Sunny Designs to triple production capacity
Will add space in China over next few years
Tom Russell -- Furniture Today, February 9, 2010
The company, which showed at last week's Las Vegas Market, has a lease arrangement with an option to buy 50 acres about 30 minutes east of its four existing factories in Tianjin, a city in northeast China just south of Beijing. Over the next few years the company plans to build a million square feet of manufacturing and warehouse space in 10 buildings on that land.
This ultimately would give the company another 700-containers-per-month capacity. It has a 300-container capacity in its existing 700,000 square feet of manufacturing and warehouse facilities, so the expansion would push its monthly capacity to 1,000 containers.
Three of the four current factories produce dining, home office, home entertainment and occasional and accent furniture. The fourth, which began operations in August, produces chairs, dining tables and case goods.
A fifth Tianjin-area factory, expected to be completed in May, has two buildings that total about 70,000 square feet and will produce parts.
With the new project, the first phase is expected to be completed in late 2010 and will total about 400,000 square feet, with a capacity of about 300 containers per month. The other two phases, to come on line in 2011 and 2012, will each total about 300,000 square feet. The facilities will produce a mix of case goods and upholstery.
"What this factory will do is produce a complete line," said Hokeun Lee, company marketing director. "We can target any category in dozens of different looks once this is up and running. This just opens up so many different avenues for us category-wise and look-wise."
Since the company hasn't been able to receive a low antidumping duty on bedroom furniture, it doesn't produce that category in China. Instead, it produces a limited number of bedroom sets in Indonesia.
The company declined to disclose how much it will spend on the expansion other than to say it is a multimillion-dollar investment.
Officials said the expansion will enable Sunny Designs to continue its aggressive product introduction cycles at each market, where it usually launches about 100 SKUs.
"We will bring (product) to market quickly and if it doesn't work, we will kill it right away," Lee said. He added that the increased production capacity will enhance the company's ability to develop product in conjunction with retailers.
Company CEO and founder Sunny Hwang said the Tianjin area is home to about 1,000 furniture production facilities, many of which churn out goods for the domestic market in China. With such an industrial base, he said, his plants will have many skilled workers to draw from, many of which are trained in upholstery production.
Upon completion, his new complex will employ as many as 3,000 workers, including 1,000 in the first phase.
The expansion is occurring as the company experiences solid growth in spite of the slow economy. While officials did not reveal sales, they reported a 20% increase in revenues in 2009 following a 19% increase in 2008.
Officials attribute that to their wide selection at mostly lower middle price points. The expansion will carry it into an even more promotional realm due largely to the extra capacity.
"When the economy bounces back, we might have a lot more demand," Hwang said. "We are capturing more real estate on the (retail) floor."