Not all importers like being tied to one source
By Thomas Russell -- Furniture Today, March 19, 2006
High Point — Independent U.S. furniture importers like to be important to their suppliers, but many don't want to own overseas factories or be tied to dedicated plants. They want the flexibility of forging new sourcing relationships to meet changing market demands.
Perhaps a plant may lack adequate capacity as business grows, or be unable to meet quality standards and delivery schedules. And an importer simply may be able to get a better price at another factory.
Trade Masters
"We're just looking for the best price, the best quality and the best delivery," said Ron O'Dell, president of case goods importer Trade Masters. "That may be at Factory A today and at Factory B tomorrow."
An open-door relationship also allows an import specialist to do what it does best without worrying about the financial side of manufacturing.
Powell Co.
"Our goal is not to own (a plant) because, as technology evolves, that would require ... an ongoing infusion of capital," said Sean Slack, executive vice president of merchandising and marketing for case goods importer Powell Co. "Our business is to sell furniture, not manage factories. We're not tying up our dollars other than in sourcing furniture in the most proficient manner."
Powell typically adds two or three factories a year to its roster in order to offer new designs and help handle increases in volume, he said.
Emerald Home
David Beckmann, president of Emerald Home Furnishings, also said it doesn't make sense for his company to have a hand in producing through a dedicated plant or an ownership stake. The case goods importer sources from 40 plants, primarily in China and Malaysia but also in Thailand, Vietnam, Indonesia and Brazil.
"Our focus is buying and reselling rather than making and reselling," he said. "We are doing that because the marketplace is so volatile. Once you set down roots, you are committed and lose flexibility. It's pure economics. The guy that can look for the most cost-effective way and manage his business that way is going to be the low-cost producer. The furniture industry always gravitates to the low-cost producer."
Beckmann added that capacity in Asia, in particular, provides a banquet of choices for retailers and consumers. "It's a buyer's market," he said.
Lifestyle Enterprise
Case goods importer Lifestyle Enterprise also wants to keeps its sourcing options open. That gives the company access to a wide variety of plants in China, Malaysia, Indonesia, Vietnam and Thailand, which collectively represent about 95% of its business, said President Greg Noe.
"Those countries have individual strengths, such as raw materials and labor expertise," he said. "You take advantage of those strengths but don't make yourself involved in it."
Lifestyle sources from 30 factories in Asia, Noe said, adding, "We can go into any country, select the best factories and place large orders. The factory, the marketing company and the retailer can all benefit from that."
Stanley Furniture
Still, selecting source plants is often complex and must be done "very carefully," said Jeff Scheffer, president of major U.S. case goods manufacturer-importer Stanley Furniture, which works with about 12 plants, mostly in China but also in Eastern Europe and the Philippines.
"The first thing we look for is a culture that resembles ours, as well as their approach to what they put in a carton, the quality of it and how quickly they ship it," he said, noting that Stanley is a loyal business partner with its overseas factories and expects that same loyalty in return.
For Stanley, overseas production has to meld with what it makes domestically. Currently, imports represent 30% of Stanley's line, with the rest made in the United States.
Phil Haney, executive vice president for Stanley's collections business, said, "We don't want to jump around too much with production. We want (manufacturing partners) to have a competency and a good capability of whatever we ask them to make."
Marrying imported goods to its domestic line allows Stanley to retain control over a suite, Haney said. The company uses anywhere from 30% or less of an overseas plant's capacity to 100%, he said.
Most importers don't make a decision to switch source factories lightly. Most have done business with particular factories for years, and won't go elsewhere unless there's a serious quality or service issue.
La-Z-Boy
"It's a balance between cost, quality, service, capacity and design (capabilities)," said Mike Padjen, a vice president of operations at La-Z-Boy Global, which works with various non-dedicated source factories to get the widest range of product at the best price. "Your first choice is to go into a plant that you are in already and that you are familiar with, because ... you know what you're going to get."
The second alternative, he said, is to find other plants that can produce a design outside the capabilities of a current supplier.
Like Stanley, however, La-Z-Boy sources in a relatively small number of factories, thereby making it a more important player to its suppliers.
Furniture Brands
The same is true at Furniture Brands International, which sources in China, the Philippines, Indonesia and Vietnam. Except for its Maitland-Smith subsidiary, FBI doesn't have dedicated plants or ownership stakes in offshore factories. Furniture Brands has been consolidating some manufacturing at Lacquer Craft, which has a huge factory in Dongguan, China.
Lynn Chipperfield, FBI's senior vice president, said relationships are key in such decisions. "As long as we're getting good product and quality, our needs are satisfied," he said.
At this point, it doesn't make financial sense for FBI to have any dedicated plants or ownership stake in offshore factories, Chipperfield said, adding, "We have seen (production) move from the Philippines to Taiwan to China and to Vietnam. The last thing you want is to be tied down in one location with brick and mortar."
Kemp Enterprises
Case goods importer Kemp Enterprises has what it calls dedicated production space, but no ownership in plants. Its business is focused on three factories owned and operated by Dare Global in the Fuzhou and Shenzhen areas of China. Kemp uses roughly 50% of the capacity in these facilities.
President Bill Kemp said the door is open to move production if necessary, but he would be reluctant to move since he considers Global a true partner that would work with Kemp to resolve any issues.
"In my way of thinking, you wouldn't move unless you had a problem you couldn't resolve," Kemp said. "Both sides grow as you get to know each other and build the relationship."
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