HFN Staff Report
NEW YORK–Rumors of the demise of American home furnishings manufacturing may be greatly exaggerated.
With importing costs rising at an unheard-of pace while materials and transportation expenses skyrocket, domestic manufacturing is gaining more concrete economic benefits.
At the same time, retailers are looking to tighten their inventory belts and demanding shorter lead times, which plays in favor of U.S. manufacturers. And perhaps most importantly, the U.S. dollar is taking a beating in the international ring.
For these reasons, some companies are relocating overseas manufacturing to the U.S. Meanwhile, some companies that have always made products in the U.S. say there’s no time like the present to make it in the U.S.A.
Sauder Woodworking does about 80 percent of its manufacturing stateside, said Kevin Sauder, chief executive officer. While the company is not de-emphasizing its imports, “price increases are coming in from Asia, so the value proposition has improved” for domestic production, he said.
Sauder said there are more challenges importing from Asia than sourcing domestically. He mentioned inventory investment, currency fluctuation, monitoring quality control and cultural differences as examples.
“We’ve been able to get around or make up for many of these challenges because the price has been so compelling,” Sauder said. “But when the price difference becomes less compelling, those become larger factors.”
Manufacturing for the rug and carpet industry has a long history in Georgia but, in recent years, much business was diverted, primarily to China, when production and labor costs offered much in the way of savings. This trend could be changing.
Larry Mahurter, director of advertising and sales promotion for Couristan, said that importing becomes less attractive as costs rise. He mentioned the current method of shipping polypropylene pellets from the U.S. to Asia for carpet production as an importing method that may come to an end.
“To have materials traveling from the states to foreign mills only to be shipped back here as final product is not making a whole lot of sense,” Mahurter said.
For some rug companies, the decision to return business to the U.S. is not a new one.
“We started bringing business back to the U.S. about 10 years ago,” said Anne Carley, vice president of marketing for Mohawk’s Karastan division. “We initially went overseas for the looms and quality level we didn’t have here, but in the past 10 years, we’ve added all that back to our own facility.”
Carley said that most of Karastan’s product is now manufactured in the U.S. with very specific product, chiefly when the company is looking to achieve handcrafted effects, being produced overseas.
In tabletop, Lenox has brought the production of its Tin Can Alley white dinnerware program back to its plan in Kinston, N.C. The company has added colors to the collection since moving it back to the U.S., which was not possible when it was done overseas, according to Glenn DeStefano, vice president and general manager for Lenox dinnerware.
“We brought it back due to both cost increases in Asia as well as the greater capability of our factory here.” The Kinston factory is Lenox’s only U.S. manufacturing plant.
Textiles maker Croscill is planning to increase its U.S. manufacturing, specifically for its White Label branded program and its higher-end bedding, according to Carl Legreca, president.
“In this case, it’s more economical for us to do higher-end products here,” Legreca said. “You can pass along the higher labor costs of doing higher-end products, and you can do shorter runs so you’re making it pretty much to order, rather than transporting large quantities.”
Hollander Home Fashions splits its production between the U.S. and the Far East, sourcing the shells and fill for pillows, comforters and master pads, then fills them in the U.S.
Jeff Hollander, said that the U.S. production works to his company’s advantage as retailers shorten their demand cycles.
“We need to ship them within two or three days of getting an order,” he said. “We could bring in finished goods, but it would cost a tone in freight.”
Hollander added that he thinks more manufacturing “will move back here and in Mexico because of the lower costs of utilities and of renting a building, compared with abroad in today’s market.”
The candle industry, including players such as Yankee Candle and Colonial Candle, is primarily homegrown, manufacturing almost entirely in the United States.
“We’re having a lot of retailers coming to us instead of going direct,” said Frederick Contino, president of Midwest, which owns the Colonial Candle brand. Part of that switch may be due to the soaring costs of paraffin, an oil-refining by-product that is a key candle component, and the retail fear, founded or unfounded, that increasing prices may corollate to decreasing quality in Chinese-made goods. “The bloom is off the rose,” in terms of Asian sourcing on candles, Contino said.
Some high-end lighting companies have not wavered from production in the U.S.
“In lighting, there’s a bit of an art to doing some things,” said Malcolm Tripp, chief executive officer of H.A. Framburg & Co. The company has manufactured in the U.S. since 1905. “Many of the things we do are a craft. You don’t set it up to make 1,000 of one piece.”
Tripp said that when the company makes a new product, quality control has the company rejecting up to 30 percent of the batch.
“I can’t imagine not being there [to see a new product first being made],” Tripp said. “If we experience a problem, we can fix it quickly.”
Dan Browdy, director of operations for domestic manufacturer Hubbardton Forge, said the company is set up to do small runs and customize according to customer needs.
“It’s a different business model that’s not possible if you’re shipping in containers from overseas,” Browdy said.
For some home furnishings companies, manufacturing in the U.S. is a decades-long tradition.
Many glassware companies, including Libbey, Anchor Hocking and others, have always manufactured in the United States.
“Glass is heavy and it breaks, which means it makes sense to produce as close to the market as possible to minimize shipping costs and breakage,” noted Greg Pax, consumer marketing manager for Libbey. “Our retail business has been growing steadily and we do attribute some of that growth to the fact that most of our products are made in the USA,” Pax said. “There are quite a few advantages with buying from the USA, including shorter lead times, smaller minimum orders, lower freight costs, currency stability, etc. We also feel that our glass quality as well as the quality of our packaging is higher than similar imported products.”
Libbey’s handmade home decor items are made in its factory in Mexico because it does not have handmade capabilities in the United States. It also recently opened a state-of-the-art factory in China, but that is used primarily for distribution to the Pacific Rim.
Thermoserve, a 52-year-old plastic beverageware company, makes 85 percent of its products domestically. Mel Abernathy, the director of sales and marketing, said the rising cost of manufacturing plus the weak dollar have played into the company’s favor.
“Our customers see a definite advantage in dealing with us on basic programs and replenishment programs because of our domestic capabilities,” he said. That has pretty much always been the case, but “now we’re definitely on more even ground with imports.”
Nordic Ware has been making cookware and bakeware in the same Minneapolis factory for 63 years. When other companies “chased cheap labor” 20 years ago, the company was committed to staying put, said David Dalquist, president, Nordic Ware.
“We felt there was always going to be a place for American manufacturing,” Dalquist said, due to the short pipeline and just-in-time replenishment.
Plus, there is a growing percentage of the U.S. population that wants, seeks and demands U.S.-made products. We tell retailers, ‘You can’t afford not to have U.S.-made goods,’ ” he said.