Timing right for Tupelo
Companies start hiring as upholstery demand grows
By Gary Evans -- Furniture Today, February 15, 2004
TUPELO, Miss. — "Help Wanted" signs have begun appearing in front of upholstery factories in northeast Mississippi — signs of optimism as manufacturers get ready for the Tupelo Furniture Market, which opens Thursday.
Production of upholstery and other furniture products has been edging upward as unemployment roles head downward. The city of Tupelo's jobless rate has fallen to 3%, down from 4.3% in December 2002 and well below the U.S. national average of 5.3%. Unemployment for the greater Tupelo area is 4.2%, down from 5.3% a year ago.
"We're getting a good many orders from several different manufacturers, and they're beginning to have trouble finding experienced help like they want," said Sidney Bailey, placement manager for the Employment Security Commission office here.
"We're beginning to see some ads in the paper, which is a good indicator," he said. "When they start running ads, they're adding upholstery lines."
As furniture goes, so goes his office's workload. The area has lost several companies, including apparel makers, in recent years.
"Basically, furniture is the big boy down here now," Bailey said.
One of the upholstery manufacturers here seeking additional help is Bushline.
"I'm projecting a 20% to 25% (sales) increase for the first six months," said Hollis Bush, owner and CEO. "I'm comfortable in saying that," he said, adding his company "is doing the things necessary to get the business."
Bush is optimistic the Tupelo market will be strong and that the company's strategy of adding new products and fabrics will keep driving business. "I've got signs all over town advertising for help," he said.
Several high-volume producers of promotional upholstery note that business has been on a healthy uptick since the first of the year, and see it as an indication of a strong 2004. Not everybody feels that way, however.
Gerald Washington, president of promotional manufacturer American Furniture, isn't so sure the early momentum can be sustained and predicts the year will be "weak." But for now American is running "wide open" six days a week, he said, and backlogs are beginning to build dangerously high. Some of the growth stems from consumers spending their tax return dollars on furniture, he said.
American's business has been so strong that the company stopped taking on new accounts a month ago. It will be at the Tupelo market servicing present customers until backlogs are back under control.
"If you tell people you can't ship them right now, they'll come aboard later," Washington said. "But if you tell them you can and then don't, then you have problems."
Southern Dreams, which makes sofas targeted to retail from $399 to $799, will go to the market with business up about 10% in the past two weeks. President Mike Hudson attributes the increase to tax refunds, which should keep the buying cycle going for months.
"It's a cycle that happens," said Hudson said. "Customers go in and buy merchandise from dealers and then dealers tend to get caught without merchandise. Then they make sure it's stocked. The cycle runs all they way through May and the first of June."
Sales taper off afterward. But Hudson said sales should rise enough for the full year to give the company a 3% to 4% increase in profits.
He said the company doesn't plan to add employees in the next 60 days but added, "Two more weeks like the past two weeks and our tune will be changed."
Hudson said he worries about Chinese imports like he'd worry about any other competitor.
But he noted that the labor accounts for only 17% or 18% of cost in upholstery, about half that of case goods, giving the low-wage countries less of an advantage. And domestic upholstery production keeps getting more efficient.
"In 1980 when I first entered the upholstery area, not as a manufacturer or an owner but as a simple worker, sofas were being sold for $225 wholesale," he said. "We still sell sofas for $225. It's because the employee is more productive, which is a big factor."
Tom Foy, the former Lane Co. president named last week as president of Furniture Brands International, said that upholstery business has been picking up across the price spectrum.
"Business has been good. During the month of January, we worked overtime. It's really encouraging," Foy said.
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