Malaysia shipments rebound

Thomas Russell -- Furniture Today, August 13, 2012

HIGH POINT - A glance at the numbers in Zepol Corp.'s database indicates that Malaysia is shipping more furniture here than last year.
     Given the rough year that Malaysia had in 2011 - its furniture shipments to the U.S. were down 9% from 2010, according to Furniture/Today research - the gains likely haven't been that difficult to achieve. Last year's declines involved several wood furniture categories, including dining tables and beds, that make up a significant part of Malaysia's production.
     Zepol's data show Malaysia shipments grew in both the first and second quarter, which is encouraging given the importance of the U.S. market to furniture producers there. The question is whether it will hold up for the balance of the year. This will depend largely on consumer demand for the promotional and lower middle-priced case goods and upholstery sourced there.
     A number of customers that purchase in those opening price points are still suffering from the effects of the recession. Many are unemployed, underemployed, or in houses that are still underwater. In short, the so-called recovery has passed them buy and more clouds may be on the horizon.
     Yet according to companies that source there, Malaysia still has a stable future as a furniture producer.
     "Malaysia is an important source country and they provide us a price point we can't access from China or Vietnam," said Lee Boone, president of case goods importer SLF, who estimated that less than a third of its line comes from Malaysia.
     He noted that the industry there has access to vast rubberwood supplies that factories use to make bedroom and casual dining.
     "There are plenty of factories there with the equipment to process that type of material," he said.
     Mike Wurster, president of case goods importer Elements International, said his company has sourced there five or six years. Today, he estimates that 40% of his product mix is made there.
     "Malaysia has been very strong for us in the promotional categories," he said. "They are really good at that price point. Their strength is mass production and they have the right infrastructure to do commerce there."
     The challenge for Malaysia will be to maintain a quality work force, which for now comes mostly from outside the country and is permitted to stay on temporary work visas.
     Officials also note that as demand for higher value products rises, Malaysia could be required to produce goods with better finishes, design and functionality.
     "As customers trend towards higher-priced goods, it is harder to find those types of goods out of Malaysia," said Wurster, whose Malaysian bedroom mix primarily consists of four-piece sets retailing from $899 to $999.
     SLF's Boone agrees that Malaysia may need to step up the value equation. Finishes, for example, tend to be simple, which doesn't tend to command a higher price point.