Wood manufacturers see growth in domestic product
February 27, 2014,
High Point - Domestic wood furniture makers say they saw significant growth last year, which they admit could be difficult to duplicate in 2014. Still, they believe their quality construction and proximity to the marketplace will continue to be major advantages that will drive some growth in the year ahead.
Legends Furniture, for instance, reported a 47.5% increase in sales of its domestic wood line in 2013, largely driven by additional capacity at its Tolleson, Ariz., plant, which produces mostly home entertainment and home office furniture but also some bedroom.
Due to limitations in its domestic capacity, company marketing and product development director Tim Donk said Legends won't likely duplicate that growth in 2014. But he still expects it to be a good year.
"Everything is in place to have another banner year," he said, noting that more than half the company's sales are from domestic product. "I think that speed to market has a lot to do with it along with consumer appreciation of made-in-America goods."
The company promotes its domestic story on hang tags at retail, and has competitive price points that range from $199 to $599 for entertainment console units.
Solid wood furniture manufacturer Gat Creek also had a good year in 2013, with sales up about 10% from 2012, bringing the company back to pre-recession sales levels. CEO Gat Caperton said he expects growth to slow to the 5-6% range this year since the company is discontinuing some old product.
"Our strongest category is bedroom, but that is where we have done the most product development in the last few years," Caperton said. "We are now spending time in the dining category, which is where most of the growth opportunity is for us." The company will discontinue a number of older chairs it has sold for up to 20 years and replace them with new chairs. As that product comes into the pipeline, it will take a while for the sales to catch up, but Caperton remains optimistic.
"Generally there has been clear improvement (in the economy) and we expect good growth this year," he said.
"We are very optimistic but we think our growth will be a little moderated." Glenn Prillaman, president and CEO of Stanley Furniture, said the company's Young America brand grew in the single digits in 2013, representing about 40% of the company's overall sales of around $97 million.
"I do expect growth in the coming year, but it is very difficult to predict top line revenues in this environment," he said.
Over the past few years, the company has invested in equipment and technology, including up fits to its Robbinsville, N.C., plant, where the Young America youth bedroom line is made. Along with manufacturing a line available in multiple color options, officials say controlling their production allows them to ensure the product meets safety standards. The line is also Greenguard certified, meaning it uses raw materials with low chemical emissions.
The company also has partnered with retailers to offer consumers online information about finishes, product specifications and availability. It posts its retail prices on the site, but gives consumers a chance to save by buying the product at their local retailer.
makes the Joshua Creek
console in its Arizona
factory. It is made with
knotty alder in a rustic
barnwood finish. The
console retails at $749.|
|Oak Design showed this
traditional fluted TV console with
clipped corners at the winter Las
Vegas Market. It is available in
oak and alder and retails from
$829 to $899 on the West Coast
and East Coast respectively.|
Prillaman believes these will be among the company's primary drivers of success in the year ahead.
"The biggest tailwind is the fact that we don't have to make any changes in our business, and we are very focused on making ourselves easy to do business with," Prillaman said. "We have a great product with great value, and a good website and we are protecting the brick and mortar retailer by not allowing the Internet to be just a price shopping tool."
The main challenge, he said, is to improve the partnership between Young America and its retailers so that together they can be focused on "attracting and retaining the customer that wants to trade up" to the brand, which offers dressers retailing around $849 and twin beds around $749.
Some manufacturers are more bullish on 2014, saying that they expect to see more growth than last year.
Chad Gascho, founder, owner and president of solid wood case goods manufacturer Conrad Grebel, said business was up about 10% in 2013. He expects sales to increase 15% to 20% this year.
"I have grown every year since we started in 2002," he said. "There are advantages to being small. I had nothing to do but grow."
He said that over the years, his company has sourced bedroom and dining room furniture from about 11 Amish workshops within a 30-mile radius of his company headquarters in Indiana. This year in particular, he expects to see growth from two solid wood lines that offer a better and best story - one at price points of $5,999 and $7,999 for four-piece bedrooms and another at $3,499 to $4,499 in the American Hardwood Creations line it introduced last April.
Five-piece dining sets retail from $1,799 to $7,999 in the regular Conrad Grebel line and $1,499 to $2,299 in the American Hardwood Creations line.
Gascho said the biggest challenge is to differentiate itself from other Amishmade lines by offering more stylish looks.
"The perception is that all Amishmade furniture is the same," he said. "It forces us to be creative, and we are open to being creative. The opportunity is to be more creative and distinct than other companies out there."
Simply Amish is another solid wood Amish-made furniture resource that experienced growth in 2013. Company President Kevin Kauffman said sales were up 10%, ithe company's fifth consecutive year of growth.
This year, he expects to match that growth.
"Last year was a record year for us on overall sales," he said, noting that previous year growth was in the mid single digits. "We are planning on growing on that."
Kauffman admits the company can't come close to matching the price of imports. But he said the company isn't willing to sacrifice quality simply to compete with those goods.
"A lot of people recognize the value you get with this product," he said. "Just because it is made in America is not the reason it is higher-priced. It has higher quality, has better hardware and is well thought out.... They get a lot for their money."
The Bergamo bedroom by Conrad Grebel is made with solid maple and is shown in a toffee finish.
|The Garrett bed by Gat Creek is made with solid
Appalachian cherry and is shown with some case
pieces from the company’s Sabin collection. The bed
retails at $1,998.|
That said, the company has sharpened its price points by scaling back the size of some pieces. It also is doing some larger production runs.
"If we can do 20 pieces at one time, that is a big run for us," he said. "That created efficiencies for us there."
A bed in the regular line retails for about $1,999 compared with $1,099 in an entry-priced line. A best-selling large dresser retails at $3,599, while an entry priced version sells at $1,699.
Art Barber, president of dining and occasional furniture manufacturer Charleston Forge, said the company saw 20% growth last year and expects to grow 25-30% this year. That won't get it back to its peak sales before 9/11, but Barber is optimistic about the future because of the company's added efficiencies in manufacturing and its more targeted sales approach, which includes social media.
"It's been a tough battle," Barber said, noting that the company had to sell some real estate and pare down its work force to remain stable. "But we are seeing growth, and we expect growth this year."
Charleston Forge and others are achieving growth after investing in equipment, technologies and even new facilities. Kauffman said Simply Amish recently spent about $200,000 to more than double its in-house finishing capabilities. Caperton said Gat Creek added five CNC machines in its West Virginia plant in the past year or so, and is adding some new sanding and molding equipment this year.
"Domestic manufacturing has become a niche, but even within that niche you have to be internationally competitive," Caperton said. "The folks that are left manufacturing in the U.S. are the ones who can compete on an international basis.... The lesser players have been taken out of it, but it is still competitive."
Bedroom and home entertainment/office furniture producer Oak Design Corp. also saw growth last year and expects to grow again this year. Company President Ismael Castellanos attributes that to the company's maintaining its quality standards.
"We haven't lessened our quality, or come up with a new product for a customer that wants to spend less money," he said. "We have stuck to what we have wanted to do best. The mentality (of the consumer) is completely changing in that they want higher quality product and made-in-U.S. product."
To stay competitive, his company too has invested in new equipment, including a new CNC router last year. This year, it is installing new software to offer retailers real-time information on product and where it is in the production and shipping process.
"This year, that is our biggest priority," Castellanos said. "It will streamline our whole operation.... Now customers, when they send in an order, they want to know an exact shipping time based on backlog."
He said other challenges remain, including the California regulatory environment that sets rules on everything from formaldehyde emmissions to labeling requirements for U.S.-made product. Raw materials costs, including oak, a major component of its wood line, are also rising.
That said, he remains optimistic about 2014.
"We are trying to provide the best product at the best prices, and little by little I am putting my stamp out there for customers," he said. "It's about quality, quality, quality, and then the profits will come."