GREENSBORO, N.C. - Despite a recent drop in wood furniture imports, don't expect a return to domestic manufacturing.
That was a message from industry analyst Jerry Epperson, who spoke to the American Home Furnishing Alliance's annual Manufacturing Summit here June 5.
Epperson, managing director of Richmond, Va.-based Mann, Armistead & Epperson, said U.S. wood furniture imports fell by 23.6% in the first quarter compared with the same period in 2008, with China experiencing a 26.8% drop. But shipments of U.S.-made product fared even worse, falling 28.6%.
Epperson said wood and metal furniture producers face a challenging regulatory process that makes it difficult to open a U.S. plant. He estimated that it would take two to three years to get the necessary government approvals, permits and environmental studies to start or reopen a factory.
And U.S. factories face tough competition from Asian factories, including some that have their own U.S. sales forces and distribution facilities.
"In wood and metal, it is so much more competitive," he said.
Still, he noted that some U.S. manufacturers continue to succeed thanks to their investments in flexible production, and inventories aimed at meeting retail demand.
Fabric upholstery, in his view, has better long-term domestic prospects. While the glut of shipping capacity has made it cheaper to ship a sofa from overseas, Epperson noted that domestic upholstery shipments fell less than imports in the first quarter, the first such reversal in recent memory.
He added that companies that have shifted to an all-import model for upholstery have had mixed success. And while both upholstery and mattress imports have grown, he said, so have complications with each category.
To some extent, domestic producers have been aided by a weak dollar, which boosted exports of wood furniture by 17.1% in the first quarter and upholstered furniture by 18.6%, according to Epperson's research.
Home furnishings sales continue to be affected by factors ranging from lagging housing construction to sagging employment, he said.
Because the category is not as sensitive to housing, he predicted that mattress sales will rebound before furniture. Upholstery, he said, will come back by around early 2010, with case goods in tow, making a comeback sometime in mid-2010.
He predicted that youth and entertainment furniture will help drive the wood side of the business as more households have children and the price of large-screen televisions continues to fall.
Item business, he added, will continue to outperform sales of suites, at least until consumer confidence returns.
No comments:
Post a Comment