Pandemic-fueled disruptions coupled with an increasingly unsettled geopolitical environment have realigned traditional global sourcing relationships in recent years and are likely to drive even greater realignment in the years to come.
It’s become commonplace to think of China as the default source for most of the furniture and home furnishings imported into the U.S., as the country’s rapid industrialization, massive low-cost labor force and highly developed infrastructure have made it the go-to resource for as long as many in the industry can remember.
It’s easy to forget that the never-ending quest for low-cost labor has seen manufacturing hopscotch from one developing economy to another for generations. As standards of living rise, and wages along with them, there is an inevitable threshold at which the search for the next emerging country arises.
That dynamic has been accelerated in recent years, first by a series of tariffs aimed at leveling pricing differentials and then amped up further by the outbreak of COVID-19 and its economic ripple effects. The pandemic whipsawed global supply lines, forcing furniture manufacturers to accelerate the search for alternative source countries and touching off a worldwide race to find the ideal combination of price, proximity and logistical efficiency.
This week’s issue of Furniture Today features a comprehensive package of stories looking at many of the countries currently in the hunt for U.S. furniture manufacturers’ business. Not surprisingly, each of the regions under discussion currently offer a mix of advantages and disadvantages that, taken in totality, suggest the global sourcing equation is likely to become more fragmented in coming years.
None of the countries competing to become the next leading furniture exporter currently combine the perfect combination of population, political stability, established infrastructure, manufacturing base and expertise to match that was offered by China at its height, although several appear poised to move in that direction over the next decade.
That said, the relative value that manufacturers assign to each of those variables continues to evolve in the face of rapidly changing geopolitical, climatic and economic realities. Few if any, for example, could have foreseen the combined impact of military activity disrupting transit of the Suez Canal while extended drought conditions simultaneously undermined transit through the Panama Canal.
Additionally, the traditional organic path to industrialization is becoming accelerated by the combination of increasing governmental support in developing economies and large-scale manufacturers’ ability to turnkey manufacturing operations, in some cases including trained workers.
The past five years have seen sudden and dramatic shifts in the source of furniture imports to the U.S. market. The next five are likely to continue that trend.
For those wondering why there’s no mention of domestic manufacturing activity, which has seen a significant uptick in the wake of the pandemic. Furniture Today will address that sector in more detail in the Aug. 26 issue’s Domestic State of the Industry report.