The Everly Brothers sang about problems, problems all day long and would have appreciated the list of challenges faced by North American woodworking companies.

There are plenty of challenges, but there are also opportunities for manufacturers of cabinets, residential and office furniture, millwork and store fixtures.

Here are the greatest challenges as written by responding companies during our FDM 300 research.

Imports were the greatest challenge for FDM 300 companies in 2005. Hiring and keeping good employees was next, followed by issues related to managing growth. Concerns about health care costs rose sharply in 2005, and this is listed as a separate category for the first time. Materials cost, a major concern a year earlier, was still a problem but was mentioned by fewer companies in 2005.

The complete listing of the FDM 300 companies appeared in our February 2006 issue. The list is also available online at www.fdmonline.com.

Imports

The number of respondents stating that imported furniture and other wood products was their greatest challenge increased slightly in 2005. That represents 23 percent of respondents who offered a "greatest challenge." Here are some of those responses:

  • Worldwide competition
  • Asia
  • China imports
  • Competing with Asian imports
  • Competing with Canadian companies
  • Competing with Chinese exports
  • Competing with international suppliers
  • Competing with the Chinese!
  • Customers moving overseas
  • Facing growing competition from China and other countries overseas. Combating this by shortening our delivery times, offering better after-sale services and offering a wider range of design furniture
  • Globalization, changing dealer base, consumer confidence
  • Imported products
  • Inflation on domestic-sourced products, increasing Asian imports
  • Low-cost, Chinese-made casegoods
  • Maintaining a domestic manufacturing presence in a furniture world dominated by imports!

 

Employees

Let's face it: This is always an issue. The same number of companies (20 percent) listed this as their greatest challenge last year. Here are some of the responses:

  • Hiring quality people
  • Skilled labor availability
  • Getting qualified employees
  • Finding and training new employees
  • Finding capable and aggressive people to maintain our growth
  • Finding qualified, capable labor
  • Finding skilled installers
  • Getting good employees
  • Hiring CAD technicians, over-the-road truck drivers and qualified factory employees
  • Retaining and training quality employees
  • Finding good, qualified craftsmen

 

Growth issues

Handling growth and increased production was the greatest challenge for 14 percent of responding companies.

  • Building infrastructure
  • Completed implementation of software operating system, a 2-1/2-year project
  • Keeping up with 25 percent growth year over year
  • Maintaining lead times
  • Locate offshore sourcing that is dependable in delivery timing and consistent in quality and production volumes
  • Increase production
  • Managing growth
  • Maintaining realistic lead times for our dealers (volume of production)
  • Moving to a new building with little to no downtime and still having a record sales year
  • Predicting impact of a potential economic downturn on our young, growing company
  • Synchronizing sales with capacity
  • World sourcing is creating major supply chain problems and inconsistencies
  • Being able to keep up with demand and growth
  • Expanding capacity to meet increasing demand

 

Materials cost

Materials cost is still an issue, but it was mentioned less often than it was a year ago. Thirteen percent listed cost of materials as their greatest challenge. The responses included:

  • Rising raw material costs
  • Energy and commodity costs
  • Maintaining competitiveness in the face of rapidly rising material costs
  • Non-stop increases in steel, aluminum, polyurethane foam and energy costs
  • Quality raw materials
  • Raw material price increases and gross margin decline

 

Health care costs

There were several health care responses a year ago, but that number jumped to 10 percent this year. Here are the challenges:

  • Controlling health care costs
  • Health care costs; finding talented people to produce our products
  • Health care, insurance, EPA, collections
  • Health cost/employee retention-recruiting
  • Health insurance
  • Medical costs
  • Rising group insurance costs

 

Pricing and profitability

There were fewer responses (6 percent) in this general category than a year ago. A few samples:

  • Competitive pricing with increasing quality and product performance
  • Canadian dollar value
  • Pace of the rising dollar and predatory pricing
  • Passing on increasing costs to customers
  • Raised prices to stay same size

 

Other concerns

  • Fifteen percent of respondents mentioned other concerns:
  • Customer consolidation
  • Demand for product, maintaining quality
  • Internet auctions for engineered millwork
  • Keeping the domestic factory operating and at a profit
  • Reaching the remodeling market, getting to specifiers/designers and competing with "big boxes" with their imports
  • Rising freight costs
  • Staying abreast of trends and styles
  • The difficulty to collect money
  • The online auction process; staying competitive
  • Workers' comp. containment

And finally...

  • Everyday life

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