The NC furniture industry is picking up steam

HICKORY, NC – Six months after the start of the coronavirus pandemic, as millions of workers lost their jobs and companies worried about their economic future, something unexpected happened at Hancock & Moore , a supplier of custom upholstered leather sofas and chairs in this small North Carolina town.

Orders started to pour in.

Families stuck at home decided to upgrade their sectionals. Singles tired of looking at their sad futons wanted new, nicer living room furniture. And they were willing to pay – which turned out to be a good thing, as the cost of every part of furniture production, from fabric to wood to shipping, began to rise rapidly.

Over a year later, the furniture companies that dot Hickory, North Carolina, in the foothills of the Blue Ridge Mountains, were presented with an unanticipated opportunity: the pandemic and the supply chain disruptions that have caused it. The result caused a setback at factories in China and Southeast Asia that decimated American manufacturing in the 1980s and 1990s with cheaper imports. At the same time, the demand for furniture is very high.

In theory, this means that they have a chance to rebuild some of the business they have lost due to globalization. Local furniture companies had cut jobs and reinvented themselves as a result of offshoring, turning to custom upholstery and handcrafted wooden furniture to survive. Now companies like Hancock & Moore have a backlog of orders. The company is scrambling to hire workers.

“It doesn’t sound trivial, but it’s unprecedented,” said Amy Guyer, vice president of human resources and benefits at the parent company which includes Rock House Farm furniture brands such as Hancock & Moore and Century. Furniture.

Yet the same forces that prevent foreign manufacturers from selling their products in the United States – and give American workers a chance for higher wages – are also creating hurdles.

Many companies depend on parts from abroad, which have been more difficult – and more expensive – to obtain. Too few skilled workers seek industry jobs to fill vacancies, and companies don’t know how long demand will last, making some reluctant to invest in new factories or expand into cities with larger potential labor pools.

“We’d love to increase capacity,” Ms. Guyer said, “but we’re North Carolina’s furniture mecca – all other furniture companies are in the same boat as us.”

Even if there were enough workers, said Alex Shuford, managing director of the company that owns the Rock House Farm furniture brands, “the push won’t last as long as it takes to get to a market. fully trained workforce and get them acquainted.

The current moment, he added, “is abnormal in all respects and is not sustainable in any way.”

For now, Hickory businesses are experiencing a huge recovery thanks to high demand and limited supply. Prices for sofas, beds, kitchen tables and bedding have skyrocketed this year, climbing 12% nationally through October. Furniture and bedding is only a small part of the basket of goods and services that the inflation measure tracks – around 1% – so this increase has not been enough to drive overall prices up to uncomfortable levels alone. But the rise was accompanied by rising costs for cars, fuel, food and rents that pushed inflation to 6.2%, the highest level in 31 years.

The question for policymakers and consumers is how long will the surge in demand and the limitations in supply last. A key part of the answer is how quickly sea lanes can clear and whether producers like Hickory Craftsmen can increase production to meet booming demand. But at least at the national level, this is proving to be a more difficult task than one might imagine.

On a damp late October morning, the sound of whirring power sanders and the thud of a craftsman planing a chair leg echoed through one of Century Furniture’s cavernous warehouses. The factory once housed 600 workers who took care of the assembly lines. Today, around 250 are busy building tables, chairs and desks.

The factory typically has 2,000 orders in progress, but these days it’s more like 4,000, said Brandon Mallard, its manager. Previously, deliveries of ordered furniture were made within six to eight weeks; now they can take six months.

The same supply chain issues that plague nearly every industry are also plaguing Century. Dresser drawer handles are trapped on container ships somewhere between Vietnam and North Carolina. For some products, imported timber suffered delays.

Component delivery dates “continue to move,” Mallard said.

The work was also a challenge. Century employees have been working overtime to make up for the backlog, but workers are running out and margins on furniture are so slim that paying overtime can reduce profits. Several of Mr. Shuford’s brands have raised their prices, but because parts are pre-ordered weeks or months in advance, sometimes they have failed to increase them quickly enough to keep pace.

The Hickory experiment is a microcosm of what is playing out on a larger scale in the global economy.

Demand has rebounded after falling at the start of the pandemic, fueled by government stimulus checks and savings accumulated during the pandemic. Spending has moved away from services to goods, and this combination is only slowly normalizing.

The sudden change has upset a finely balanced global supply chain: sea containers have struggled to get to stockyards where they are needed, container ships cannot clear ports quickly enough, and when goods imported arrive on dry land, there are not enough trucks around to deliver everything. All of this is made worse by the closures of foreign factories linked to the virus.

With overseas-made parts not reaching domestic producers and warehouses, prices for finished products, parts, and raw materials have skyrocketed. American factories and retailers are raising their own prices. And workers have become scarce, prompting companies to raise wages and further fueling inflation as they raise prices to cover those costs.

Chad Ballard, 31, went from $ 15 an hour making furniture in Hickory at the start of the pandemic to $ 20 in a more specialized position.

Mr Ballard said he came to town four years ago after working in construction and tree maintenance services in Florida. He was ready for something more stable and less exposed to the elements, and he found it in furniture making. The job gave him sufficient stability and financial security to pay for his Jeep and make plans to buy a house with his wife, who also works in the industry.

But there is a flip side to some of the factors that help support workers like Mr. Ballard: if inflation continues to rise in the high-demand economy, it will mean higher costs for them and other consumers. that nibble at paychecks and make it harder to pay for daily necessities like food and shelter. Already, the heating economy means that Mr. Ballard’s goal of buying a home will be a little more difficult. The typical price of a home in Hickory has increased 21% over the past year to $ 199,187, according to data from Zillow.

As price hikes continue, policymakers fear that consumers and businesses will expect sustained inflation and demand steadily higher wages, causing a spiral in which wages and prices push each other.

There are reasons to believe that such a disastrous result can be avoided. Many economists, including those in the Biden administration, believe demand will eventually moderate as life returns to more normal patterns and consumers spend their savings, allowing supply to catch up – maybe by the end of next year.

“We have a tight and tightening labor market,” said Jared Bernstein, White House economic adviser. Mr Bernstein said the administration predicted that solid wage growth would outlast rapid inflation, thereby improving worker leverage.

But pandemic employee shortages, which are occurring in the United States in part because many people have chosen to retire early, could also serve as a snapshot of the demographic shift that is coming with an aging workforce. work of the country. Labor shortages are one reason why ambitions to bring back production and jobs from overseas could prove complicated.

Hickory’s furniture industry was struggling to hire before the coronavirus even hit. It has a particularly aged workforce because a generation of talent has avoided an industry plagued by layoffs linked to relocations. Today, too few young people join to replace those who retire.

Local businesses have automated themselves – Hancock & Moore are using a new digital leather cutting machine to save on manpower – and they have made efforts to train employees more proactively.

Several of the larger companies sponsor the furniture academy of a local community college. On a recent Thursday night, employers set up booths at a job fair there, forming a circle of hope around the school warehouse door, welcoming potential candidates with lanyards. branding and information material. It was the first event of its kind devoted to furniture.

But progress is slow, as companies try to assure a new generation of young (and smaller) people that the field is worth pursuing. Business representatives outnumbered job seekers by far for much of the night.

“It’s such a difficult market to find people,” said Bill McBrayer, director of human resources at Lexington Home Brands. Companies look to short-term workers, but even companies specializing in temporary help cannot find people.

“I’ve been in this business for 35 years,” he said, “and it’s never been like this.”