HIGH POINT — On the surface, domestically made wood furniture would appear to have a clear advantage over imports in these still troubled times.
For one, being closer to the market allows producers to get goods to consumers more quickly as it doesn’t require waiting a few weeks for a container plus another few weeks on the water.
Secondly, these manufacturers traditionally have been able to turn around goods quickly, with lead times of four to six weeks for initial orders and an even quicker turnaround times for goods already in production or inventory.
Yet, we are speaking of normal times, and these obviously still aren’t.
Like many others in the industry, domestic manufacturers have seen their order backlogs and lead times increase due primarily to huge increases in demand. Now instead of a six-week turnaround, many are quoting 12 to 16 weeks.
Shut-down disruption
This all harkens back to the pandemic related shutdowns in 2020 that were followed by a surge in demand once retailers reopened. The backlogs quickly rose as many manufacturers had trouble restarting their own operations. Supply chain disruptions both for domestic and imported materials and components also contributed to longer lead times and higher backlogs.
In addition, manufacturers saw higher turnover and higher absenteeism rates among workers who had fallen ill or were under quarantine.
“In reality, rebooting a factory is not a smooth and seamless process,” said Ben Copeland, director of sales and marketing at Bradford, Vt.-based Copeland Furniture, of the six-week state-mandated shutdown that began March 25. “It then took us another four to five weeks to get back to (normal) production.”
Today, the company has estimated 16-week lead times for its made-to-order production vs. a more typical six to eight weeks.
“The backlog is so extensive; it is taking 16 weeks,” Copeland said, adding that the company still maintains a quick-ship program with some items in stock and others that are at various stages of production. These can be shipped out in as little as a week, but current lead times can be several weeks higher.
The good news, Copeland said, is that the company is slowly lowering its backlog, currently shipping about “20% more than we are taking in for orders every week on average. So we are in a pretty good position to get that under control.”
Berkeley Springs, W. Va.-based Gat Creek, which is undertaking an expansion of its Berkeley Springs, W.Va., case goods plant this year, also is dealing with lead times of 14 to 15 weeks, compared with a more typical four to five weeks.
“Obviously, the demand is high, and we are working like crazy to fill it,” said Gat Caperton, CEO. “There was a big bubble of orders that hit us in the third and fourth quarters, and business is still good, and it makes it hard to catch up.”
He said the company probably won’t achieve a significant reduction in backlog and lead times until early 2022 when the expanded plant comes on line and starts shipping.
“It just depends on your incoming order rate; you really just don’t know,” he said. “We have to produce at a rate greater than or incoming orders, and we just can’t get there now with our facility and our people.”
2021 — a growth year
While these companies and others say it can take the better part of this year to get shipping times back to normal, they are optimistic for a growth year. For example, Copeland whose shipments were off a few percentage points in 2020, is expecting double-digit growth in 2021.
Gat Creek is also expecting growth in the year ahead, particularly as orders are converted into sales and shipments.
Tim Donk, director of marketing and business development at Tolleson, Ariz.-based Legends Furniture, said that demand has grown for its domestic wood line, largely consisting of home entertainment and home office furniture.
In the past six months, demand has shifted to where some 70% of its sales are for domestic compared with 30% for imports. In the past, this has fluctuated between 50/50 and 60/40, with domestic representing 60% of sales.
As domestic demand increased, so did lead times. Today they are roughly 16 weeks, quadruple more typical lead times for domestically produced items. Goods produced for inventory typically ship in a week’s time.
“We had more people buying from us than we normally do,” Donk said of the growing interest in domestic product during the pandemic.
Recruiting efforts
Yet, while lead times have quadrupled, the number of pieces produced each day has risen as the company has been able to hire about 40 more people in the past four months, bringing it to a current level of 180.
It recruited these workers by paying raising its minimum hourly wage by $2 up to $14, which is higher than the minimum wage for Arizona.
“Everybody’s wages went up,” Donk said. “It is very expensive, but it seems to have paid off. We are producing significantly more per day. … Factory work is not for everybody, but it is better with increased wages.”
Donk added that the company also pays employees a $1,000 bonus if they help recruit someone who stays on board at least six months.
Indeed, labor challenges have persisted as the pandemic has resulted in increased absenteeism. In addition, some companies that lost workers during furloughs or temporary layoffs last spring have had a challenge getting back to full employment
Caperton said that Gat Creek was able to bring back all workers who were on a temporary furlough last spring. Still, absenteeism has been a challenge at a time when demand remains at historic highs.
“We have had to grow capacity, and the absenteeism rate is up for everybody,” he said, noting that the normal 2% to 4% absenteeism rate has tripled due to the pandemic.
He noted that once vaccines become more available absenteeism rates should come back to normal levels, which he described as “pretty low.”
RTA manufacturer Sauder Woodworking employs about 2,000 workers in its hometown region of Archbold, Ohio. Yet due to strong demand — including in its growing ecommerce business — the company is running three shifts, six days a week and could use another 200 workers, said Kevin Sauder, president and CEO, noting the company is now hiring another 30 to 40.
He added that the company offers a flex work crew of some 50 workers who can pick the hours they want to work. This appeals to many who like having a flexible work schedule.
“They are college kids and others who don’t want full-time work, but who still want a decent paycheck,” Sauder said. “We are just trying creative ways to bring more employees in the door. We live in a rural environment, so you have a relatively fixed amount of people within a 30- to 40-mile radius that you can draw from.”
He added that 2020 was a strong year due, and he expects 2021 also to deliver strong sales and a strong bottom line.
“Sales growth was uncharacteristically high because we could sell everything we could make. And this year we will be able to sell everything we can make,” he said noting that while inventories have dwindled, the company’s backlogs have historically been less than two weeks.
Finding efficiencies
Galax, Va.-based bedroom manufacturer Vaughan-Bassett said it has increased its production by 50% — and grown sales by the same amount — so far during the first quarter compared to the same period last year. It accomplished this in part by transferring 40 to 50 workers from its Webb particleboard plant to its bedroom plant just across the street after shutting down the Webb plant in August.
“We also have been on an aggressive hiring binge in the past five months and have contracted with an excellent HR provider, and that is helping us increase the size of our work force,” said Doug Bassett, president.
Bassett said the company also has gotten more efficient in its manufacturing, eliminating underperforming collections — from 24 to 14 active collections — and increasing the size of cuttings in the process.
“When you can double the size of your cutting and you have the type of equipment we have in our factories, … everything becomes so much more efficient,” Bassett said.
He noted that an average dresser might require 200 to 300 machine set ups; by doubling a cutting that ends up reducing the overall number of set ups required. “We are doing everything we can to speed up production and become more efficient and take advantage of this unique opportunity in the marketplace to grow.”
The company has also reduced the number of underperforming finishes, Bassett noted.
“Everything has been done to streamline production and to up our production,” he said, adding that this in turn helps deliver product more quickly. “That is what the dealer is wants right now is quick delivery. … Most companies are struggling to accomplish that.”
Based on continuing demand others also expect 2021 to be a good year for the domestic wood industry.
Dan Minor, president of Boone, N.C.-based Charleston Forge, said overall sales were flat in 2020, but that he is expecting a good year in 2021 overall.
And while the company’s backlog is about 25% higher than normal, Minor said the company recently increased its production staff by about 15% bringing the company to about 95 workers. That is expected to help lower backlogs closer to more typical levels.
“Right now I feel good with what we have,” he said, noting that there is still a learning curve for new employees. “We just need them to be productive. … Our backlog will creep down over the next two months due to increases in productivity.”
One area he would like to see grow again is its contract business, which used to represent about one-third of its business but is closer to 15% currently.
“I am optimistic for the year and believe that we will have a good year,” he added. “If we can get the contract portion of our business rolling, it can be a great year.”
Building up inventory
Kevin Kauffman, CEO and owner of Arcola, Ill.-based solid wood case goods manufacturer Simply Amish, said that sales were off about 5% in 2020, partly due to temporary store closures during the pandemic.
“Obviously in 2020 there was that huge disruption,” he said, particularly on the West Coast where it continues to do a lot of business. He noted that even though the company was able to deliver during the shutdown, dealers simply weren’t accepting shipments.
The company has what Kauffman called a “pretty decent backlog” and lead times of 12 weeks for made-to-order items, which compares to a more typical six to eight weeks. He expects this to lower to eight to 10 weeks by the early fall due to increased production made possible with the company’s investments in new CNC equipment and the conversion of some warehousing into production space.
While it still uses about 40 independent contractors in Illinois to build certain product, Kauffman said the company continues to add more production in house. It also continues to build inventory for its in-stock, quick-ship program.
“We have been building up inventory to make sure there are things that dealers can sell from immediately instead of waiting 12 weeks for everything,” he said, adding that with the initiatives it has in place, the company expects sales to be up double digits this year. “We want to do as much as we can to take care of the higher demand.”
Copeland Furniture also has made investments in its Bradford, Vt., plant, including a new five-axis CNC machining center and a new four-axis CNC machining center, which help service the company’s made to order processing center for large panel parts.
It also has installed a new fully automated finger joint machine that is replacing a slower semi-automatic line installed about three years ago.
Finger joining, company President Tim Copeland said, makes it possible for the company to use material that had been waste and to develop new products at sharper price points.
The company also has hired new employees and is investing in their training. “This has been particularly important, as over the past six months, a number of key team players have needed to quarantine,” Copeland said in a video to its retail customers. “Thankfully none of them have been seriously ill.”
The company also is expanding into an adjacent 50,000-square-foot factory building that will provide increases in manufacturing capacity “across 2021 and beyond.”
“The investments will have more of a long-term effect,” Ben Copeland said of the equipment purchases and expansion of work force and factory space. “It will pave the way for long-term growth after the end of this. We want to come out of this better able to serve the domestic market.”
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