Expo Mueble exhibitors see reason for optimism
By Powell Slaughter -- Furniture Today, February 29, 2004
GUADALAJARA, Mexico — GUADALAJARA, Mexico — Mexican manufacturers, coming off a couple of tough years, saw reasons for optimism at the winter edition of Expo Mueble, Mexico's largest furniture trade show.
The good news for manufacturers here comes in several forms:
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U.S. retailers, Mexico's prime export market, anticipate improved performance in 2004 as the U.S. economy shows signs of recovery.
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U.S. importers are exploring sourcing alternatives to China in light of the current antidumping investigation of Chinese wood bedroom imports.
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Exports to European nations are looking up, two years into a free-trade agreement between Mexico and the European Union.
The exhibitor count rose 6% from the 2003 winter show to 372, and organizers had to convert an area of about 10,000 square feet, normally used for parking, to accommodate demand for space.
In an opening-day press conference, Francisco Cosío Jazo, president of the Jalisco Furniture Manufacturers Assn., or AFAMJAL, a show organizer, said the Jalisco furniture industry had lost almost 2,000 jobs in the past three years — 721 jobs in 2003 alone, when 63 manufacturers closed.
"It's due to contraction of the market here in our own country and competition from other source countries for the U.S. market like China," Cosío said. "That's reflected in lower exports to the United States."
Victor Urquiza Arroyo, vice president of merchandising for case goods and upholstery manufacturer Dixy, summed up the business outlook this way: "From conversations with major customers in Mexico, I think it will be a little better than last year."
Urquiza doesn't expect a banner year, largely because many economic reforms pushed by Mexican President Vicente Fox have stalled. "Congress is divided among the parties," he said, "but I think the industry will be 3% to 4% ahead of last year."
Mexico's close ties to the U.S. economy are creating a ripple of confidence among customers of case goods manufacturer Galleria.
"The U.S. economy is rebounding, and that makes people here more comfortable in committing to product," said Blas Garza, chief executive officer. "And order rates were so low last year that retailers depleted their inventories. They're more open to purchase this year."
Looking for alternatives
While most Mexican manufacturers still have a lot of work to do to match the finish refinement of their Chinese competitors, smaller U.S. importers in particular are showing renewed interest in Mexican bedroom furniture.
At bedroom manufacturer Ponderosa's stand, buyers from three U.S. companies asked about bedroom and voiced concerns about the U.S. antidumping petition.
"We see an opportunity to sell more bedroom furniture in the U.S. market," said Ponderosa Director Ramiro Barco, whose company's sales split evenly between the U.S. and Mexico. "Buyers asked me what we can do to help them broaden sourcing. We heard from a number of U.S. companies concerned about the (petition) situation."
Even if the petition is successful, Barco said Mexican manufacturers face challenges to remain competitive.
"Right now you have China, but later it will be Vietnam, then India or Brazil," he said. "We're reworking our manufacturing processes, paying more attention to quality, to worker training, to servicing our customers. But geography can work for us. We want the opportunity to work harder to do more business."
Delsa, a major source in Mexico for Kemp, saw the petition's potential effect long before this market.
"We've seen more Americans than ever in our facilities in Delicias," said Mario Amaya, director of national sales. "There were three American companies here at the show pretty interested in what we're doing. One ordered some samples for premarket."
Other U.S. companies made appointments at the show to visit Delsa's plants.
"If we see duties on Chinese bedroom of 25% to 60%, we're definitely back in business" as a growing source country, Amaya said.
Toro Furniture, which sells case goods and accents to several Top 100 U.S. furniture chains, sees opportunity to do business with small and mid-size U.S. customers.
"We've always had a strong business with large customers, but we're starting to work with more smaller accounts on consolidation programs, where we'll send several orders for different retailers on the same trailer," said Rafael Rosas, sales manager.
"Our advantage (relative to China) is that people don't have to buy such large amounts," he continued. "They can get the quantity they want in the time they want, since we're shipping a lot of product every week. We can send a trailer daily."
Putting sourcing to work
In addition to sourcing Asian goods or components themselves, Mexican manufacturers are looking elsewhere to adapt to globalization in the furniture industry.
Case goods manufacturer Muebles Rich, for example, sources carved case goods components in China and chairs from Europe.
"We have an alliance with an Italian manufacturer of chairs, which we import and finish and market here," said President Rigoberto Chavez. "We're sourcing solid-wood carved components that we finish ourselves and integrate into our finished pieces."
Mexican manufacturers must adapt or perish, Chavez asserted.
"We can't protect ourselves with a wall around our market," he said. "Both sides — manufacturers abroad seeking to expand markets, and companies here wishing to keep their business growing — have to integrate."
Tam-Mex, which makes metal bunks and beds, and wood desks and accents, has decided to offer product the Chinese don't. The metal bed line is all steel now, and despite steel price increases that likely will raise prices 15% to 20% through July, the company keeps building business.
Tam-Mex entered the adult bedroom market here with a series of steel beds using patented D- and oval-shaped tubing.
"We've been able to get some new accounts with these new products," said José Bissu, director of sales. "We won't play price anymore with the Chinese."
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