That was a view held by three manufacturing experts who spoke to about 70 industry professionals attending the American Home Furnishings Alliance's annual Manufacturing Summit here June 5.
One speaker, Steve Taylor, a professor of management at Mississippi State University, said that as the number of foreign home furnishings manufacturers grows, it will be important for U.S. producers to be small, smart and extremely agile.
In particular, he said manufacturers should identify niches where they can compete.
Among the growth opportunities he sees are serving the Gen Y consumer who wants products tailored to his or her individual needs, and serving aging Baby Boomers who are downsizing their living spaces.
But in serving these markets, Taylor also warned manufacturers against getting too big.
"Long production runs are not in our own best interest," he said. "When you have a long production run, you have a commodity product and that is based on price and we cannot win that war.
"You have to make things efficiently and you have to make things that differentiate you from your competitors," he said, adding that processes and products should be developed with the customer experience in mind.
Taylor also urged manufacturers to be innovative, doing things like installing WiFi devices in recliners and updating Web sites to include videos that update consumers on where their product is production.
Art Raymond of Raleigh, N.C.-based wood furniture and cabinet manufacturing consulting firm A.G. Raymond & Co. described the "Factory of the Future." Citing Winston Churchill, he took an optimistic view of the old industry model that has resulted in hundreds of plant closures, seeing "opportunity in every calamity."
To compete now, he said, a manufacturer must define its marketing plan to identify customers and clearly state its value proposition. A factory must focus on what it does well, he said.
Raymond said successful factories will be able to combine and manage the use of technology and information systems, suppliers, space and people. People in particular are a critical part of a plant's success and need to be nurtured through leadership training and other education programs, he said.
"I would prefer to have a mediocre plant and equipment operated by a world class team than vice versa," he said.
He also identified two models for the factory of the future. One was a semi-custom, upper medium-priced wood furniture operation that produces in small lot sizes, and the second was a high-production facility making a limited number of SKUs of low-priced yet highly functional and innovative products.
Eric Lail, director of lean solutions for Hickory, N.C.-based business consulting firm Total Insight, described the lean manufacturing process. He cited an unnamed company that went through a five-year conversion, reducing its raw materials inventories and its number of facilities, and cutting its worker compensation costs because it had fewer accidents.
Lail said a key element of lean is reworking the plant floor to remove wasteful processes and anything that doesn't add value to the finished good.
Another major element is the notion of a "pull" system that responds to customer demand for certain products, rather than producing goods and hoping they sell.
He said workers are critical to the success of any lean conversion.
"Lean always works if it uses the proper leadership strategy to implement it," he said.
"You have to constantly create enthusiasm with your employees and always pat them on the back for what you have done to improve."
He also cautioned that a conversion to lean manufacturing can take time to yield benefits.
"Lean is not a silver bullet if you are looking for a quick solution," he said. "It's not a quick solution."
| [Sidebar] |
| Epperson: Don't expect return to domestic wood production |
| By Thomas Russell |
| 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. |
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