BERKELEY SPRINGS, W. Va. – Gat Creek President Gat Caperton believes the future is stable for made-in-U.S. furniture manufacturers, but also that there could be more done to build a domestic presence back up.
Specifically, he thinks more investment is required.
“Bringing more furniture back to the U.S. will first and foremost require significant capital investment,” he said. “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), called Net Foreign Investment by economists. Plus, China’s local, regional and national governments took on huge amounts of debts. For 20-plus years, China built/purchased an amazing amount 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,” he continued.
Gat Creek manufactures high-end solid wood furniture at a 140,000-square-foot plant in West Virginia’s Appalachia region. It recently completed a $10 million expansion, which included a 40% increase in manufacturing space and more and better machinery. The company employs around 215 people and has around $30 million in annual sales.
Caperton has always been fueled by a steadfast belief in American-made furniture.
“When I bought the company 30 years ago and determined to build 100% in America, folks in the industry looked at me as though I was crazy,” he said. “Today, people have rediscovered an appreciation for American manufacturing and what makes us different and better.”
Caperton believes domestic furniture makers have advantages in market knowledge, speed to market for durable goods, sustainability and consumer trust.
The main difference, though, is accountability, according to Caperton.
“When you live and work in the same place, you are accountable for what you do. You are responsible for doing what’s right for the environment, what’s right for the consumer and what’s right for employees because we look them in the eye every day. Someone across the world isn’t accountable for any of that.”
Where domestic manufacturers struggle compared with their importer competitors is in high health insurance costs, stricter safety and environmental regulation, and higher material costs.
“Labor costs are slowly shrinking but still significant,” he said. “For materials, steel is dramatically more expensive in the U.S. than anywhere in the world. Lumber costs are pretty competitive when timbering is done legally, but a lot is not.”
The future of the domestic market lies in the high-end and the lower-end, Caperton says.
“The real danger is in the broad middle of the market,” he said. “The high-end has some defendable niches. With scale, high levels of automation and design-to-build wisdom, some lower-end domestic manufactures compete quite effectively. (My apologies for the term ‘low-end,’ many of these folks make nice furniture at a very low cost.)”