U.S. producers still have opportunities, professor says
Offers skilled labor base
By Furniture Today Staff -- Furniture Today, October 27, 2005
WINSTON-SALEM, N.C. -- The state of U.S. furniture manufacturing is gloomy but opportunities exist, according to a University of North Carolina professor.
Economics professor Mike Luger spoke this summer at a furniture forum here organized by the American Home Furnishings Alliance, the North Carolina Department of Labor and law firm Womble Carlyle Sandridge & Rice.Luger noted that decades ago, some northern U.S. manufacturers moved south to take advantage of lower wages, taxes and real estate costs. For furniture manufacturers, North Carolina also was appealing because of its abundance of oak, poplar, maple and other woods. Area rivers could power sawmills, while railroad lines provided convenient transportation. Moravians and Quakers who had settled in the state were wood craftsmen. By the time of the stock market crash in 1929, North Carolina led the country in wood furniture produced.
Despite job losses in the past five years, furniture remains the state’s second- biggest manufacturing employer behind textiles, at 58,248 people in 2004, Luger said. The state ranks in the top three in the country in furniture jobs.While China is usually blamed for layoffs, the U.S. furniture market began to suffer a dozen years ago. Luger said that Canada’s furniture manufacturing shot up after the North American Free Trade Agreement was implemented in January 1994.According to a study by Duke University, North Carolina furniture employment has declined 28% in the past 12 years, from 80,873 to 58,248. Most of those job losses have occurred since the second half of 2000.
The same factors that pushed industry south are now pushing jobs to Asia: lower wages and cheaper real estate. The average American furniture craftsman earns 20 times what a worker in China makes — about $14 per hour compared to 69 cents, Luger said. Chinese factories also are relatively free from environmental standards, which are growing increasingly strict in the United States, he said.While southern states can’t compete with Asia on wages, the region still has some of the advantages that led High Point to become the furniture capital of the world — a skilled labor base, existing infrastructure and good wood.Some U.S. furniture companies already have implemented changes to make them more competitive, such as offering custom orders with multiple finish or fabric options, various heights on casual dining sets, and upholstered goods with customers own materials, Luger said.Companies that are still thriving probably already have a focus on innovation, he told the audience.
Those looking to diversify could find opportunities in related fields, like kitchen cabinets or storage areas for prefabricated homes, boats and luxury aircraft.“Globalization is an undeniable reality,” Luger said. “To compete, we must increase productivity, rethink how we are organized, make new products and find new markets.”
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