Walmart, the home of “Low prices, Every day, On everything,” is hopping on the Furniture Made in America bandwagon.
Last month Walmart U.S. President and CEO Bill Simon pledged that Walmart and Sam’s Club will buy an additional $50 billion of products from domestic manufacturers over the next 10 years, including furniture, higher-end appliances and textiles.
Ironically, sadly, Walmart’s pronouncement came the week after Lincolnton Furniture abruptly shut down its 300,000-square-foot manufacturing plant in Lincolnton, NC. Founded in late 2011 by fifth-generation furniture maker Bruce Cochrane, Lincolnton quickly became a cause celeb of the resurgence of furniture made in America. Cochrane was widely interviewed by the media and invited to attend President Barack Obama’s State of the Union address last year.
In an interview with WBTV, Cochrane cited price competition with Chinese furniture plus unanticipated costs to retrofit the plant as contributing factors for the shutdown. The company has hired a merger and acquisition specialist to find a buyer for the plant or to dispose of its $5 million in woodworking equipment and other assets.
News of Lincolnton Furniture’s sudden shutdown came shortly after Woodworking Network reported that the massive former Mill’s Pride manufacturing complex in Waverly, OH, consisting of 11 buildings totaling 2.5 million square feet on 57 acres, had been sold to an investment group for $5 million. Masco closed down the plant that made ready-to-assemble cabinets two years ago, putting 1,200 people out of work. At its zenith the Mill’s Pride plant employed approximately 3,000 people.
Chinese Wood Products Invasion?
The new owners announced that Gilco International Lumber would occupy a small portion of the complex and that they were in discussion with a number of other potential tenants including a Chinese furniture manufacturer.
The idea that a Chinese concern would give up its home town advantage of cheap labor to invest in developing operations on U.S. soil was predicted more than five years ago by Peter Kleinschmidt, president of Stiles Machinery.
Several reports by Woodworking Network over the past year or so have proven Kleinschmidt to be right on the money. A few examples:
• GOK International, a Chinese wood furniture company, will develop an assembly and finishing plant in Ringgold, creating 300 jobs over the next three years.
• Restaurant furniture maker Selected Furniture will invest $1.2 million to purchase and revamp a 200,000-square-foot manufacturing facility in Starke County, IN.
• St. Martin America, an assembler of melamine plywood frameless cabinets with Chinese roots, opened its first U.S. plant in Cressona, PA.
I’m not suggesting that any of these developments is a bad thing. In fact, I would suggest just the opposite; I think it’s a good thing that Chinese and other foreign investors are investing in U.S. manufacturing, and as a result, creating jobs and sales opportunities for U.S. suppliers.
I expect that we will see a continuation of this trend, as more foreign investors find that the production cost advantages they enjoy in their homelands is less valuable than being directly attached to the world’s greatest consumer market.
Consider that many of the world’s largest auto makers now own and operate plants in the U.S. Better yet, consider that the Toyota Camry now holds title to Car.com’s “most made in America motor vehicle” for the fourth consecutive year in 2012, edging out the Ford F-150.
There must be a moral there somewhere. Could it be:
A. Walmart will buy more domestically-produced furniture from companies owned by Chinese and other foreign concerns?
B. More U.S. companies will realize that there must be something to all of this foreing investment in Amerca's wood products future and get in the game.
C. Mission Impossible! This colulmn will self-destruct in five seconds.
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