Vietnam emerging as viable source
It may never eclipse China, but its factories and workers offer valuable skills
By Powell Slaughter -- Furniture Today, August 1, 2004
Ho Chi Minh City, Vietnam — While much of the furniture manufacturing boom here springs from efforts to move bedroom production out of China, Vietnam isn't expected to replace its giant neighbor's dominance in the U.S. market.
Rather, Vietnam is emerging as yet another in a stable of viable Asian source countries.
Many sourcing specialists believe Vietnam offers particular opportunities at the high end. The key factors are the country's native craftsmanship, an educated, quick-to-learn work force, and low labor costs.
Also, the country has a number of plants willing to make relatively small production runs — even though many of the large, foreign-managed plants already have booked most or all of their capacity as bedroom suppliers switch from China to escape U.S. antidumping duties in the category.
A pioneer and his impact
One name that always comes up when talking about Vietnam's potential as a source country is Paul Maitland-Smith. Theodore Alexander, the manufacturer he founded here in 1996, has earned a reputation for quality high-end goods that took native skills in inlay and unique treatments such as eggshell veneer and adapted them to Western consumer tastes.
Just like what happened years earlier in the Philippines, where Maitland-Smith also was a pioneer, his operation here has fed the development of other manufacturers. It has contributed to the presence of an educated, youthful labor pool that learns new techniques quickly — a resource that should keep Vietnam's furniture industry going.
"The ability to hit the ground running at the high end has a much greater head start here than in China at the same stage of development," said Randy Austin, group president of Theodore Alexander.
That's a reason Sarreid decided to source its entry into high-end case goods in Vietnam. The importer, which has sourced occasional, accessories and individual case goods items from some 10 plants here for a little over a year, teamed up with manufacturer AA Corp. for a 100-piece collection of English and American antique reproductions that debuts at the October High Point market.
Jason Reid, who oversees product development for Sarreid, said Theodore Alexander set the stage for companies like AA Corp.
"People around the world import marquetry from Vietnam, and the factories here know high-end veneer," he said. "They have incredible local woods. You take inexpensive labor, the short learning curve for workers, and the indigenous woods — this place is hot."
The pattern of industrial development, with furniture makers clustered in manufacturing parks around the Ho Chi Minh City area, is another plus. Potential customers can hit a lot of plants in a short time.
Steve Tymkew, purchasing and import operations manager for Accent Furniture, a wood division of U.S. manufacturer and importer Boyd Specialty Sleep, just finished his second trip to Vietnam with Brendon Xu, the company's China operations manager.
"The big difference between here and China is that you can see four or five factories in one day. In China, you're lucky if it's one or two," he said. "Three other things going for the area are plans for a major airport and major port, and plenty of land for development."
Broyhill's Vietnam sources are in a good position to deal with increased demand, said Don Essenberg, merchandise manager for import case goods.
"We've been coming here at least two years and haven't seen any limitations on what we can do here compared to China," he said. "The capacity is sufficient and the finishing capability is there. People we're doing business with here came to Vietnam before antidumping. Now everyone is coming."
The presence and increased activity in Vietnam of major finish suppliers such as Valspar, Akzo Nobel and Sherwin-Williams is raising the comfort level here for potential U.S. customers.
"We work closely with Akzo and Valspar on ways to find sourcing opportunities," said David Martin, La-Z-Boy's director of Asian imports. "If you're a manufacturer looking to do business in the States and understand the American consumer's requirements, finish is the key."
Coatings companies do a lot of legwork to evaluate which Vietnamese plants have the ability to finish goods to U.S. tastes.
"If they feel they can do the finish, we need to go in and evaluate if they can do the rest," said Andy Bell, who oversees La-Z-Boy sourcing in Thailand, Malaysia and Vietnam. "Finish capability is a good start."
La-Z-Boy division Pennsylvania House has a new collection for October coming from Vietnam, and Bell said production is starting for a full collection of bedroom and dining room for another wood division.
While foreign-managed manufacturers currently account for most of Vietnam's wood exports to the United States and for much of the new capacity coming on line, the next stage of growth will come from native companies.
Tight partnerships like the one between AA Corp., one of the homegrown companies, and its three U.S. customers are the model that could hold the most potential for newcomers hoping to import from Vietnam. A key aspect of sourcing in the country is to match importer needs with the right manufacturing partner.
"Most of the things I'm finding here are middle to middle-high end," said Tymkew, who has sized up a number of factories. "You can't go in and try to change the plant. You have to play to their strengths, whether that's solid wood or working with veneer."
Beyond the usual suspects
As in China, where heavy Taiwanese investment led to expansion among homegrown plants as well, Vietnamese companies should come into their own as sources for the U.S. market. That could happen soon, as capacity at the "usual suspects" for importers become spoken for.
"What is available beyond the close-knit group of manufacturers that have moved here — that's what everyone wants to find out," said La-Z-Boy's Martin. "It's hard right now to understand what these new factories are capable of, but they'll surface."
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