Furniture business has found stability on a smaller scale
(Bloomberg News) — Robert Tomlinson, a soft-spoken 53-year-old, keeps the boilers running at a shuttered Broyhill furniture factory by day, and by night retreats to his small wood-frame home next door in Lenoir, N.C.
Every morning used to start with a roar as the plant’s fans revved up and hundreds of workers arrived to finish bedroom and dining-room sets. Now, only Tomlinson’s skeleton maintenance crew disturbs the silence. The factory’s closing almost a year ago was the latest blow to America’s furniture capital, hammered for years by Chinese imports.
Tomlinson holds out hope the shop floor will bustle again; last fall, a Hong Kong company purchased the plant and is evaluating how to use it. But President Donald Trump’s trade war with China has prompted many furniture companies — indeed, manufacturers of all stripes — to shift production to Vietnam, Malaysia and Mexico without repatriating jobs to the U.S.
Trump’s efforts to revive manufacturing overlooks the reality playing out along this stretch of rural America. While manufacturing jobs started their post-recession rebound in 2010, tariffs aren’t bringing back off-shored factory jobs. At least not in the nostalgic let’s-build-stuff-with-our-hands way the White House envisions. And even if they did, few in these parts want to do manual labour. What’s really needed here are skills.
“A lot of parents are telling their kids not to go into furniture, or they’re telling kids to go to college,” said Marta Truitt, a human resources director at luxury furniture maker CR Laine. “Just getting good applicants is a problem.”
Part of then-candidate Trump’s support in 2016 came from disgruntled blue-collar workers, and this Blue Ridge foothill region saw as much distress as anywhere. Employment in its furniture industry dropped by more than half in the 2000s because of the Great Recession and Asian competition.
Today, the stretch of U.S. 321 from Hickory to Lenoir, known locally as Furniture Row, is littered with closed showrooms.
While Trump won this area 2-to-1, few locals expect his 25 per cent tariffs to bring back lost jobs. Civic leaders are eager to attract skilled trades and emerging technologies. Meanwhile, Hickory’s made-to-order upholstered furniture sector — which survived the foreign onslaught — is thriving, and managers complain more about an aging workforce than Chinese competition.
If any lost jobs did return, it’s not clear who would fill them.
Manufacturing is a tough sell for many young people. While factories now have air conditioning and on-site health clinics, it’s still physically demanding, sometimes risky work. The median age of a U.S. manufacturing worker rose to 44.1 years in 2018 from 40.5 years in 2000, according to a new survey from the National Association of Manufacturers.
The action is half a world away. As the Trump administration readies another 10 per cent tariff on the last $300 billion (all figures U.S.) in Chinese imports, Vietnam is the beneficiary.
U.S. imports from Vietnam rose 33 per cent in the first half of this year compared with last, while imports from China fell 12 per cent, Census Bureau data show. A recent Bain & Co. survey of U.S. firms with operations in China showed 60 per cent of respondents agreed with the tariffs’ objectives, but only 40 per cent saw them leading to more American jobs.
“In our world, everyone who’s in China is trying to move to Vietnam,” said Michael Shelton, chief executive of Valdese Weavers, a North Carolina firm that makes fabric for upholstered furniture. “The most expensive plane ticket since the 10 per cent tariffs came into being has been getting to Vietnam.”
Some U.S. furniture companies moved quickly when the first round of 10 per cent tariffs was imposed on $200 billion in Chinese goods in September 2018, and today they’re almost finished shifting production out of China.
In High Point, N.C., Home Meridian International is more of a sleek marketing and supply-chain company than furniture manufacturer. Office workers in khakis and cardigans conduct brainstorming sessions in plush recliners. Many brands under the fold of Home Meridian and its Virginia parent, Hooker Furniture, began shifting production to Asia in the 1990s, said co-president Doug Townsend.
Now, the company is rapidly moving production to Vietnam from China. By year-end, Home Meridian will source only 15 per cent of its production from China, down from 35 per cent in 2018, according to a recent regulatory filing. It will save money on wages in the bargain: The average pay of a Chinese furniture worker is still only around $1,000 a month, Townsend said. Elsewhere in Asia, it’s as low as $200 a month.
Few locals seem to be counting on a return of the lost jobs. They may not need them.
Ten years ago, unemployment in the Hickory-Lenoir-Morganton metropolitan area hit 15 per cent after a wave of factory closings. However, boarded-up plants no longer needed power, which freed electrical capacity for computer data centers. Apple committed to spending $1 billion on one, and today the facility employs around 400, said Scott Millar, the region’s economic development chief.
Unemployment is down to 4.3 per cent, and the furniture business has found stability on a smaller scale. Americans’ finickiness over sofa fabrics has led to a resurgent custom-order business insulated from Asian competition. Remaining factories are offering $2,000 hiring bonuses and wages of as much as $35 an hour.
Matthew Banks, 19, is a prized recruit at CR Laine, the high-end upholstered furniture maker. As he cuts crescent-shaped bar-stool pieces with the aid of a computerized device, he seems to know his own worth.
“Time is my commodity,” Banks said. “And I sell it to the highest bidder.”
Back in Lenoir, Tomlinson handles security and waits for cold weather so he can fire up the boilers, just as he did through the years of declines and dismissals. Hong Kong’s Samson Holding owns the idled factory through its subsidiary, Craftmaster Furniture of Taylorsville.
While it’s considering expanding its U.S. upholstery division there, there’s a problem in furniture country that transcends headaches over tariffs. The shortage of skilled workers “is one of the bottlenecks we have in our company right now,” said Roy Calcagne, head of Craftmaster.
— With assistance from Sarah McGregor