Import challenges examined
By Brian Carroll -- Furniture Today, March 10, 2002
GREENSBORO, N.C. — Addressing the impact of imports, more than 200 furniture executives gathered here earlier this month for a day of seminars that proved equal parts wake-up call, pep rally and call to arms.
The Purchasing and Materials Management Division of the American Furniture Manufacturers Assn. organized the event, which offered a variety of perspectives on the increasing challenge that imports pose for the domestic manufacturing base.
The division's president, Danny Nance of Pearson Co., framed the day's talks by describing the challenge as "literally one of survival. But this industry has always been resilient to adapt, even to flourish."
Manufacturing veteran Jeb Bassett of Bassett Furniture advised companies to evaluate their product mixes and market opportunities, then formulate a domestic-import strategy that maximizes the advantages of each.
Bassett, who is vice president of global sourcing at his company, said imports must be 10% to 25% less expensive than domestic equivalents to warrant buying them. Imports also need to be high-volume, long-lived product lines with clearly defined specifications, he said.
Don't overlook domestic sourcing, especially for parts, he added.
"Often we give special considerations to offshore sources just because they're imports," he said. "When you put the whole package together — inventory level commitments at every stage, price, quantities and the rest — it's very possible the local supplier 30 miles up the road can beat the price of the offshore source. We've found that to be the case."
Companies that engage in importing can get benefits in addition to lower prices, said Andy Gfesser, president of Trendler Components. Imports can give a company leverage when dealing with U.S. labor, help realize economies of scale, and drive internal change within a U.S. company.
"We are now globally sourced," Gfesser said. "Developing strategic alliances is challenging, but it is investing in global distribution channels for those brave enough to take such risks."
Norman Coley, vice president of operations at North Carolina-based upholstery producer Lee Inds., said import competition is largely about perception.
"We've been dealing with imports our whole existence," he said. "It's just that the imports used to come from Tupelo, Miss. Imports are making us more competitive. It's been a wake-up call."
Coley said Lee has worked to trim order-to-delivery times from weeks to days and will continue to work until it's measured in hours and minutes. Lee has a comprehensive plan to be "not one of the best at what we do, but the only one that does what we do," he said.
"It's an effort up and down the supply chain," said Coley. "We can't as a company pull this off alone, and our vendors are aware of that. They're making the changes too."
John D. Bassett III, president and chief executive officer of Vaughan-Bassett, is one of the industry's best-known U.S.-first proponents. In a rousing call to arms, Bassett encouraged his audience to "quit talking about the problems. Let's talk about the solutions. Hell, I know what the problems are."
With raised voice and consternation written all over his face, Bassett paradoxically called on the industry to "just calm down. We're in for what Saddam Hussein called the 'mother of all battles.' And change is our friend."
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Jeb Bassett's analysis of U.S. vs. import strengths
U.S. strengths
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Raw materials (white oak, Pennsylvania cherry)
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Shorter lead times
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Service/delivery
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Can produce smaller quantities
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Better quality
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Lower inventories
Import strengths
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Labor costs: 25 to 75 cents an hour
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Abundant labor supply
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Good at labor-intensive tasks (carving, detailed finishing)
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Open to new ideas — no "we've always done it that way" mentality
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Can produce large quantities of small parts
Import weaknesses
"There is no way around the Pacific Ocean. It's 22 to 32 days on the water, there are different time zones, long lead times (60-90-180 days) and transport costs."
Source: Jeb Bassett, vice president of global sourcing, Bassett Furniture
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| Bassett |
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