All the talk of jobs and made in America, makes me think where the opportunities are. By the way, the United States is still the largest manufacturer on the planet. So, coming back to the woodworking scene, I did some calculations about costs, shipping weights and markets.
A 40-foot container will take 40,000 lbs. of goods, albeit it could take more were it not of our road ordinance to limit it. This container will take 200 cabinets if loaded well. Here is question: What is the percentage of freight versus the value of the goods, and where is the market opportunity?
Can we produce the product and compete in a global economy as the motor companies do? We have wood, industrial board production, computerized manufacturing, skilled labor, lots of land and above all, free will. So, I went back to the numbers; if I offered a high-end custom cabinet to the Japanese at a landed cost of $400 a foot could I make money and be competitive. Surely, Japan in the wake of the earthquake and tsunami has to be the biggest market opportunity for several years to come.
A European styled cabinet with the latest embossed melamine, the latest in hinge and drawer technology can be produced at 40 percent material costs and supplied for $400 a foot. Direct labor can be assumed at 4 percent. Or stated otherwise, for an average price of about $500 per cabinet. Now, this is a custom cabinet and it is fully assembled. I am not trying to compete with IKEA and their customer base. And now for some real fun, imagine I supplied this product like the automobile industry? I find myself a partner in Japan or anywhere else for that matter, and use my core competency, say making custom parts, or whatever, and ship those to the “assembly plant”, whilst buying the latest in hardware technology from the local importer as required, what would that do to the numbers?
Flat pack option
It’s a conundrum, while I can ship the cabinets flat packed and load more cabinets on my container, the value goes down to about a quarter of the completed product above. If the freight to a given place is 5 percent of the value of the product I can be competitive, at higher than that probably not. Issues with shipping components without damage would be a further impediment. And, now I have to satisfy many more custom customers in a reasonable time.
In conclusion considering the logistics, quality control and above all the market I wish to serve, it is more feasible to send 200 top quality custom cabinets to the right client, than do the RTA thing. We need manufacturing jobs, we need to use the current excess capacity in our business, let’s export. Take a trip to Tokyo, it’s beautiful in spring. See the cherry blossoms.
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