Progressive Furniture enjoys Mexican connection
December 10, 2013,
The Baja Wood plant processes as much as 130,000 board feet daily. This worker is inspecting shaped parts used in bedroom production.
ROSARITO, Mexico — Like most case goods resources, Progressive Furniture sources from several countries in Asia including China, Vietnam, Malaysia and Indonesia.
Each brings unique advantages and looks to a wood product line that includes bedroom, dining room and occasional furniture.
But over the years, Mexico has become an equally, if not more, important resource than any one of those countries, particularly in bedroom.
This is due to Progressive's longtime sourcing partnership with Baja Wood Internacional, a dedicated factory that operates a 280,000-square-foot production facility and 100,000-square-foot warehouse in Rosarito, just south of Tijuana.
Progressive, a division of Sauder Woodworking since July 2001, has sourced product from Baja Wood since 1992. From the start, both manufacturers worked to transition the plant from a facility that once specialized in bunk beds to a resource that produces complete master bedrooms, said Kevin Sauder, president and CEO of Sauder.
"It's been a profitable, long-term relationship for both parties," Sauder said, noting that while Progressive doesn't have an ownership stake in Baja Wood, it provides financial support where needed. "It is built upon a level of trust and understanding that has been very positive for both parties. They are good people."
This piece, part of Progressive’s Trestlewood collection, is one of many solid wood case pieces made in the Mexico plant.
Over time, Baja Wood has become an increasingly important wood bedroom resource, especially with the closing of Progressive's laminate and veneer bedroom plant in Claremont, N.C., in late 2007.
Around that time, product made in Mexico represented about 20% of the company's business, said Dan Kendrick, president of Progressive. Today it is closer to half.
"When we shut that factory down, this Mexico factory became our identity," Kendrick said.
Officials say the Mexico sourcing operation, which has been in its current location since the mid-1990s, remains competitive against factories in Asia, thanks to a combination of plant and worker efficiencies and its proximity to the U.S. market.
The one-shift operation employs roughly 700 full-time production workers in a variety of jobs ranging from machining parts to finishing product. The product is a bedroom line made mostly with solid U.S. pine.
Today the plant produces roughly a third of the estimated 40 suites in the Progressive line. Four-piece groups retail from $599 to $1,499 with the sweet spot at $899 to $1,299.
Due to the use of solid pine, the product ends up larger in scale and more rustic in nature than the transitional and contemporary veneer-based groups that come out of Vietnam.
Kendrick said that it would be impossible to import bedrooms with the same dimension, scale and price out of Vietnam. However, he guessed that similar groups coming out of Vietnam would start around $1,299 and top out at $2,499.
Countries like Vietnam still have an advantage in labor costs. There, the minimum wage is about 70 cents per hour and furniture workers can earn $1 per hour or more. Still, that's less than half the estimated average hourly wage of about $2.25 in Mexico.
Where Mexico wins is its proximity to the marketplace and its on-site warehousing capabilities. Lead times from Mexico - from order placement to the arrival at the retailer's door - range from 14 to 20 days based on the store location, Kendrick said. Shipments from Asia take more than 60 days from inventory and more than 90 if ordered from cuttings.
Because of its location, shipping from the Rosarito plant is a lot like shipping out of San Diego, minus the labor costs, Sauder said.
"The raw materials come from the U.S., but they have labor and manufacturing costs associated with Mexico, which are lower," he said, adding, "The logistics are so much better - they have a very quick turnaround and low freight costs, and the inventory is right there on site."
Today, the plant ships about 165, 53-foot trailers per month. A warehouse expansion underway will double the size of the facility to 200,000 square feet under one roof, and there's also additional storage on site, which Kendrick said will increase the shipping capability to as many as 225 trailers per month.
Progressive also ships Mexican-made product in less-than-truckload quantities from its Claremont, N.C., warehouse. These can ship in a matter of days from receipt of the order.
"The advantage here is that we warehouse product," Kendrick said. "That, for me, is what tips the scales, the service aspect."
Kendrick said he also believes workers in Mexico also are more productive than those in Asia.
During a tour of the facility that Furniture/Today took this past summer, workers were busy on a plant floor that processes as much as 130,000 board feet of wood and completes 2,500 pieces of finished product daily.
Many were operating machines ranging from optimizers in the rough end to planers and CNC routers that shape various components used in the finished product. Others were busy working on product with their hands, which included tasks such as sanding, assembling and finishing.
Such efficiencies are critical in terms of producing product that is well made, styled right and that sells at retail.
Bob Hudgins, a case goods buyer for Virginia Beach, Va., Top 100 retailer Haynes Furniture and sister company The Dump, said every product he buys has to be the best value whether it's out of Asia or Mexico. However, he said he believes Progressive's product from Mexico offers a tremendous value in the low to lower-middle price range.
He said the large scale solid pine product does particularly well at The Dump locations in areas such as Houston, Dallas and Tempe, Ariz. However, a recently introduced lifestyle look is doing well at Haynes stores in the Tidewater region of Virginia.
"The most recent group I bought from them is a lifestyle look and that is one of the bigger trends in case goods," he said. "They have a very nice lifestyle look in reclaimed pine that is doing well."
Fran Coleman, case goods buyer at Englewood, Colo.-based Top 100 store American Furniture Warehouse, said the retailer has been buying the Progressive line since well before he started with the company 16 years ago. Today it floors four Progressive bedrooms from the Mexico plant.
Coleman said the product is readily available in 30 days or less, and AFW can receive goods at the U.S. border on its own fleet and ship it directly to its stores. He also said he considers the product a great value based on its size and heft.
"From my standpoint, they excel at one style and it is heavyweight goods," Coleman said. "They are not real clean-lined lifestyle looks, but that is not what I look for (from Progressive)."