Products Co. in Taylor, Mich., by Alex Manoogian, Charles Saunders and Harry Adjemian six weeks after the 1929 stockmarket crash. Manoogian bought his partners out a year later. Originally an autoparts supplier, Masco really started to prosper after the company invented the single-handled faucet in 1954. Today, Masco commands 36% of the $1.2 billion U.S. faucet market, its fat 27% operating-profit margins in that segment helping to fund home-furnishings acquisitions. Masco also has a thriving cabinet business, sparked by its market-leading subsidiary, Merillat Industries Inc. The company spun off its automotive and industrial businesses in 1984, just in time for its push into furniture.

But since a peak of $318 million in 1988, Masco's net profits slumped to $221 million in '89, $139 million in '90 and an estimated $105 million last year. Operating profits from building and home-improvement products -- including the flagship faucet business -- were essentially flat from 1988 through 1990. But operating profits for home...