Upholstery makers face issues
By Gary Evans -- Furniture Today, December 29, 2002
After a roller-coaster ride through 2002, stationary upholstery makers will enter the New Year looking for moderate growth and facing at least two potentially explosive issues — imports and new flammability rules.
The import issue has moved from a crawl to a sprint, and seems to be gaining even more momentum as manufacturers seek to protect their margins.
Flammability, on the other hand, has been almost an ignored issue. But now some industry observers believe it's moving front and center.
The reason: This is the year that the action on revisions to California's Technical Bulletin 117 is expected to accelerate. TB 117, which details new flammability rules for upholstery components, is expected to go through its required stages this year and go into law by 2004. Not only will it involve California upholstery makers, but also producers from the rest of the country — and the world — who ship into this major market.
Wishful thinking
Several manufacturers admitted that 2002 hasn't been the year they wished for — with single digit gains in sales and units, below most expectations. Growth for the New Year is expected to be flat to moderate although manufacturers are maintaining an upbeat outlook.
"If the economy has bottomed out, it should be a pretty good year," said Roy Calcagne, vice president of upholstery merchandising for Broyhill.
He said the first half of 2002 was "very good" but the second half was off. The upcoming year's prediction is moderate, with growth between 4% and 6%, Calcagne said.
Norwalk also expects to gain ground during 2003, after a year that posted only single-digit gains, according to Jack Arthur, vice president of merchandising, "I'd have to call it moderate," he said of expectations, "although we're determined to beat 2002's growth rate."
Dick Posey, vice president of marketing for Fairfield Chair, thinks the industry will gain ground as consumers take advantage of reduced interest rates, leaving them with more disposable income.
Fairfield will finish 2002 with moderate growth, and Posey echoes the sentiment of other company execs.
"Although we are not excited about moderate growth, we feel optimistic about any growth given the current business climate," he said.
According to Posey, Fairfield's broad base of customers and products "allows us to have more steady incoming business than lines that specialize in just one area and depend on a smaller customer base. We have also focused on further expansion and freshening of our product line this year, and that has allowed us to open new accounts that we have not previously sold."
Midpriced upholstery producer Best Chairs expects to finish 20% ahead of 2001, according to Brian Lange, vice president of sales and marketing. He said the company is celebrating its 40th year of consecutive sales growth with the increase coming from its same customer base and no acquisitions.
"We anticipate continued growth opportunities in 2003," he said. "Matching 2002 increases will be a stretch goal, but we are optimistic 2003 will be a good year."
Bright spots
Another player seeing good growth in 2002 was Comfort Designs, a contemporary specialist.
"For our upholstery division, we will end 2002 with a 25% increase in shipments over 2001," said President Colin Keefer. "Not much of this comes from the general economic situation, but it reflects our revitalization of the business."
A Keefer-led management team restructured Comfort Designs in 2002. As of Jan. 1, the company will be moving its upholstery unit to a new factory space that is three times the current area.
Keefer said that the company looks for "robust growth in 2003, again mostly from our turnaround. Industrywide, we see a small, say 3%, upholstery growth."
Although he sees the 2003 "upholstery market as one of intensifying competition," the ongoing increases in the sale of new and older homes holds an opportunity. "Those potential customers are our target, and unless we have an economic meltdown, their needs will support our growth," Keefer said.
Norwalk's Arthur said his company's major goal "is deciding how dependent we want to become on global sourcing. The West Coast strike was an eye-opener, as we are in the process of contacting customers to advise them of missed holiday deliveries because of this apparently short strike. Implications of this work stoppage were instantaneous, with lasting impact. And it's not over yet."
Competitive pressures from imports continue to top the list of issues for Best Chairs.
"We currently import various components of our furniture, but not fully-assembled upholstered furniture, but all possibilities will be considered," said Lange.
Likewise, the biggest issue faced by Fairfield "is companies importing fully finished and assembled products. In response, Fairfield will emphasize its custom-order strength, and it recently implemented a plan to "dramatically" reduce special-order turnaround.
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