Institute for Supply Management reports rise in manufacturing index in February

The Institute for Supply Management's index of manufacturing activity climbed to 61.4 in February from 60.8 the previous month, which is the highest reading since it reached the same level in May 2004. The index indicates expansion in manufacturing, with February's new orders index rising to a seven-year high along with shrinking inventories and the highest level of order backlogs in a year. Export orders rose to the highest level in over 22 years, boosted by growth in developing countries like China, Brazil and India, according to the Institute for Supply Management.
Despite this expansion, commodity prices for raw materials rose for a third straight month, which may spark higher inflation and slow growth. The price increase was felt in the construction industry, as the US Commerce Department reported that spending by builders fell in January to a seasonally adjusted annual rate of $791.8 billion.
"While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the prices index indicates significant inflation of raw material costs across many commodities," said Norbert Ore, chairman of the institute's survey committee.

Furniture Buying Index slides to 55

The Furniture Buying Index has fallen two points to a reading of 55, the same as this time last year, according to America’s Research Group.
“More and more consumers are concerned about the national debt and are worried about government interference,” said Britt Beemer, chairman of America’s Research Group.
“Job security is a major worry for many Americans,” Beemer said. “... These fears have many consumers much less enthusiastic about buying furniture."
While consumers are hesitant to invest in furniture, it's important to remember that you can only put off a purchase for so long. Eventually, you have to buy a new chair, bed or furnish a home. The purse strings will loosen but probably not until next year.

Eco-friendly, affordable custom cabinets

Designing a green kitchen doesn’t mean sacrificing style or breaking the bank.
Robin Wilson Home is licensing its name for a line of affordable, eco-friendly custom cabinetry made in the U.S.A. by Holiday Kitchens. The line will launch at the April 2009 Kitchen/Bath Industry Show in Atlanta. The eco-conscious line features more than 100 door styles in green materials, such as bamboo, coconut, wenge and stainless steel. Classic hardwoods like cherry, maple and oak also are available. The manufacturer uses low-volatile organic finishes, paints and stains, and the frameless custom cabinetry has 10 percent more usable storage space compared to traditional framed cabinetry, according to the company.
Another area to consider is how the cabinets are made. And it’s hard to not be impressed with Holiday Kitchen’s green manufacturing principles. According to the company, its manufacturing process uses computerized cutting methods to reduce waste and 100 percent of its wood waste is recycled into cutting boards, animal bedding and landscape materials. Its cabinet lines also use sustainable woods and reconstituted veneer.
I guess it is easy being green.

U.S. leads world’s $307 billion production market

While low-cost imports continue to challenge the U.S. furniture industry, worldwide production of furniture is worth about $307 billion in U.S. currency, with the United States in the lead at 21 percent of total production. These findings are part of the World Furniture Outlook 2008/2009. The estimates are based on information from national and international official sources.
The seven major industrial economies, the United States, Italy, Germany, Japan, United Kingdom, Canada and France, comprise 50 percent of the world’s total production. Sixty-five percent of the entire world’s production is from developed countries with 35 percent coming from emerging countries, with China being the highest at 18 percent. China and Poland have had rapidly increasing production thanks to newly built plants.
The degree of openness in the furniture markets, or the ratio between imports and consumption, rose from 20 percent in 1997 to 30 percent in 2006. This increase was important in the United States, where the trade deficit was nearly $22 billion. From 1997 to 2007, the United States had an imports increase from $8.6 billion to $26 billion. U.S. imports presently are leveling off.
International trade of furniture has grown faster than furniture production and faster than international trade of manufactures due to the opening on the main furniture markets in the past 10 years. In 2008 and 2009 the world gross domestic product will continue to grow at a fast pace along with international trade of manufactures. World trade of furniture is expected to grow by 15 percent in 2008, and might amount to $121 billion.

4 Traits of successful office furniture manufacturers

When sales soften many office/contract manufacturers follow the same playbook. Most companies drastically reduce fixed and variable costs, which are followed by mass layoffs from the top down. Many also pull advertising and delay or kill product development and new products. If this is your game plan to ride out the latest recession, you might want to rethink your strategy.
According to an office/contract furniture manufacturer study from Velocity Partners, it has identified four key traits of successful small and middle-market companies.
1. Design furniture that differentiates and defines your brand and does not just fill a gap in the product portfolio.
2. Eliminate or sell any product lines, services and other activities that do not add value to the brand or company.
3. Focus on market segments that provide opportunity for growth and differentiation. Sell a solid brand and products in a new market segment today.
4. Focus on matching the right: designs, A&D specifications, end-user customers and products.
Velocity Partners reviewed the 2001-2002 recession through post-recession performance of 12 North American office/contract furniture companies with sales between $15 to 30 million that were profitable in 2000.

Surprise: Furniture orders are down

OK, so we all know that 2009 will be a challenging year, and I don’t think our new president will be able to offer a quick fix. Car manufacturers to furniture makers are feeling the crunch as wary consumers pull back. Until consumer confidence is restored luxury good makers and big ticket items will continue to experience decreased to flat sales.
Orders for new residential furniture fell by 28 percent in October 2008 compared to a year earlier, according to a manufacturer survey from High Point accounting and consulting firm Smith Leonard. New orders in October were down by 13 percent from September and year to date though October 2008 orders were off by 12 percent. Shipments of completed orders were 20 percent lower in October 2008 compared to October 2007 and year-to-date shipments were 11 percent less than the year prior.
As a result furniture companies are shedding jobs. I just read that Michigan-based Kindel Furniture Co. laid off 24 employees and is adding a four-day work week. Even though sales were slightly up for 2008, a waning backlog and fewer orders from High Point Market made the cuts necessary.

Furniture firms create export consortium

U.S. furniture companies may have found the antidote for low-cost, imported wares.
Six U.S. furniture manufacturers are creating a program for export sales, introduced at the High Point Furniture Market, which opened Oct. 20 in High Point, N.C, with the goal of building relationships with international clients.
The consortium, American Furniture Exporters, currently is comprised of Leathercraft Inc., C.R. Laine, Designmaster Furniture Inc., McKinley Leather of Hickory Inc., Paladin Industries Inc. and Wright Table Co. All companies are located in the Hickory, N.C. area.
The campaign will target approximately 2,000 international buyers. The AFE companies offer high-end residential and commercial furniture. Each manufacturer will introduce international buyers to AFE, referring them to other manufacturers in the consortium.