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Thomas Russell

Vietnam still offers value

HIGH POINT - Data tracking furniture shipments from Vietnam highlight the inconsistent nature of the furniture business in the United States.
     One quarter shipments rise and the next they fall, making it difficult to say whether we're actually seeing a recovery or not.
     Still, as seen from import data for the first half, Vietnam remains not just one of the top Asian producers, but also one of the most important sources in the world for the U.S. market. Its first half shipments were $927 million, up 26% from the comparable 2011 period and second only to China, according to Furniture/Today research.
     The numbers reflect the importance of Vietnam as a wood furniture resource. It's important because of its range and diversity of price points from the lower middle to the upper end of the spectrum. Companies such as Magnussen Home, SLF, Broyhill and Klaussner source much of their wood lines there. So do companies such as Lexington, American Drew, Bassett and Hooker.
     At the higher end of the spectrum, companies such as Stickley and Theodore Alexander operate plants there. So does A-America, a middle market resource with an ownership stake in a plant that produces its solid wood bedrooms.
     Companies cite the level of quality, craftsmanship and infrastructure as key benefits to sourcing there. Despite ongoing increases, labor rates also are lower than in China and, in some cases, Indonesia, which is another emerging source country, particularly at the high end.
     A-America does an estimated 30% of its volume out of Vietnam. It primarily produces solid wood bedroom there, offering four-piece sets that retail from $1,799 to $2,499. It also sources some dining room from Vietnam on a proprietary basis for select retailers.
     "You are seeing a lot more movement in Indonesia, but Vietnam is still a great value," said Dean Banks, senior vice president of sales, marketing and merchandising at the company. "Labor is stable and for us being a solid wood resource, it comes down to factories being able to produce great product."
     Emerald Home Furnishings has sourced its wood line out of Vietnam for a number of years, but recently chose to consolidate its sourcing into three key factories, down from seven. The plants produce lifestyle collections that include bedroom, dining room and occasional furniture.
     "We are giving them significant business and we get better quality, service and delivery because we are becoming a meaningful player for them," said John Iasiello, vice president of wood products.
     He said dining room has been a little more challenging than bedroom because dealers expect sharper price points on cleaner lined goods than Emerald has been able to achieve on some groups. But on one highly carved dining set shown at the October High Point Market, he said, dealers were impressed at the level of design in a table and four chairs set to retail at $1,599.
     Iasiello added that another value-added proposition that Emerald has been able to offer from Vietnam is the ability to mix collections on a single container.
     "Now retailers don't have to buy just one collection from us," he said. "They can mix up to three collections on one container with bedroom, dining room and occasional. It helps with their GMROI (gross margin return on investment)."

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