Domestic manufacturers of cabinet furniture find balance between advantages and disadvantages

IMPORTANT POINT — A comparison of the strengths and weaknesses of domestic furniture manufacturers versus their importers must be done frequently for it to be truly meaningful, as geopolitics, material costs, ocean container rates, and other factors always affect the market differently. The value of each segment is constantly changing.

But there are certain things that seem to remain unchanged. The main advantage of domestic manufacturers consistently seems to be speed to market. The main disadvantage is cost, particularly in terms of labor and regulation.

“Vanguard can typically deliver a one-off piece in four weeks,” said Andy Bray, president of luxury manufacturer Vanguard Furniture. “Internationally, the same would take four to six months.”

The same even applies to Vaughan-Bassett, whose products are less high-end and more mass-produced.

“Reliability, speed to market and most importantly, risk reduction for the retailer,” said Doug Bassett, president of the company. “Retailers don't have to hold inventory on hand and don't have to predict when they'll get it. We act as their warehouse and they don't have to commit to container loads.”

Another benefit – felt even more acutely since COVID – is reduced supply chain risk. Importers, especially if they source exclusively from Asian factories, can be more vulnerable to global supply disruptions. Importers feel the impact of factors outside their control – or at least factors that are harder to predict – such as geopolitical events and wildly fluctuating ocean container rates.

Trend towards deglobalization

Ben Copeland, vice president of sales at Vermont-based Copeland Furniture, believes “deglobalization” is the inevitable result.

“Many furniture importers are buying U.S. logs, shipping them to Asia and then turning them into furniture before shipping them back to the U.S.,” he said. “It's ridiculous and there's reason to believe that will eventually go away. That bodes well for American manufacturers. So I think it will be beneficial for us.”

He also believes that rising prices abroad will be helpful.

“When countries develop, their prices rise,” he said. “China also has tariffs and duties. They acted as an umbrella to set prices for other Asian countries. So when China rises, other countries' prices will also rise.”

Another factor in favor of the domestic market – perhaps even more so in the upper segment – ​​is the perceived growing consumer desire for quality.

“The philosophy of the American people has changed somewhat in the last 15 years,” said Tom Zaliagiris, senior vice president of sales for Sherrill Furniture. “It's gone from wanting to get everything at the lowest price to a greater emphasis on quality and getting exactly what they want. There are customers who will always buy imported goods. That will always be a piece of the pie that we can't touch. But that piece is getting smaller. It's difficult to buy full containers of something that you hope will sell. Your money is tied up because you get the invoice when the product ships, but then the product can be rerouted or sit on the water for eight weeks.”

However, not everyone is convinced that the American consumer is changing.

“I feel like domestic production is picking up for manufacturers because they were dependent on foreign production during COVID,” said Kyle Schlabach, vice president of sales at Ohio-based Mavin. “A lot of what manufacturers depend on is sourced internationally. But until consumers put quality and environmental friendliness above the lure of low prices, it's hard to say whether we're going to gain market share.”

In order to actually stimulate domestic furniture production again, high-quality furniture manufacturer Gat Creek believes that investments from both the private sector and the government are necessary.

“Bringing back more furniture requires, first and foremost, significant capital investment,” said Gat Caperton, the company's president. “I believe Morgan Stanley uses the phrase 'capital creates change,' and that's true. China benefited from enormous capital inflows from 1991 (WTO accession) to 2019 (before the pandemic). China's local, regional and national governments took on enormous debt.”

“For over 20 years, China has built and bought an astonishing number of factories and capital/production facilities. The US does not need to match China's investments over the past two decades, but it would easily need a few billion to noticeably accelerate the trend.

Biggest challenge: work

Over the past five years, domestic furniture manufacturers have consistently cited labor – both finding and retaining workers – as the biggest challenge facing their businesses.

Community college programs alleviate the problem somewhat, but they may not be enough, at least in North Carolina.

“I think we would like to see them go beyond what they are,” said Zaliagiris of Hickory-based Sherrill. “We are a major contributor as part of our philanthropic efforts to invest at Catawba Valley Community College. The demand for skilled workers far exceeds what the program can produce. That's great, but there has to be more.”

A further hurdle is that the students admitted to the course are often already working for a furniture manufacturer.

“Because the program is so competitive, the people who get accepted are already working for a furniture manufacturer,” he continued. They are sent there by an employer to learn new skills. They could move from logistics to manufacturing or from the office to material handling. We want people to be able to do that and increase their income, but it's rare that a freelancer comes out of the program.”

In Galax, Virginia, the story is a little different.

“We live in a unique community in Galax,” said Bassett of Vaughan-Bassett. “There used to be six furniture factories here. There are still a lot of highly skilled people who live nearby and enjoy working in a furniture factory. We have a good pool of skilled workers. The biggest risk is that they are slowly aging. We will probably have long-term problems, but when business is as tough as it is now, those concerns will be pushed to the back of our minds.”

More automation could help, but only to a certain extent.

“We don't have the complete answer to the automation question,” Copeland said. “We've achieved more automation over the years. We've gone from single-station tools to about 13 CNC mills today, which are a form of robotics, although they may not be perceived that way.”

“But to what extent we can continue to use this remains to be seen,” he added. “These machines require quite a lot of service and maintenance. We have considered a robotic finishing line, but we believe that the same number of people will still be needed to maintain it.”

Vanguard's Bray agreed.

“Five-axis milling and automated fabric cutting machines have helped to close the labor gap,” he said. “However, there are many tasks that cannot be automated. For example, eight-way hand-bound frames must be hand-bound by definition. Furniture finishing requires many steps and is very difficult to replicate with automated solutions. Lower-end furniture can be finished this way, but it is mostly simple 'motor oil' coatings.

“(Automated machines) also increase capital costs,” he continued. “Short-term costs for long-term gain. It's hard to say whether the process of making furniture will ever be fully automated. I can't imagine a robot building a piece of furniture on its own, but I can imagine something like the auto industry where robots assist the process. But I don't think we can remove the 'human' from manufacturing.”

Make the investment

Ashley Furniture Inds. will invest $80 million to expand its two manufacturing facilities in Lee County, Mississippi, and create at least 500 new jobs through the investment, the company said.

As part of the project, Ashley will expand its foam and mattress production in Verona by purchasing and renovating a neighboring factory and building a new factory. In addition, Ashley plans to expand operations in Saltillo, currently the largest mattress plant in the country, according to the company, through “significant” investments in equipment and operations.

Ashley says the project aims to increase the company's operational efficiency and provide better service to its customers.

“This strategic investment underscores our commitment to growth and enables us to better serve our customers,” said CEO Todd Wanek. “By expanding our capacity in Mississippi, we will create more jobs and strengthen our presence in the region.”

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