The announced closure of Stanley Furniture’s plant in Henry Co. signals the end of the 1970-style mass furniture production.

The announcement that Stanley Furniture’s plant would close denotes the end of wood furniture production in Virginia’s Henry County. With the loss of 540 jobs, the plant will be converted to a warehouse for imported products that will replace those previously made in the 1.7 million square foot complex. Once an assemblage of best-in-industry process equipment and control systems, the plant’s closure more widely marks the final death throe of traditional 1970-style mass furniture production.

Since the beginning of this century more than 300 wood furniture plants have been shuttered in North America. Only a few U.S. companies now operate a single domestic wood plant; even fewer run multiple facilities. Domestic producers have experienced a one-two punch: a tidal wave of low cost imports followed by the bursting of the housing bubble and ensuing severe recession. From the 2000 high of nearly $13 billion of U.S. made casegoods, domestic production has fallen to under $6 billion. With hardwood lumber production for furniture down by more than two-thirds, some believe the decline of U.S. wood furniture manufacturing has been even steeper. And as Stanley’s announcement indicated, local manufacturing has morphed into a no-profit zone.

Old industry can’t compete

In many ways the closure of these plants is a blessing. The U.S. cannot win a 21st century battle with last century’s weapons. The domestic industry that was built and operated from 1960 through the late 1990s can never compete with the Chinese in making the furniture U.S. customers demand. These products feature fancy face veneers, carving, and 18-step finishes that require lots of labor and frustrate attempts at automation. With the offshore cost of production 30 percent below that in U.S. plants, the economics made the shift to foreign sources a simple decision.

Those economics are driven by factors other than labor cost. The cost of manufacturing in the U.S. is an astounding 18 percent higher than those in our nine largest competitors including industrialized countries like Germany and Great Britain. This difference consists primarily of external costs, such as those beyond the direct control of company management such as litigation, health care, taxes, and compliance. Recent tightening of boiler regulations, for instance, most likely impacted Stanley’s decision.

Global economics, however, are rapidly changing. Costs of doing business in countries beyond our shores are rising along with the rates for shipping containers, without which foreign trade is impractical. China’s currency is certain to rise in the near future against our dollar thus making their products more expensive. Will the tectonic plates underlying the world economy shift sufficiently to enable a rebirth of domestic wood furniture?

No rebirth

No, not by cranking up those obsolescent 1970-era casegoods plants and running companies as we did when those plants were considered high tech. Rather, the industry’s revival will depend on a total overhaul of how to deliver the right product at the right price in the right time to the right place for today’s consumers. Such a stem-to-stern re-think starts with an open mind, some knowledge of strategies from other industries, and a willingness to check your experience at the front door. Knowledge of today’s furniture business is only valuable if you believe tomorrow will be like yesterday, that tomorrow’s consumer demands will remain like yesterday’s, and the concept of selling furniture has stopped evolving.

This thought process must recognize that a production facility is only a small part of the value chain in which a company operates. For that reason, building the right plant is not only the responsibility of the plant manager or V-P operations. It’s the job of the entire company from the corner office down through marketing, sales, finance, and human resources as well as every link in the value chain from raw material suppliers to logistics providers and finally to the resellers. A factory, no matter how efficient, cannot make up for bad choices and decisions about the value chain in which a company operates. Simply building a new plant in the U.S. as a link in the value chain typically employed by today’s furniture companies has no future.

Those who may consider domestic wood furniture production feasible should also consider three final thoughts:

--You don’t have to be everything to everybody – American workers, no matter how well equipped, cannot excel at everything. But it’s a large market with many product and market combinations. You can build a nice business and compete effectively by taking advantage of a single narrow, well-chosen niche.

-- It’s impossible to achieve revolutionary performance without reinventing what you do and how you do it – Needless to say, to produce wood furniture here in the U.S. again, the industry must employ not only leading-edge manufacturing principles but also develop new value chains. The old business models no longer apply.

-- Manufacturing is a critical part of a company’s strategy even if it’s not a producer – If you rely totally on suppliers for your production, their plants must be aligned with your manufacturing task. Their owners and managers must understand what they must do well to support your company. That task goes well beyond just making product for the lowest price.

-- North America has abundant timber resources, tons of available technology, and a strong entrepreneurial spirit. Wood furniture manufacturing can only regain a place in the U.S. if it uses those assets and the required capital productively.

Bottom Line: The old U.S. wood furniture manufacturing industry is dead. Let it rest in peace in our memories and history books. Reviving domestic production and, indeed, the entire industry’s future can only be accomplished by a radical overhaul of how we fulfill the dreams of our consumers.