Mexico's Nick Oak finds niche in case goods
Thomas Russell -- Furniture Today, November 26, 2012
TIJUANA, Mexico - Mexican wood furniture producer Nick Oak says it has developed a strong niche in the industry, thanks to its ability to produce bookcases and TV consoles in multiple finishes and wood species.
This, combined with its relatively small size and use of quality materials, is helping the company stay focused and consistent in an economy that yields little room for error in its presentation or pricing of finished goods.
Nick Oak's factory, in a suburb of Tijuana called Mariano Metamoros Centro, is about 100,000 square feet and employs 100 workers. It could expand to accommodate another 50 or 75 workers, but company owner and President Nick Gonzales said he wants the factory to stay small in order to control the quality of its output.
"We consider ourselves a very small factory that is very efficient," Gonzales said while giving a Furniture/Today reporter a tour of the plant e arlier this year.
Gonzales is a former plant manager for a factory in Mexico that made furniture for OEM customers including A-America, Oak Express and Intercon. He has owned his factory here since 2001.
Today, his strategy has boosted business prospects for its U.S. partner, Kurio King, which develops products in conjunction with Nick Oak, and acts as a U.S. sales and marketing arm for the manufacturer.
"When you get too big, there is no quality or service," said Sergio Zorio, who left case goods producer Sunny Designs in 2008 and partnered with Nick Oak to produce the bookcase and console line. "The beauty of this is also that it is so close to the border."
That proximity to the U.S. market helps company compete against producers in China and other Asian countries.
Some of those producers might be able to produce in mass quantities that deliver a lower landed cost. But Gonzales said his products' landed costs from Tijuana are competitive with Chinese goods. The Mexican factory also can ship custom orders to the U.S. more quickly than the Asians, he said.
Nick Oak produces in wood species including oak and birch veneers and oak and poplar solids. The plant offers 19 finishes, including some paints.
These goods ship in mixed containers from the factory in roughly two weeks from the time of order and can be transported across the border in a matter of hours, versus at least two weeks on the water from China.
The consoles retail from $199 to $499, while bookcases range from $99 to $189.
Kurio King sells to retailers around the U.S. Accounts have included well known names such as R.C. Willey, Art Van, Nebraska Furniture Mart, Furniture Outlets USA and American Furniture Warehouse.
The factory is a single-shift operation. Most of the machining of parts is done early in the day, because it is the most energy-intensive part of the production process and thus avoids running up high energy use during peak hours of 2 p.m. to 6 p.m. Most assembly, finishing and packaging, which uses less energy, takes part in the latter part of the shift.
Last year, the plant produced about 20,000 bookcases and roughly 10,000 consoles, Gonzales said, noting that it is running at roughly 65% to 70% of capacity.
"We have a lot more room, but we still do OK at that rate," he said, adding that business this summer has been stronger than summers over the past five years. "Usually, summer for furniture manufacturers is ugly, but this one wasn't. It slowed down some, but not l ike in years before."
The plant also produces custom cabinetry for kitchens, which are sold to the U.S. market.
Once units are assembled and finished, they flow to the packaging area, which has three box making machines. Gonzales and a staff member engineered the machines to produce custom cartons for each piece produced. Packaged units are then shipped across the border each day via common carriers as well as a few company owned trucks.
Gonzales said business was up about 15% through the first few months of this year, and he's optimistic about the balance of the year and beyond. That's particularly true given the continuing demand and innovation he sees in flat screen TVs, requiring new entertainment furniture, and the demand for bookcases for home offices and other parts of the home.
"That is where demand is and that is where we want to be," he said.
But to be successful, he plans to stay small and focused.
"I am very comfortable with 100 people, and if I needed to I could go to 150 to satisfy my customers," he said. "But I would want to stay this size in order to be able to do it right. I have never been a guy that has said, ‘If I could only produce one more $1 million.'"