U.S. factories still have home court advantage
Jerry Epperson -- Furniture Today, April 13, 2003
Thanks to the International Trade Administration and the American Furniture Manufacturers Assn., we can now calculate the impact of imports in 2002 on the U.S. household furniture industry.
For all household furniture, domestic factory shipments grew 3.7% in 2002, while total imports jumped 17.2%. Household furniture imports were 38.9% of U.S. furniture consumption (at retail) last year, vs. 36.2% in 2001 and 20.4% a decade ago. This is for completed product, whether assembled or not, and does not include components.
Last year, U.S. shipments of wood furniture declined 1.8% while total wood imports grew 19.7%, and wood imports from China grew 52.5% to a U.S. shipment equivalent of $2.9 billion. Imported wood furniture was 47.7% of all wood furniture sold in the United States in 2002. Who is No. 2? Canada at $1.3 billion. The fastest growing? Vietnam.
Imports of upholstered furniture were 13.7% of all upholstery sold here last year. That doesn't tell the whole story, because eight of the 10 largest U.S. upholstery makers brought in cut-and-sewn covers last year. In some cases, this represents as much as 15% of the units they sold.
Domestic upholstery grew a respectable 10.9% in 2002, but imports grew 21.3%. Italy remains the largest U.S. supplier of upholstery, but China leaped past Mexico and Canada into the No. 2 slot. Fully assembled upholstery from China grew 81.1% last year, from a small base. These numbers include both fabric and leather.
Of course, if tougher flammability standards take hold, we may be selling concrete sofas.
The compounded annual growth rate for domestic wood furniture over the last 10 years was 2.2%, while for total wood imports it was 15.1%. By country, Mexico had a compounded annual growth rate over 10 years of 10.8%, Italy 15.2%, Canada 17.1%, Indonesia 19.2% and China 40.1%.
U.S. domestic upholstery had a 10-year growth rate of 6.4%, while total upholstery imports grew 18.7%. Compounded annual growth rates by country were Italy 14.5%, Canada 19.7%, Mexico 27.3% and China 53.8%. Ten years ago, Chinese upholstery imports were one-sixth of what we bought from Canada. In 2002, Chinese upholstery imports were almost twice the volume from Canada.
There is a tendency to oversimplify imports. It's not just a question of cheaper labor. Technology, modern transportation and communications have made oceans less of an impediment while improving everyone's productivity. We used to measure capacity by the size of a facility and the number of employees. It's amazing what technology can do today in our plants.
We all want clean air and pure water, but government regulations mean most U.S. factories have had to spend capital to meet ever-stricter standards, not improve productivity. In many ways, what's happening globally parallels what Virginia and North Carolina did to New England decades ago with cheaper labor and easier access to less expensive raw materials.
Compete on your strengths. Remove emotion from your decisions. We still have the home court advantage. Be smart. They are.
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