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The Nation | A GIANT AWAKES

Chinese Imports Force Innovation

As many U.S. furniture makers scale back or go out of business, some are reinventing themselves to stay competitive.

October 21, 2002|Marla Dickerson and Evelyn Iritani | Times Staff Writers

Cheap imports have shuttered many a U.S. furniture plant. Determined that his Los Angeles factory would not meet the same fate, John Boyd found a way to capitalize on low-cost Chinese manufacturing.

He began importing furniture and parts from China last year to cut costs. At the same time, he reorganized his own manufacturing operation to focus on areas in which he had an edge on the Chinese: small production runs, original designs, a rainbow of finishes and fast delivery.

The mix of imports and innovation has led to lower prices and higher sales for John Boyd Designs, a maker of moderately priced bedroom, dining room and office furniture. While the U.S. furniture industry is shedding jobs, Boyd has increased his staff by one-third, to 180 workers.

"They forced me to reinvent myself," Boyd said of the Chinese. "If I were still making everything myself, I'd be out of business by now."

A flood of Chinese imports is forcing U.S. furniture makers to re-engineer their businesses. Some are upgrading technology to drive down costs. Others are trying to find niche markets or beat foreign competitors by offering better service.

And some of the best-known U.S. brands are closing their domestic plants and shifting production to China.

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Southern Decline

The effect of Chinese imports has been felt most keenly in the South, the traditional home of the U.S. furniture industry. Of 69,000 American furniture jobs that have disappeared in the last year, 11,500 were in North Carolina.

Furniture Brands International Inc. of St. Louis, the country's largest furniture company, shuttered five factories in North Carolina and Virginia and cut 1,200 jobs last year. Drexel Heritage Furniture Industries Inc. of Drexel, N.C., has shaved its U.S. production over the last decade from 12 plants employing 3,800 people to four plants with 2,000 employees.

Jeff Young, the new head of Drexel (now part of Furniture Brands), says the downsizing is not over. "I wouldn't want our employees to read this," he said, "but fundamentally, one day ... we'll primarily be a marketing arm, with the labor overseas."

The pressure also is being felt in Southern California, the nation's second-largest furniture-producing region, with more than 1,500 firms and 55,000 workers. Over the last two years, California has lost 10% of its furniture manufacturing jobs.

For U.S. firms, the message is clear: Innovate or face extinction.

The survival strategy adopted by John Bassett, president of Vaughan-Bassett Furniture Co. in Galax, Va., is to improve service while cutting costs.

Bassett promises to deliver furniture to customers 10 days after receiving an order, one-third the average wait. He has invested $42 million in the latest automated equipment for his four plants, reducing labor costs and speeding production. The plants turn out as many as 100 dressers an hour.

Vaughan-Bassett can produce bedroom sets -- a bed, a chest and a dresser -- that sell for $999, among the lowest retail prices on the market.

"All I'm saying is, before you turn tail and run, why don't you put up a good fight?" Bassett said.

In an industrial section of South-Central Los Angeles, Decotec Furniture Manufacturing Co. has taken a different tack. The last few years have been tough for the company, a maker of casual metal dining furniture. Sales have dropped 50%.

"People aren't going to spend $2,500 on a dinette set when they're worried about the economy," said Bill Mann, the company's owner and president.

Rather than become an importer, Mann decided to cut his production costs. He laid off 10 of his 15 workers, scoured auctions for used manufacturing equipment and began making his own decorative metalwork instead of buying it.

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Selling by the Internet

Mann found that he still could not manufacture as cheaply as the Chinese. So he tried a new approach: selling some of his products directly to retail customers via the Internet.

Decotec's biggest clients are furniture stores, which add a hefty markup before selling the merchandise to consumers. By cutting out intermediaries, Mann reasoned, he could keep more profit for himself and still offer lower prices than many retailers charge for imports.

That is a risky strategy. Manufacturers who compete with their retailers risk losing them as customers. In addition, many shoppers are reluctant to make a major purchase over the Internet.

So Mann decided to experiment with a single category -- bar stools -- offering half a dozen styles online for $150 to $200 each. To keep his retailers happy, he agreed to give them a cut of any sale originating in their territories.

In a little more than a year, Mann said, sales from Barstools4u.com have grown to represent about 25% of his business. "It has kept me afloat," he said.

Mann doesn't blame China for his woes. A history buff, the 60-year-old believes many of the world's conflicts are caused by hunger and hopelessness. A more prosperous China, he reasons, will be a peaceful China, capable of buying more U.S. goods.

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