Rapid change is upon us. Competitive advantages in some countries that now dominate the furniture industry are waning. One may reasonably ask if the tectonic plates underlying the world economy have shifted sufficiently to enable a rebirth of wood furniture production in the U.S.
The window of opportunity for such a renewal, in my opinion, is opening. At their current pace, the all-inclusive cost of furniture made in China, by far the leading supplier of wood furniture to our market, will soon approach those in the remaining, better managed U.S. plants. But China is not our only competitor. Furniture production is booming in Vietnam, and the search for new, more competitive sources in other countries continues.
To compete globally, U.S. producers must strip their existing plants to the floor and install newer means of building furniture that will satisfy their customers. No shortage of new technology is available for that task. The truth is new technology is being introduced faster than users have absorbed it. And technology goes beyond process machinery to include:
• New materials such as lightweight panels and waterborne, fast curing coatings.
• New handling equipment that saves labor and space.
• New information systems that optimizes process operation.
These technologies can be assembled in a myriad of ways. To simplify this discussion, let’s look at the two ends of this spectrum:
Cabinet plant on steroids
This operation can build semi-custom, upper-medium priced wood furniture for consumers who demand a wide selection of style, configuration, species, and finish. This plant features flexible machinery, both CNC and dedicated one-function varieties, able to produce in lot sizes of one. Limited work is completed before a customer order is received. Specialty suppliers provide key components within a few days of order. Throughput time is measured in days, not weeks.
A key asset of such a plant is its information system. Order information flows seamlessly through product engineering and purchasing out to the front line workers in the form of bar-coded tickets. This information directs the setup of machinery and the transfer of components through the correct machining processes then to final assembly, finishing, and packing. No finished goods warehousing is required; shipping occurs immediately upon order completion.
Cabinetmakers have operated this model for years and successfully defended their turf from competitors who have lower costs. There’s no reason a basic, semi-custom cabinet plant cannot be beefed up to build residential solid wood and veneered furniture. In fact, that’s already happening. Many cabinet companies now offer youth bedroom, home office, entertainment, and dining room furniture in a variety of styles, species, and finishes. When the housing market recovers, this expansion of traditional cabinet product lines will, no doubt, continue.
This plant competes not on price but rather its ability to produce exactly what the consumer wants.
At the other end of the spectrum, is a high production plant 180 degrees removed from the semi-custom scenario above. This model gives the consumer great functionality, less choice, and decent quality in exchange for a very low price. Such a plant produces a narrow product range designed around a basic material/construction platform and fabricated on highly focused technology.
This plant’s culture concentrates on relentless cost cutting and attention to performance. Product engineering continues well beyond a new item’s introduction. The goal is to lower costs across the line by two to three percentage points each year. That’s accomplished by applying new machining technology and minimizing material content continuously.
This operation looks nothing like a conventional 1990s era furniture factory. It employs lightweight panels as its material platform, foiling and finishing lines for applying UV-cured waterborne coatings for surface decoration, and ships every product flat packed. It operates three shifts and pushes out huge volumes through machine and finishing lines capable of 30 identical parts per minute. Material handling is highly mechanized requiring minimal human intervention. Its modus operandi is large lots. Remember that nothing trumps high speed, high volume production for lowering unit labor cost.
This plant competes on focus, an attribute that enables extremely low costs at sacrifice of variety.
The factory of the future will be the sum of many moving parts, choices that must be made to cobble together a highly efficient operation. No single model will be the correct one. But technically, the pieces already exist and await being assembled into a machine that can compete with anyone anywhere.
The missing piece in this vision though is a new, unique go-to-market business plan that combines production technology with smart marketing and distribution to deliver the right product at the right price to the right place at the right time. Overlaying a new factory over today’s furniture value chain will not reenergize U.S. wood furniture production. We’re talking about a revolution in the way we design, build, and satisfy tomorrow’s consumer. Tomorrow after all will not be like yesterday.
Bottom Line: The U.S. wood furniture industry is rightfully viewed by most as a no-profit zone. Its players refuse to embrace strategies that brought success to those in other product sectors. Few, if any, have completed a thorough gap analysis comparing foreign sourcing to a state-of-the-industry domestic factory like described above. Nor has anyone explored unique, new ways to capture a piece of our $85 billion market. The first movers who take up this challenge may reap a bonanza.
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Integrated system provides immediate real-time production and financial reports.
This report focuses on current trends in kitchen
construction, design and finishes based on surveys at leading
More and more cabinets are being made in China.
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