Wood manufacturers more optimistic than a year ago
By Powell Slaughter -- Furniture Today, December 26, 2004
High Point — With the presidential election out of the way, signs of progress in Iraq and demand that's been pent up so long it should be ready to pop, case goods manufacturers are more optimistic in general than a year ago.
Many believe consumer confidence is on the upswing and that, barring any major setbacks in Iraq or terrorist attacks at home, and continued improvement in the economy, prospects are brighter next year for bedroom and dining room activity at retail.
Within the industry, the antidumping investigation of wood bedroom furniture from China awaited only the final determination of injury from the International Trade Commission at press time. Even if the ITC finds injury, the duties affecting those producers that account for most Chinese bedroom furniture are not steep enough to cause a major disruption in pricing.
While the duties aren't what the petitioners had hoped for, an affirmative ruling would leave them with the ability to pursue individual Chinese producers they believe are dumping. It's worth noting that even many importers admit there is dumping going on in China — but not, of course, for the record.
Most suppliers simply look forward to getting back to business without worrying about the antidumping issue. The investigation cost a lot of time and money for both sides. Overall, it remained an internal issue for the industry, and despite on-again, off-again coverage in the mainstream press, the antidumping investigation never caught the interest of many consumers one way or the other.
Ashley Cos. Chairman Ron Wanek said the completion of the U.S. election will help the industry, both in terms of it being off consumers' minds, and the fact that he believes a Bush administration will be better for the economy.
"I'm bullish on the outlook," he said. "Business in general is going to be up."
While duties come into play with some imports, and raw material costs are up, Wanek doesn't see increases at retail.
"I think pricing is going to be stable, and it's pretty well leveled out already," he said. "I think there's going to be some cost absorption. Raising prices right now would be the wrong thing to do, and I don't think consumers will allow the industry to do it (anyway)."
Jeff Scheffer, president and CEO of Stanley Furniture, is another producer who sees a good year ahead in 2005.
"You're talking to the eternal optimist, but in talking with other people in the category, they're more optimistic versus this time last year," he said.
"On the whole, the economy is improving. The election is behind us, and interest rates are still good. A lot of the fundamental (indicators) we watch for are good."
Scheffer said a number of issues should help stabilize deflationary trends in case goods pricing over the past few years, but antidumping duties aren't one of them.
"I don't think (8.64%) has much of an effect on anything," he said. "The bigger issue is some of the inflationary things we're hearing on costs — lumber, finishing materials, cartoning all are more expensive, not to mention overhead factors like the increased cost of health care."
Stephen Giles, vice president of merchandising at Universal, believes that increased Asian production capacity will keep the deflationary pressure on, especially if demand doesn't pick up.
"We do see a pickup in retail lately that hopefully will continue into the new year," he said, pointing out the economy is improving, the U.S. election is decided and elections are coming in Iraq. "I see more economic stability in 2005," Giles said. "We're looking at modest gains in case goods."
In style, look for case goods leaders to continue a move toward moderation, in terms of looks as much as in terms of size.
"If we look at the case goods category as a whole from a styling standpoint, we sense a shift toward cleaner looks, not necessarily contemporary or modern, but simpler," Stanley's Scheffer said, noting that heavy carving and huge scale are turning into commodities. "That weighs heavily on our design thought processes. We're going after wants, not needs; we're not in the commodity business."
Simplicity of design also is one of three influences Tom Tilley, president of Thomasville, sees for case goods in the coming year.
"That's not only in the ornamentation, but a manifestation in the overall scale of the pieces — a swing back to simpler, more streamlined designs concentrating on woods, finishes and hardware," he said.
Tilley also predicts an increased number of accent items and eclectic design in major collections in order to create interest and contrast on the retail floor and give consumers a design-oriented option.
"Those pieces often have unique materials, whether painted finishes, stone, leather or other interesting materials," he said. "People are looking for ways to express their personal style, but often aren't comfortable mixing materials and colors. The extent to which we as manufacturers can show them rooms to which they can aspire will enhance sales."
Painted finishes are another key, at Thomasville and many other producers.
"The black painted colors are increasingly popular," Tilley said, adding that Cinnamon Hill, Thomasville's October introduction, comes in a fruitwood finish or black with rub-through.
"Years ago, that painted finish would have accounted for 10% of orders, but with Cinnamon Hill over 40% was in the painted finish," he said. "It is somewhat urban, reflects apparel trends, and doesn't conflict with anything."
Giles at Universal said consumers are inundated with carved, ornate looks.
"We definitely see a return to cleaner product, simpler lines," he said. "I see it in women's fashion, in home trends and in the dealer reaction to product we introduced at market. Our more ornate, heavily carved groups didn't do as well."
-
Specialty sleep products likely to stay hot
Dec 22, 2004 -
Wood makers jockey for growth
Jan 8, 2006
VIEW ALL GALLERIES
