Seating materials prices haven't fallen
By Gary Evans -- Furniture Today, May 22, 2006
High Point — For anybody who thought last year's rise in costs of upholstery materials might be temporary, well, can we sell you a nice bridge?
Permanent is the word, apparently, as seating manufacturers face ongoing cost pressures with foam, fabric, packaging and transportation caused by one of the most severe price spikes in foam and other petroleum-based products in recent history.
Prices have been rising for nearly two years, but took off after hurricanes Katrina and Rita slammed into the Gulf Coast last summer, damaging the region's chemical industry.
Most manufacturers showing at market here said they believe prices of seating components have leveled off. But no one sees hikes that once held the promise of being short-term going away, or expects that surcharges will be eliminated.
For the most part, producers have rolled all or part of the extra costs into new price structures, and buyers market here seemed to be taking them as just part of doing business. Factories were reluctant to say how much the increases added to the price of a sofa, but estimates ranged from $10 to $50 or more at the factory level, depending on price points.
"Pricing has definitely stabilized, much to the pleasure of our customers and our sales force," said Lee Fautsch, vice president of sales, residential, for Flexsteel. "The rapid escalation that we saw in the past 18 months to two years put a lot of our customers and reps off balance. But, yes, price increases have slowed down."
Like dozens of other producers, Flexsteel initially passed on some hikes in the form of a surcharge, but "we've rolled the surcharge into our basic pricing structure and don't have that anymore," said Fautsch.
Ken Salm, senior vice president of sales and new business development at Douglas, agreed that materials prices have stabilized, "but at ridiculously high levels."
Salm said Douglas opted to implement a straight price increase, rather than a surcharge, last year because the company didn't believe raw materials prices were coming down anytime soon. He also said a price increase is more fair to sales reps because most manufacturers don't pay commissions on surcharges.
"Obviously, no one likes a price increase, and it's not as if I'm excited about raising prices. But I am excited about staying in business," he said.
"I still wake up in the middle of the night on that one," said Severina Parker, national sales manager for Carson's of High Point. "In the beginning, after Katrina, we were led to believe it was a temporary hike (in foam costs) and we were going to do the same thing — make a temporary charge to cover it.
"Then (suppliers) made it pretty darn clear that it wasn't coming down. It was really bad for a while. We had three increases in three weeks (on foam) and it wasn't when you placed the order, it was when they shipped it to you."
She said the company came up with a 10% price increase at the beginning of the year, and "we'll be sticking to that."
Nadine Andrews, merchandising manager for upholstery at Broyhill, wasn't so sure that prices have completely stabilized.
"We see surcharges on fabrics all the time because of the petroleum. Foam has stabilized quite a bit," she said. "But ask me tomorrow."
| Acknowledgements | ||
| Business Editor Larry Thomas contributed to this story. | ||
