An North Carolina manufacturer of Italian-style upholstered furniture outsourced all its wood frames to Europe and Asia years ago. At the beginning of 2012, it moved wood frame production back to the U.S.
A Connecticut-based multinational manufacturing high-end residential furniture will focus its retail showroom expansion almost entirely on China. But 60 percent of the goods sold there are shipped from the Americas, mostly from the U.S.
A Virginia furniture manufacturer finds success retailing children's bedroom furniture produced exclusively in its U.S. factories, despite the fact it cost up to 75 percent more than the Chinese imports it used to sell.
A Wisconsin value-priced residential furniture giant opened its first Shanghai retail showroom, just as it invests millions opening and expanding plants in North Carolina and Wisconsin.
These aren't isolated reports, but headlines taken from major national newspapers over the last few weeks. It's part of a generalized trend that is seeing the recovery of manufacturing in America.
The movement is based mostly on economics. As costs for energy have risen, shipping costs to transport goods from foreign factories to U.S. retailers erases much of the competitive advantage of foreign producers. In China, rising salaries amid competition for labor is chipping away at that country's competitive advantage.
But a part of the trend is a mix of marketing with a dash of patriotic fervor. Efforts like Made in America and Made in USA initiatives, and media attention (ABC's American Made, for example) are building consumer awareness, coaxing them to seek out domestically produced goods, even if they have to pay a bit more for them.
|Made in America Initiatives
This is not a strictly U.S. phenomenon by any means, as the economies of Canada and Mexico are intimately tied to insourcing trends, supported by cross-border investment. The Toronto chapter of the Society of Manufacturing Engineers launched a "Take Back Manufacturing" initiative fall,
It's no wonder furniture is among the segments moving back to U.S. shores for production. The trend, say supply chain analysts at the Hackett Group, favors bulky items with high shipping costs; items are high, where color and style are subject to quick-paced consumer trends; or where supply chain integrity and consumer safety is paramount - all features that describe furniture.
Studies this year both by MIT and The Boston Consulting Group conclude that the pace of "reshored" or "insourced" manufacturing will accelerate in the next two years. Boston Consulting Group says residential furnishings is one of seven segments that will move back to U.S. factories by 2015. And from what we are seeing so far they are going to be proven right.
"This is good news for the American worker as growth in the U.S. manufacturing sector keeps more high-paying jobs at home," said The Hackett Group analyst David Sievers.
Sievers says reshoring becomes more viable as the total landed cost gap of manufacturing offshore shrinks. The Hackett Group's research found that the cost gap between the U.S. and China has shrunk by nearly 50 percent over the past eight years, and is expected to stand at just 16 percent by 2013, largely driven by rising labor costs in China, as well as rising fuel prices globally, which affects shipping costs.
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