By DENNIS SEID
Daily Journal
BALDWYN – Separated by several hundred miles, the Berkline furniture plant in Baldwyn and the Broyhill Furniture plant in Lenoir, N.C., aren’t much alike.
The Mississippi facility makes reclining chairs, sofas and loveseats; the North Carolina plant makes wood case goods.
But workers at both locations, much to their dismay, have something unpleasant in common: Come Aug. 26, their employers are shutting the doors for good.
Wednesday, the 400 employees at Berkline’s 10-year-old plant were told it will close in 60 days. Earlier this month, the 700 workers at Broyhill’s Pacemaker case goods plant learned that operations will cease there as well.
The furniture industry, particularly the wood segment, has been hit hard in the past decade or so primarily because of intense competitive pressures brought on by China.
The world’s most populous nation has a cheap labor force that can produce goods far cheaper than in the U.S., and domestic companies, seeking to cut costs where they can, are relying more on foreign labor, materials and goods.
In Mississippi, the upholstered furniture industry – centered in the northeastern part of the state – has held up better than North Carolina’s wood furniture industry. From 2000 to 2012, furniture manufacturing in Northeast Mississippi stayed relatively steady, with some 22,000 employees.
In North Carolina, furniture employment has dropped from nearly 81,000 in 1993 to a little more than 58,000 in 2012. Most of the losses, according to industry newswatcher Furniture Today, have occurred since the second half of 2000.
Furniture Brands International, whose CEO is Tupelo-based Mickey Holliman, is the second-biggest furniture company in the U.S., with brands such as Lane, Broyhill, Thomasville, Henredon, Drexel Heritage and Maitland-Smith. But even the multibillion-dollar giant isn’t immune to cost pressures.
In June 2012, the company announced it was closing three case goods manufacturing facilities and converting an upholstery plant to a warehouse.
At the time, Holliman said the closings were “an accelerated step in our continuing effort to balance our domestic production without import program and to gain greater efficiencies in our domestic facilities. Consolidation of our manufacturing into fewer facilities will improve capacity utilization and it will help with absorption of fixed costs … all of these initiatives are for the purpose of improving our margins and delivering greater value to our shareholders and our customers.”
Same tune, different verse
And in a prepared statement Wednesday, Berkline/Benchcraft LLC CEO Bill Wittenberg said much the same.
“In today’s low cost, highly competitive home furnishings environment, this gives us an opportunity for cost reductions that enable us to maintain our competitiveness,” he said.
“We’re continuing to take advantage of the growing capacity of our offshore resources,” Wittenberg added.
Other furniture executives agree that doing business isn’t getting easier. Hassell Franklin, founder, chairman and CEO of Houston-based Franklin Corp., said the competitive landscape is ever-changing.
“Yes, I was surprised to hear that Berkline was closing, and I feel for all those people,” he said. “The market is tough. You have to constantly tweak your business model. It’s about cutting costs, shipping quickly and many other factors. There are no easy answers.”
Chinese manufacturers are steadily gaining a foothold in the upholstered furniture segment. While domestic companies once relied on mainly imported parts to use in their manufacturing operations here, more of them also have sent their cut-and-sew operations overseas.
Imported fabrics have become the norm. Assembly remains the heart of operations in the U.S., but industry experts warn that it’s a matter of “when,” not “if” Chinese companies learn to master shipping fully assembled upholstered goods back to the U.S.
“I’m not in the prediction thing, but the industry is different and the jobs are changing,” said Franklin. “We’ve had a good first half and it’s looking good for the next two quarters if nothing dramatic happens in the economy. But it’s still very tough and very competitive. It’s a moving target.”
Contact Daily Journal Business Editor Dennis Seid at 678-1578 or dennis.seid@djournal.com
