The wood components industry has undergone significant changes in the past few years. "Since the economic downturn in 2000, an estimated 300 companies have exited the dimension and component industry," says Steve Lawser, executive director of the Wood Component Manufacturers Association. "Not all of these companies closed their doors, but they moved in different directions, either shifting to another area of woodworking or contracting to their lumber operation only."
This change has removed a lot of the excess capacity from the industry. "Those who are remaining are stronger and more viable companies," says Lawser.
WCMA is comprised of 150 U.S. and Canadian suppliers that produce rough, semi- and fully machined wood component products for the cabinet, furniture, millwork, store fixtures, staircase, building products, flooring and related decorative wood product industries.
Changing with the times
The WCMA's market studies identify trends and provide other information that can help members adapt their business to a changing marketplace. In 1996, for example, market studies indicated that the building products and cabinet industries had surpassed furniture as the leading markets for components. "Many of our members shifted their focus to the building, remodeling and cabinet industries," Lawser says.
A range of services accompanies these products. "WCMA members are expanding the services they offer their customers," says Lawser. These include finishing lines and producing components for inventory. "They are working closely with their customers and anticipating their needs to have the component products readily available when needed."
In the 1970s, the furniture industry accounted for more than 70 percent of the components market, says Lawser, but has declined steadily since then. "The residential furniture market continues to be a declining market for domestically produced components, as more U.S. manufacturers are outsourcing their components or having entire furniture products manufactured offshore," Lawser says. Domestic components manufacturers face direct competition from overseas component suppliers and also lose business when finished products are imported.
This competition from imports is the most daunting challenge facing the components industry. "Low-cost imports have driven prices down while domestic costs of production have continued to rise," Lawser says. "This has created a cost-price squeeze that has resulted in very thin margins for most components manufacturers. Although sales remain fairly steady, profitability continues to deteriorate, making it somewhat difficult for companies to make capital investments to improve productivity and lower costs."
To overcome the import challenge, WCMA members are relying on superior quality, quick delivery and shorter lead times, says Lawser. Many producers are offering customized products to compete with mass-produced imports and are concentrating on supplying customers who produce custom, high-end products with unique features.
"WCMA members also have the advantage of close proximity to their customers and suppliers to better manage the supply chain all the way through to the end use customer," Lawser says. "They have better communication and closer interaction with their customers, which allows them to make last minute changes in order to satisfy their customers' needs."
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