Rising costs help domestic producers

Thomas Russell  — Furniture Today, October 24, 2008

HIGH POINT  — Domestic case goods are making a comeback at the high Point Market thanks to the efforts vendors are making to customize their product mix or increase efficiencies in their North American plants.

The shift is due to several factors, including rising costs on overseas furniture. While it’s still less expensive to produce many goods overseas,

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the cost issues are whittling down the final price difference, including shipping.

Vendors here this week are offering customized product on a made-to-order basis, which lowers inventory costs for dealers. Proximity to the market — a natural advantage for domestic producers — also is an important factor to retailers looking to receive goods quickly.

Part of a strategy

Thomasville Furniture plans to increase the use of its domestic wood plants after this market. The company will add 100 jobs at its 1 million-square-foot, 700-worker plant in Lenoir, N.C. by the end of the year to produce a new modular home entertainment wall program.

The 12-piece wall system, available in four finishes, is what Thomasville President Ed Teplitz calls a mix-and-match home theater group. The quality and prices lean toward the higher end with four-piece units retailing around $5,000.

It allows us to offer a more customized product and have more options at retail than if we had sourced this group out of Asia, Teplitz said. Our story is that we need to continue to source where it makes sense and manufacture where it makes sense to bring the most comprehensive options to the consumer at the best price.

Edward Audi, executive vice president of Stickley Furniture, said the company continues to expand its investment in domestic facilities and recently added a rough mill line to its Manlius, N.Y. plant. It also will soon add a new finish line for Nichols & Stone, a brand the company purchased in July.

Audi said demand for well-made domestic product remains strong.

We are focused on maintaining high levels of product quality, he said.

This week at market, Stickley is launching its The Stickley Difference wall display for retailers, which explains the construction of the company’s furniture.

Other companies are also seeing marketing opportunities. Dining specialist Saloom is offering new made in America marketing materials, featuring a quality statement from company executives Peter and Linda Saloom and a DVD about their case goods factory.

Retailers tell us that a growing number of consumers are coming into their stores and asking for furniture that is made in the USA, said  Becki Gould, director of marketing for Saloom.

Harden Furniture is launching a custom headboard program this market that will be produced in its 450,000-square-foot, 400-worker plant in McConnellsville, N.Y. The program offers six different headboard styles in any of the company’s 800 fabric and leather options as well as its 30 finish options.

It’s not a complicated product, said President and CEO Greg Harden. It’s two dimensional with not a lot of carving or shape. That makes it a relatively easy product to do domestically and a pretty good value.

Most of the headboards retail in the $1,295 range, with a slight upcharge for leather.

Kincaid Furniture also is launching a domestically produced custom-upholstered headboard program, which includes five headboards available in 650 fabrics and leathers. It also is using its Hudson, N.C. plant to make American Heartland, a bedroom-only group in three finishes, and most of the bedroom portion of Rosecroft, an Arts and Crafts-inspired group. (Rosecroft dining and occasional will be imported from China.)

Today, just over half of Kincaid’s wood line is made domestically.

Nationally, 35% of all wood furniture sold in the United States in the first half this year was made domestically, according to Richmond, Va.-based Mann Armistead & Epperson. That is down slightly from the same period in 2007, when it was 37%.

Custom counts

With your major case pieces and beds, we find (that with U.S.-made goods) we can be competitive for that kind of product, said Steve Kincaid, president of Kincaid Furniture. A shift toward a lean and more efficient manufacturing model has helped, he said.

He added that Kincaid has systems in place to produce smaller cuttings, which helps it handle more custom orders and custom finishes. These include American Journal, a domestic case goods and upholstery collection launched last market that offers wood pieces in six finishes.

Customization also is driving domestic business at Stanley Furniture, which is offering 14 finish options on its new 80-piece Coastal Living by Stanley Furniture whole home collection, to be produced in Virginia.

Vaughan-Bassett is offering six finishes in its new Alexander Julian collection, Cottage Colours. The master and youth bedroom line was inspired by the success of the company’s Cottage collection, which was launched in 2004 and also has six finish options.

Without the finishes, the new collection has a total of 40 SKUs. With the colors, that rises to at least 240. Queen beds retail for $599 while twins retail at $499.

Kincaid’s sister company Lea Inds. produces much of its youth furniture domestically and, with its new Seaside Dreams collection, will do more. The group, geared toward girls of all ages, offers five beds in 10 colors.

We have done a color program that has four finishes, said Earl Wang, vice president of product development. This is 10. It is by far the most aggressive (color program) we’ve done. It is different for us. There are people doing more but this is a number we can manage.

The wood group will be produced in the company’s 250-worker plant in North Wilkesboro, N.C.

We are trying to find things we can do domestically, Wang said, noting that about half the Lea line is U.S.-made.

Part of the domestic competitive advantage is the ability to ship more quickly. Companies interviewed for this story say they can ship in as little as 24 to 48 hours for products already in a domestic warehouse, meaning that retailers would receive it in 7 to 10 days of the order. For goods not in the warehouse at the time of order, lead times jump to several weeks.

Goods coming from Asia can be on the water for 30 days. Shipping more quickly would require importers to carry a lot of inventory, a risky proposition in today’s tight credit environment.

We still carry inventory, but where I think we can have an advantage is that the retailer doesn’t have to buy a container load of our furniture, Kincaid said. We can ship it to you in a matter of weeks.

As the credit situation stays tight, retailers don’t think they have as much cash to invest in inventory.

Wyatt Bassett, president and CEO of Galax, Va.-based Vaughan-Bassett, said the company’s domestic capabilities are creating opportunities.

It is helping us with mom and pop and larger retailers who are taking a second look at domestic production, he said. Some who have not done business with us in a while are back with us. Some who have been focused on imports are adding slots now.

Deborah Gore Dean, president of Washington-based retailer Gore Dean, said she likes to buy domestic because of the higher quality.

We tell (our customers) we buy American, not because it is American, but because it is the best, she said.

Nicholas Cardi, a principal in Swansea, Mass.-based Cardi’s Furniture, said his company buys domestically made furniture if the value is there and if it can be warehoused and delivered in a timely manner.

I’d rather the inventory sit in their warehouse than ours, he said.

He also said that consumers are willing to wait a little longer for customized goods.

When it becomes something different than a commodity and there is customization, the customer understands they will wait a little longer and will pay more, he said. But they won’t wait longer than six months.