MONTPELIER, Vt. (AP) – Instead of shipping all its manufacturing overseas, the Ethan Allen furniture company opted to stay in the United States and Vermont even if it means smaller profits, CEO Farooq Kathwari told Vermont manufacturers Thursday.

“We decided that it does make sense to control your own destiny even if it means lower margins,” he said.

That was one of many decisions Ethan Allen executives made in the face of global and national competition. The company as reinvented itself many times to survive, he said.

The 75-year-old furniture maker went from a manufacturer to a retailer and marketer to an interior design company — Ethan Allen Interiors Inc., he said.

“Either you have to be, in this age of extremes, mass merchant or you have to be a very specialized retailer,” he said.

The transformation started in the 1980s, when Ethan Allen decided “reinvention was necessary and that change can create an opportunity and has to be managed,” said Kathwari, who has been president of the company since 1985, and chairman and CEO since 1988.

The reinvention has continued, with the company changing its style, enhancing its products, and dropping its number of manufacturing plants from 29 to 21 and now 9 including two in Vermont in Beecher Falls and Orleans.

“Because to compete internationally we had to have plants in the best places,” he said.

To survive in the global economy, the best strategy for U.S. manufacturers, who are not competing on equal terms with the lower tax rates, labor costs, and different standards of countries, is to add quality, rather than try to compete by making cheaper products, he said. “Make it better,” he said.

At the event attended by about 130 business members and state officials, including the governor, Kathwari said he was concerned about young people leaving the state, and high electricity rates.

As one of a limited number of manufacturers with 60 percent of its production in the U.S., he said the company chooses to manufacture in Vermont because of the good labor force, its investments, the history and the vicinity to raw materials.

The Vermont plants had until recently been operating at 32 hours a week, “a dangerous thing for us,” he said. It’s now back to 40 hours a week.

AP-ES-10-04-07 1741EDT