HIGH POINT — Comparing the strengths and weaknesses domestic case good manufacturers have over their importer counterparts is something that must be done frequently for it to have real meaning, as geopolitics, material costs, ocean container rates and other factors are always impacting the market differently. The value each segment has is always changing.
But there are certain things that seem to remain static. The key advantage domestic manufacturers consistently seem to have is speed to market. The key disadvantage is cost, particularly with labor and regulation.
“Vanguard typically can ship a one-of-a-kind piece in four weeks,” said Andy Bray, president of the high-end Vanguard Furniture. “To do the same thing internationally would be four to six months.”
It’s the same even for Vaughan-Bassett, which is less high-end and whose products are more mass produced.
“Reliability, speed to market and, most importantly, cutting the risk for the dealer,” said Doug Bassett, company president. “Retailers don’t have to carry inventory, and they don’t have to predict when they’re going to get it. We act as their warehouse, and they don’t have to commit to container loads.”
Another advantage — and one that’s been more felt since COVID — is less supply chain risk. Importers, especially if they source solely from Asian factories, can be more susceptible to global supply disruptions. Importers feel the impact of factors outside of their control — or at least on factors that can be harder to predict — such as geopolitical events and wildly fluctuating ocean container rates.
Trend toward deglobalization
Ben Copeland, vice president of sales at the Vermont-based Copeland Furniture, thinks that “deglobalization” is the inevitable result.
“Many furniture importers buy U.S. logs, transport them to Asia and then turn them into furniture before shipping them back to the U.S.,” he said. “That’s nonsensical, and there’s reason to think that’ll eventually go by the wayside. That does bode well for American producers. So, I do think there will be benefits for us.”
He also believes that prices going up overseas will help.
“Once countries develop, their prices go up,” he said. “For China, there are also duties and tariffs. They acted as an umbrella to help set prices for other Asian countries. So if China goes up, they’re also going to go up from other countries.”
Another factor in domestic’s favor — perhaps more so at the high-end — is a perceived growing desire for quality among consumers.
“The philosophy of the American population has changed some in the past 15 years,” said Tom Zaliagiris, senior vice president of sales at Sherrill Furniture. “It’s gone from a desire to get whatever they want for lowest price, to taking more pride in quality, and in getting something exactly what they want. There are customers that will always buy import. That’ll always be a piece of the pie that we cannot touch. But that piece is shrinking. Buying full containers of something you hope will sell is hard. Your money is tied up because you’ll get invoiced when product ships, but then that product can be diverted, or it’s on the water for eight weeks.”
Not all, though, are confident in saying that the American consumer is changing.
“I feel like domestic manufacturing is coming back for manufacturers because of the reliance on foreign manufacturing during COVID,” said Kyle Schlabach, vice president of sales at the Ohio-based Mavin. “So much of what people manufacturers rely on is sourced internationally. But until consumers value quality and that green story over the allure of low prices, it’s hard to say if we’ll take market share.”
To really make domestic furniture manufacturing come back, high-end case goods maker Gat Creek thinks we will need investment, from both private investors and the government.
“Bringing more furniture back will first and foremost require significant capital investment,” said Gat Caperton, company president. “I think Morgan Stanley uses the phrase, ‘Capital Creates Change,’ and it’s true. China benefited from huge capital inflows from 1991 (acceptance into WTO) through 2019 (pre-pandemic). China’s local, regional and national governments took on huge amounts of debts.
“For 20+ years, China built and purchased an amazing number of factories and capital/production equipment. The U.S. does not have to match China’s two-decade investment but would easily need to a few billion to move the needle back noticeably.
Key challenge: Labor
For the past five years or so, domestic furniture manufacturers have continuously cited labor — both finding workers and keeping them — as the chief challenge facing their companies.
Community college programs ease the issue somewhat, but it may not be enough, at least in North Carolina.
“I think we would like to see them expand beyond what they are,” said Zaliagiris at the Hickory-based Sherrill. “We are a flagship contributor as part of our philanthropic effort to invest at Catawba Valley Community College. The demand for skilled labor is far beyond what the program is able to churn out. It’s great, but there needs to be more.”
Another obstacle is that students admitted to the program are often already working for a furniture manufacturer.
“Because the program is so competitive, the people being admitted in are already working for a furniture maker,” he continued. They’re being sent there by an employer to learn a new set of skills. They might be going from logistics to manufacturing, or from the office to material handling. We want people to be able to do that and grow their income level, but it’s rare that there’s a free agent coming out of the program.”
In Galax, Va., the story is a bit different.
“We’re in a unique community in Galax,” said Bassett at Vaughan-Bassett. “There used to be six furniture factories. There are still a lot of high skill employees that live nearby and like working in a furniture factory. We have a nice skilled labor pool. The biggest risk is that they are slowly aging. We will probably have long-term issues, but when business is as tough as it is, these concerns get put on the back burner.”
More automation may help but only to a degree.
“We don’t entirely have the answer for automation,” Copeland said. “We’ve become more automated over the years. We’ve gone from single station tooling to around 13 CNC routers today, which are a form of robotics, even though they might not be perceived that way.
“But to the extent we can keep applying that is yet to be seen,” he added. “These machines need quite a bit of service and maintenance. We’ve thought about a robotic finishing line, but we think the same number of people will still be needed to service it.”
“Five-axis routers and automatic fabric cutting machines have helped fill the labor gap,” he said. “Still, there are many tasks that cannot be automated. For example, eight-way hand tied frames by definition must be tied by hand. Case goods finishing requires many steps and is very difficult to replicate with automated solutions. Low end case goods can be finished this way, but they tend to be unsophisticated “motor oil” finishes.
“(Automated machinery) also adds capital expense,” he continued. “Short term cost for long-term gain. It is hard to say whether the process of manufacturing furniture will ever be fully automated. I can’t imagine a robot building a piece of furniture by itself, but I can imagine something like the car industry where robots aid in the process. But I don’t think we can take the ‘man’ out of manufacturing.”
Making the investment
Ashley Furniture Inds. will invest $80 million to expand its two production facilities in Lee County, Miss., and the investment will create at least 500 new jobs, the company said.
The project will expand Ashley’s foam and mattress production in Verona through the purchase and renovation of a neighboring facility and the construction of a new facility. Additionally, Ashley plans to expand operations in Saltillo, currently the country’s largest mattress plant, according to the company, with a “substantial” investment in equipment and operations.
Ashley says the project aims to enhance the company’s operational efficiencies and to better serve its customers.
“This strategic investment reinforces our commitment to growth and allows us to better serve our customers,” said CEO Todd Wanek. “By expanding our capabilities in Mississippi, we are creating more job opportunities and strengthening our presence in the region.”