June 2005

Woodworkers Sing the Blues

An editorial by Rich Christianson

It takes a sharp pencil and a strong stomach to keep score of the furniture plant closings and job losses that continue to mount.

Last fall the editors of the Hardwood Weekly Review rolled up their sleeves and tallied up the human carnage resulting from 225 furniture plant closure and layoff events they identified between January 2000 and October 2004. They concluded that some "61,000 and counting" jobs were lost in the furniture industry during that 58-month period. More than one-fourth of the job losses were in North Carolina.

As breaking news, we can add approximately 1,200 employees of Broyhill Furniture Industries and Thomasville Furniture to the "and counting" list. The two companies, both divisions of Furniture Brands International, separately divulged plans June 7 to close plants in North Carolina, resulting in the lay off of about 600 workers at each company.

We can also readily identify at least 1,400 more U.S. furniture jobs that will be lost to plant closings or layoffs announced since last October. Included are: Steelcase, 600; La-Z-Boy, 400; Bernhardt Furniture, 200; Michaels-Pilliod, 130; and Sligh Furniture, 75. Add them all up and the current, unofficial body count becomes 63,600 furniture workers and counting.

The executives making these announcements can sugarcoat the news as best as they can. They can express how sad it makes them feel to see so many loyal workers put out of work, mainly because their companies cannot compete with lower-wage foreign competitors.

But how many of these same executives can look in the mirror and say, "We've done everything we can within reason to give our employees a fighting chance?"

In the case of Broyhill, one of the plants to be closed was built in 1939, another in 1958. It's hard to imagine that either plant could hope to survive in today's extremely competitive global environment, in which manufacturers in developing countries like China and Vietnam are augmenting their wage advantages with new facilities and technology.

In the absence of investment in agile new plants, built from the ground up to more effectively compete, we can only expect further capitulation of the U.S. furniture market to offshore competition. That's a bitter pill to swallow, not only for the legions of current and future displaced furniture workers with families to feed, but for the suppliers who have long depended on serving a vital domestic furniture industry.

Antidumping Ruling Impacts Chinese, but ...

The chief aim of the furniture antidumping petition filed against Chinese wood bedroom furniture makers a couple of years ago was to save U.S. furniture jobs. We have no figures to substantiate if jobs have been saved or not as a result of the U.S. Department of Commerce's decision in the petitioners' favor.

However, as Associate Editor J.D. Piland reports this month, U.S. imports of Chinese wood bedroom furniture have dropped in each of the three quarters since the DOC made its preliminary ruling last June to collect duties. The slack has been picked up by many other countries, most notably Vietnam. Whereas imports of this category from China dropped 8% to $344 million during the first quarter of 2005, Vietnamese manufacturers shipped $91.3 million in wood bedroom furniture, up a staggering 431% from the first quarter of 2004. In addition, imports from all nations of the world increased 14.7% during the first quarter this year to $838 million.

While the antidumping duties have taken a chunk out of China's U.S. wood bedroom furniture business, this loss has been far more than offset in the growth of shipments of dining room, occasional, upholstered and other household furniture products to the United States.

Cabinets a Different Matter

Like the residential furniture industry, cabinet sales are closely tied to housing starts and home remodeling. Fortunately for domestic cabinetmakers, proximity to the market continues to give them a tremendous advantage to offshore competition, especially when it comes to offering custom choices in tight order-to-delivery turnarounds.

The U.S. cabinet industry, fueled by a record number of housing starts, is experiencing its greatest sustained growth periods in more than 20 years. While cabinet companies are slowly expanding their use of outsourced components, many of the industry's biggest names, including Kraftmaid, Yorktowne and American Woodmark, are investing in new plants to position themselves for future growth. Simultaneously, Toronto-based Canac Kitchens, a subsidiary of Kohler Co., is taking over bankrupt LesCare Cabinet's facility in Statesville, NC, allowing Canac to quickly expand its U.S. presence.

As a final and related offhand comment to Canac's action, we cannot help but wonder aloud: How can the best of times for U.S. cabinet manufacturers be the worst of times for 60-year-old LesCare? The company's fate could not be any more bleak than the rosy outlook company officials painted in the article W&WP published in October 2003 right after LesCare moved into the Statesville plant.


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