Can the U.S. Furniture Industry Compete Globally?

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Here in North Mississippi that’s the question everyone seems to be asking.

My impression is that folks just don’t believe they can.

I witnessed the decline of the U.S. Steel Industry first hand. I also participated in the rapid market shifts in the computer and high-tech manufacturing industries.

There are many parallels with the furniture industry and those industries.

So to answer the question, can the U.S. Furniture Industry compete globally?

YES and NO!

If it’s to be business as usual the answer is no. We simply cannot do things the way they’ve been done the past fifty years and compete with the low cost imports from places like China.

Let’s face it, labor at an average of .69 cents an hour, no environmental or worker protection requirements, low overhead, add up to an insurmountable list of obstacles to address head-on and win.

I read recently that one Furniture Trade Organization plans to petition the government to put protective tariffs on imports from China. While action like this is certainly warranted to protect domestic manufacturers against “dumping”, that is selling their products below cost to gain market share, it is never a long term solution. The steel industry has secured government protection on several occasions and instead of using the time and money gained to revamp their operations, they did nothing different, and we all know the result.

So what’s the answer?

First it is to realize that foreign competitors succeed in our market because there is an opportunity to do so in the absence of differentiation.

They simply copy what we make, ship it here and sell it cheaper.

We then compete on that lower price point, and rather than differentiate, we chase them.

Just look at any furniture advertisement, is there anything other than low cost highlighted?

Delivery?
Warranty?
Customer service?
Quality?
Features?

All ignored, just cheap!

I read an article on this very subject a while ago, and the writer quoted the old comic character Pogo, “We have met the enemy and he is us”.

We need to level the playing field.

Start with understanding what we have that the off-shore producers don’t?

Location, geographic proximity
Design capabilities
Quality track record
Customer service
R & D
Higher productivity per worker
More and better automation

The Chinese have low production costs due solely to cheap labor.

Why do we allow them to drive us to compete on the one single advantage they have over us?

It’s time far a strategic renewal of the U.S. Furniture industry. We need to rethink the entire supply chain;

New business models
Supply channels
Manufacturing techniques
Innovation / information instead of inventory
Quick ship / build to order
Innovate or evaporate!

We need to move away from commodity products that are mass produced at lower and lower costs, and develop niche markets that will pay a premium for quick ship, some customization, and quality.

We need to develop strategic supplier agreements and take advantage of the furniture manufacturing clusters that exist around the country.

Simply put we need to develop a market that capitalizes on our strengths and exposes their weaknesses, not continue to try to compete head-on against their one strength.

The U.S. market for home furnishings is the largest in the world and it’s ours. We need to innovate and plan to drive that market, not follow others.

U.S. manufacturers need to take responsibility for their own destiny. We need to define the market, set the standards based on ours strengths and make off-shore manufacturers compete on our terms.

Will it work for the entire market? Of course not. There will always be buyers looking for “cookie cutter” product based solely on price.

But there also has to be a huge market looking for quality goods, with some level of personalization, delivered in a timely fashion. It exists for other products, look at the automotive industry. People buy cars to make a statement about themselves, do we think they wouldn’t furnish and decorate their homes with the same goal in mind?

We need to decide what market we’re in and strategically plan to dominate it.

Martin Harshberger, President of Measurable Results LLC, is a business consultant based in North Mississippi. He specializes in strategic planning, pre and post merger integration, as well as business process improvement. Before founding Measurable Results, Mr. Harshberger was CEO of two mid-sized private companies for nearly twenty years.

He can be reached at marty@measurableresults.us