Watch for potholes on road to recovery
Ray Allegrezza, Editor in Chief -- Furniture Today, February 22, 2010
If there's truth to the old saying about good things coming in threes, then it stands to reason that less-than-good things may also arrive in a trio package.
Let's see how this impacts us. As we head into March, I think we can safely say we've experienced a trio of positive factors.
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The economy is showing measurable signs of sustained stability.
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The housing market is improving. Granted, foreclosures are still a major issue, but the stockpile of existing homes up for sale continues to dwindle and is down to a seven-month inventory level.
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While we're not off the hook, consumer spending rose for the fourth consecutive month in January.
So much for three good things. Now is there a trio of bad things we need to watch out for? I think so, and here's my list:
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Higher raw material costs. In conversations I've had with suppliers there seems to be across-the-board agreement that costs of fuel, utilities, steel, foam, plastic and resins are all on the rise.
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Higher shipping/transportation costs. Last month I saw a number of memos from shipping companies warning customers that tight vessel space for ocean cargo bound for America from Asia would result in dramatic price hikes. If you import, you know that this is the case and you also know that no one is talking about when this may end.
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China's labor shortage. While it is hard to imagine this happening in a country of more than 1.3 billion people, it's true.
Last year, as a means to offset the impact of our recession, scores of Asian furniture factories laid off thousands of workers. But analysts in China say that's just part of the problem.
Adding fuel to the fire, they say, are factors such as the often uncompetitive salaries at furniture factories, improving job opportunities away from the major industrial cities, and of course Chinese New Year, when workers go home from their factory jobs — and typically many choose not to return.
Even so, I think we are on the road to recovery. Hopefully, knowing where the potholes are, and then avoiding them, can help keep you in the race.
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