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Imports up 15% in '04

By Brian Carroll -- Furniture Today, April 3, 2005

High Point — A healthier U.S. furniture retail climate in 2004 meant a bigger appetite for foreign goods, particularly from China. After a slowdown in growth in 2003, furniture imports ballooned 15% last year to $18.4 billion.

China resumed its 30%-plus annual growth rate, jumping 31% to $8.7 billion, almost half of the total imports from all countries.

More than 47 cents of every U.S. dollar spent on imported furniture and parts went to China last year, up from 41 cents in 2003. In 2001, China's share was just 36 cents.

It seems China's growth last year didn't suffer much from duties imposed on its wood bedroom furniture by the U.S. International Trade Commission. The commission didn't decide on final duties until December, although importers had to begin posting bonds in June to cover preliminary duties.

The import numbers in this report reflect landed value of product, excluding duties and also such costs as freight and insurance.

The 15% jump in worldwide imports is an increase from the 11% rise in 2003, when growth likely was slowed by retail sluggishness and uncertainty over the antidumping petition drive.

To call the import-export figures for furniture a "trade imbalance" is almost to mock the term. The United States bought $18.4 billion in furniture from offshore in 2004, nearly 10 times the $1.9 billion exported to other lands. Exports grew 10% last year (see story at top of page).

Pacing the import growth were six countries in the top 10 that outdid the 15% growth rate worldwide.

No. 4 Mexico's output total climbed 17%, nearly doubling that country's growth rate of the prior year, to reach $975.9 million. Driving Mexico's growth, surprisingly, was upholstered seating, which grew by nearly one-fourth to $273.5 million. Upholstery was the largest U.S. export category for Mexico, exceeding furniture parts, which was tops for years.

Malaysia bounced back from a slow 2003 to send the U.S. $604.7 million worth of furniture, a 20% increase and enough to put that country back into the top five.

In what was not a surprise, Vietnam entered the top 10 by more than doubling the amount of furniture sent to the United States for the second year in a row. The $364.4 million total represented a 116% gain, which followed a 129% gain in 2003.

Vietnam's Commerce Department has predicted that Vietnam's total could reach as high as $550 million this year.

Vietnam displaced the Philippines, out of the top 10 for the first time in nearly two decades. That happened in spite of the fact that Filipino manufacturers increased their output to the United States by 11% to $202.8 million, a big improvement from a 1% increase in 2003.

A bit surprising was the 9% decline in shipments from Italian furniture makers, the only decrease among top 10 companies. One likely cause is the flight of Italian production to lower-cost countries. In the past two years, several major upholstery producers have set up operations in Southeast Asia, particularly in China.

The product breakout numbers reflect Italy's shift. Upholstered seating, the top furniture category for Italian imports, dropped 19% to $339 million, while source materials for finished furniture, like leather, showed growth.

The United States' No. 2 trading partner in furniture, Canada, resumed growth after a flat 2003, with the $2.3 billion total in 2004 representing a 5% increase. Occasional furniture led the way at $584.5 million, up 6% from 2003.

Canada has become largely a source for parts, however. Four of the top 10 categories of imports from Canada are "furniture parts."

China again is the big story. With headlines a year ago such as, "Standard opens plant in China," "Landmark turns focus to Chinese leather" and "Asian warehouses drive Jofran growth spurt," the big growth is no surprise. Much new production came on line in 2004 to spur China's return to 30%-plus annual growth, its pattern in the '90s.

The China total is so large, however, that high growth rates likely can't be sustained for long. Imports already represent approximately 60% of the U.S. furniture market, which compares to just 26% a decade ago. During that decade, shipments from China grew 2,400%.

Occasional furniture still is the largest category for China at $2.1 billion, but the big growth story for China is metal furniture and metal furniture parts. A big growth category the past several years, metal was No. 2 for China in 2004 in exports sent to the United States at a value of $1 billion, more than double the $460 million in 2003.

Furniture categories with metal are scattered among the 51 furniture and furniture parts categories in which China trades, and they all show significant growth.

Tariffs and trade tensions perhaps are taking a toll on China's flow to the United States. Although wood bedroom furniture from China grew 10% to $839.7 million, wood beds as a standalone category was flat at $397.6 million. Part of this can be attributed to shifts in bedroom production by manufacturers anticipating the duties.

Also a bit of a surprise was the 9% gain registered by No. 6 Taiwan, which has proven resilient after more than 10 years of lost market share to China.

With the shifting of manufacturing to mainland China, many Taiwanese factories have turned to producing parts. Metal furniture parts, the biggest category for Taiwanese producers selling to the United States, grew 39% to $134.4 million last year.

Tighter logging restrictions and wood shortages did not send Indonesian imports into decline, as was expected a year ago. The total from No. 7 Indonesia increased 5% to $532.5 million, a turnaround from a 2% decline in 2003.

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