The Globalization of the American Furniture Industry

Topics: La-Z-Boy, Barack Obama, 2008 Pages: 5 (1673 words) Published: November 11, 2012
American furniture manufacturers have struggled with making cost-competitive products over the past decade. Several have closed U.S. facilities and built plants overseas or hired companies to make the goods in foreign countries and ship them here. Many factors have influenced the decision to move production over seas including, labor costs, price of materials, freight costs, time in transit, overall time to make a product and get it to market, and the amount of training needed for employees. “A decade ago, nearly 100 percent of the dinette sets, cabinets, dressers, armoires and other wooden pieces sold in the United States were produced here. Today, 75 percent to 80 percent is made in China, Taiwan, Vietnam and other Asian countries.” (Chavez) In addition to production, many companies are also outsourcing their human resource functions. "Many companies today view human resource outsourcing as one of the most viable options to save money and improve services while also making a strategic contribution to the business." (Clinton) High Point, North Carolina is often regarded as the furniture capital of the world. Every six months High Point hosts The International Home Furnishing Market, which is the centerpiece to city’s economy. Thousands of sales representatives, buyers, and designers attend the event. The massive trade show is the largest, most well-known, and most important furnishings industry trade show in the world. But, a new study shows that North Carolina has lost nearly 80,000 jobs to China since 2001. (Associated Press) Economist Michael Walden recently said, “There is no question that North Carolina has lost jobs - particularly in textiles and furniture manufacturing - due to international trade agreements signed during the last 15 years. Prior to the World Trade Agreement, North Carolina's textile and apparel jobs were protected from lower cost foreign producers.” (Associated Press) To compete some companies are looking to sell their products overseas. A group of high-end custom furniture manufactures created an organization called American Furniture Exporters. Their goal is to find cost effective ways to export their goods overseas. The idea arose from the High Point market. "We saw some decent (international) traffic in our space with buyers from Venezuela, Greece, Israel, Quatar, Mexico and elsewhere” said Rick Moose the sales manager for Designmaster. (Gunin) La-Z-Boy Inc., the nation's second-largest furniture manufacturer, faced sales declines with it’s wood furniture, so they terminated much of their U.S. production and moved the work to China. In an April press release, the company came out again to announce that they were moving much of their upholstered furniture manufacturing to Mexico. A Mexican-based facility is practical for La-Z-Boy because they rely heavily on custom orders in their upholstered segment and with it’s close proximity to the U.S., orders will be shipped much faster on land, rather than if they had to travel by ship from China. Speed to market for custom orders is a tenet of our brand promise to the consumer and the strength of our U.S. facilities enables us to deliver on that promise. We made the decision to transition our domestic cutting and sewing operations while streamlining the assembly aspect of production in the United States. Our new Mexican facility will be able to rapidly supply our domestic plants with cut-and-sewn fabrics and leather for custom orders and will complement the existing cut-and-sew program from China, which supplies our U.S. manufacturing operations. (La-Z-Boy)

The U.S. is not alone in the shipping of manufacturing of production overseas; furniture giant IKEA found it to be cheaper to manufacture furniture in Ohio rather than producing it in Sweden and shipping it to the U.S. Ironically, the company IKEA came to, Sauder Woodworking Company, had shipped part of its production overseas to China to stay competitive. The company’s...

Cited: Ayers, Jeff. "Manufacturing Takes Hit." 19 Oct. 2008. Clarion Ledger. 24 Nov. 2008 .
Caplan, Jeremy. "Ikea CEO Anders Dahlvig on Surviving a Bad Economy." 18 Nov. 2008. TIME Magazine. 23 Nov. 2008 .
Chavez, Jon. "Overseas competition challenges furniture industry." 22 Mar. 2007. Toledo Blade. 17 Oct. 2008 .
Clinton, David. "Study: 76% Of Major North American Companies Outsource One Or More HR Functions." 15 Apr. 2006. Rent To Own. 23 Nov. 2008 .
Gunin, Joan. "N.C.-based American Furniture Exporters makes progress." 19 Nov. 2008. Furniture Today. 24 Nov. 2008 .
Hall, Robert A. "Who sent American jobs overseas?" 11 Nov. 2008. American Chronicle. 24 Nov. 2008 .
La-Z-Boy Furniture. "LA-Z-BOY ANNOUNCES MOVES TO STRENGTHEN ITS NORTH AMERICAN OPERATIONS." Press release. 2 Apr. 2008. 24 Nov. 2008 .
Maltey, Emily. "Overseas outsourcing heats up again." CNN Money. 11 Nov. 2008. 11 Nov. 2008 .
McCormack, Richard. "The Free-Trade Debacle: Domestic Manufacturers Vs. Multinationals." Manufacturing and Technology News 15 (2008).
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