Wood industry representatives from various industry associations were queried on the climate of their wood products market, including expectations for 2013 sales. Below are some additional comments by Pat Bowling, vice president of communications for the American Home Furnishings Alliance.
Wood & Wood Products: Overall, what are your members’ sales expectations for 2013 and how do they compare to 2012 figures?
Pat Bowling: The American Home Furnishings Alliance represents nearly 200 leading residential furniture manufacturers and importers. We do not produce forecasts, however, based on some key indicators, many of our members are optimistic about the coming year. Consumer confidence is continuing to improve, according to the Conference Board. Interest rates remain low, and the GDP is showing positive signs. Perhaps most significant to our industry, homebuilder confidence has risen to its highest level in more than six years, according to the National Association of Home Builders (NAHB). Numbers released by NAHB in December showed rising home prices, increased construction employment and a prediction for a 35 percent jump in single-family home starts in 2013. All of this bodes well for the home furnishings industry.
Year-to-date, it appears many of our member companies experienced modest improvements in sales in 2012, although some enjoyed significant double digit increases. Despite uncertainty over the “fiscal cliff” here at the end of the year, it appears 2012 ultimately will be a year of moderate improvement in the residential furnishings industry. According to government reports, retail sales of home furnishings were up a little more than 8 percent in the first 10 months of 2012.
W&WP: What will be the biggest challenges to your members and your industry in 2013? What are the biggest opportunities?
Bowling: In 2013, the biggest challenge to AHFA’s members, and to the broader home furnishings industry, will be inspiring consumers to devote a greater share of their disposable income to their homes – and, in particular, to new home furnishings. Many consumers have deferred larger ticket purchases during the economic downturn, and so the competition for that discretionary dollar as the economy improves will be all the more intense. Of course, this also represents our industry’s greatest opportunity.
Another challenge to our industry is the growing number of regulatory mandates targeting everything from the types of raw materials we use to how our products are constructed and how they are marketed to consumers. AHFA is committed to having a strong presence in Washington to provide a voice of reason and an industry-specific perspective, so that the implementation of these rules is as workable as possible for our member companies.
W&WP: Is importing still a big part of the residential furniture market in the United States, or is the resurgence of manufacturing in America having an impact?
Bowling: Imports remain an important part of the residential furniture market in the United States, accounting for more than 62% of all sales in 2011. Imports represented nearly 70% of wood furniture sold and about 38 percent of upholstered furniture sold in 2011. All three of these numbers were down slightly from 2010 levels.
W&WP: What current or pending legislation is having, or will have, the greatest impact on the North American residential furniture industry and why?
Bowling: The 1975 implementation of California’s Technical Bulletin 117 altered the way upholstered furniture was made for the U.S. market. With this standard came a mandatory “open flame” test that foam manufacturers were unable to meet without adding flame retardant chemicals to their products. Because of the perception that TB 117 provided consumers with added safety, this standard became the de facto national flammability standard, and remained so for more than three decades.
Thanks to the media’s examination of flame retardant chemicals in 2012, TB 117 is now being revised, and the new regulation is likely to end the industry’s 30-year dependence on flame retardant chemistry. This will impact worldwide production of upholstered furniture for the U.S. market. Until the revised TB 117 is released, we won’t know the full extent of that impact on our manufacturing processes. However, given the widespread publicity on the potential eco-toxicity of FR chemicals, it is at least possible that the new regulation will result in the greatest surge in upholstery sales we’ve seen in many years, as consumers move to rid their households of what is now perceived to be a potential health hazard.
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