How green are furniture makers considering globalization and labor outsourcing?
January 9, 2010 3:00 PM
At the Gat Creek Caperton Furniture Works in Berkeley Springs, W.Va., Robert Fitz selects cherry lumber for a table.
The small wing buffet in tru turquoise is made by Red Egg, which brought its manufacturing operation to North Carolina from China in 2007.
The slat sleigh bed is from Cresent Fine Furniture, which closed its plant in Tennessee and moved production to Vietnam.
A solid cherry Summerset Bed is manufactured by Gat Creek Caperton Furniture Works in Berkeley Springs, W.Va.
By Patricia Sheridan Pittsburgh Post-Gazette
That new chair or chest of drawers you just bought has likely logged more travel miles than you. The reason: American furniture is often manufactured in places such as China and Vietnam, yet the wood used to build it usually comes from the United States.
Globalization has affected almost every aspect of American manufacturing, and the furniture industry is no exception.
"The U.S. hardwood lumber industry has adapted to the change in furniture manufacturing in the past decade by following customers around the world," says Tom Inman, president of Appalachian Hardwood Manufacturers Inc., a regional hardwood lumber association based in High Point, N.C.
Flexibility is what has kept many furniture makers from going under in a very difficult economy. Cresent, a third-generation, family-owned furniture maker based in Tennessee, is known for solid wood and veneer products, especially 18th-century reproductions. In 2004, family members decided to close its U.S. facilities and move production to Vietnam.
At the other end of the spectrum is Red Egg, which started out making furniture in China but moved manufacturing to North Carolina in 2007. Staying put is Gat Creek Caperton Furniture Works in Berkeley Springs, W.Va., where solid-wood furniture is made by hand from locally grown, sustainable forests.
So how does all this impact the workers, the environment and the consumer? Here is what the people involved have to say about their decisions and their industries.
"The U.S. has the world's finest temperate hardwood forest. The Appalachian region sustainably grows two trees for every tree that is harvested or dies annually," says Mr. Inman.
More and more often, however, that lumber is shipped overseas and returns as furniture. All that travel makes it a lot less "green" than it once was.
"It is certainly easier to ship Appalachian red oak from West Virginia to North Carolina to be made into furniture. But most of those plants are closed," he says.
"Now it's loaded in a closed container and moves to Norfolk or Charleston for shipment to a foreign plant. It takes more time, more documentation and more delays for payment, but it is where the market is."
The savings on foreign labor used to far outweigh international shipping costs. Last month, National Public Radio's Frank Langfitt did a three-part series on laid-off furniture workers in North Carolina. He pointed out that a worker in China makes about 70 cents an hour, while the same worker in the U.S. makes a little more than $15 an hour.
But increasing shipping costs are changing the equation. The cost to ship a container of hardwood from eastern U.S. to Shanghai, China, increased by an average of $1,100 to $1,300 from 2008 to 2009, Mr. Iman says.
"And this is triple the cost of just five years ago."
As a result, shipments are down. In the first nine months of 2009, U.S. companies exported $146 million of American hardwood lumber to China, a 13 percent decline from the same period in 2008, Mr. Inman says.
For manufacturers, it often becomes a balancing act -- profit vs. the environment. Now, consumers are beginning to weigh in.
"The good news is customers are increasingly demanding a green and legally harvested source," says Mr. Inman.
Rich Tomkins, Cresent's director of sales and marketing, says it was "a gut-wrenching decision' to shut down its Tennessee manufacturing plant five years ago and move operations overseas.
"It had been operating for 56 years with 325 employees at our peak in the mid 1990s," he says.
Inflation and competition for workers were just some of the factors motivating the move. The company now employs fewer than 50 people in the U.S.
"We were getting clobbered, and labor costs are only one part of why we left. The U.S. government made it noncompetitive. We heated our factory with a wood blower, and used the wood waste to save money and convert it into heat and steam. Then the EPA said, 'You can't do that.' You have to spend a lot of money on wood boilers to bring it into compliance. Our government forced our hand and made it easy for us to leave," says Mr. Tomkins.
Cresent did a collection called Moderne, and it was the first time they worked with an overseas designer.
"We really got lucky and kind of bet the farm on this one," Mr. Tomkins says.
It was the most expensive collection the maker had ever introduced, but it won a Pinnacle Award, the furniture industry's version of an Oscar. The next step was following its competitors to Asia. They found a family-run factory in Vietnam.
"We basically trained them to make furniture the way we made it back in the U.S.," says Mr. Tomkins. "We use Appalachian hardwood. Ninety percent of the lumber we use is from there.
"Basically, shipping containers return from the U.S. to South Asia empty, so we pay next to nothing to get the lumber from Pennsylvania or Ohio to our factory in Vietnam," he says.
Cresent, a founding member of the Sustainable Furnishings Council, says it tries to be green overseas, finishing its furniture with low VOC (volatile organic compounds) products even though it's not required in Vietnam.
"Yes, it is more expensive, but we have young children and we want to make safe furniture. Some people couldn't give a flip about green, and some are only concerned about green. We are somewhere in the middle.
"Sustainability is like a three-legged stool -- people, planet and profit, and you can put them in whatever order. For us, it is people, profit, planet -- we totally take care of our people; they are very important to us. Profit is why we are in business; it is how America was built. If you are not profitable, you can't take care of others.
"You can't stop the world from spinning or trade from happening. We see [our] carbon footprint being erased by the fact that we are helping to keep the U.S. lumber industry going."
With so much Western-style furniture being made in Asia, Carol Gregg admits it is ironic that her company is making Chinese-style furniture here. The founder and owner of Red Egg says she moved production to the U.S. mainly because it was greener.
"It creates a reduced carbon footprint. In our China production, we were shipping wood from the U.S. to China, making the furniture in China and then shipping it back to the U.S.," she says.
Ms. Gregg says quality was also becoming an issue for her.
"We would end up having to repair and refinish pieces in the U.S. that were made in China, thus adding to the cost of the piece."
Higher transportation costs were another reason for moving manufacturing back here.
"When fuel prices skyrocketed in this country, the ocean freight costs from China increased dramatically," she says.
Lower manufacturing costs in China were "based on factories producing in volume," she notes.
"To meet minimum volume requirements often meant overbuying and ending up with excess inventory, which meant storage costs for warehousing the product."
Sometimes, that excess inventory had to be unloaded at a great discount. Having more quality control and shorter lead times getting the product to the consumer were more appealing to Ms. Gregg than lower labor costs.
"Also I now have greater flexibility so we can incorporate more customizing options," she says.
Red Egg does a lot more custom work these days, making products to designers' exact specifications.
For Ms. Gregg, the decision has meant a better quality of life because her travel time is reduced.
"Many of the factories and shops I work with are local, and there is the joy for me personally of keeping work in the community. I feel more connected to the product and the people making it," she says.
"The Double Happiness collection was the first collection I started producing in the United States. The original concept for the name was Chinese-style furniture plus Made in America equals Double Happiness!"
Gat Caperton, president of Gat Creek Caperton Furniture Works, grew up in West Virginia and began designing furniture in 1996. He had spent several years in factories developing a diverse background in manufacturing. He has worked for the past 14 years with sustainability and profitability in mind. He says the best lumber came from the Appalachian Mountains in West Virginia, Pennsylvania and New York.
"The Appalachian forest has more diversity and trees than it did more than 30 years ago. It is a clearly sustainable growing forest."
Replacing trees harvested for furniture is just one part of sustainability, he says.
"We look at our raw materials, the amount of energy used in transportation of the raw materials, the making of the finished product, the disposal of the waste you generate (some of which can be recycled), and we look at our people in terms of sustaining the work force.
"The last portion of that is plant life-cycle. So when we take a tree that has captured carbon for 200 years and turn it into a piece of furniture that is going to last at least another 100 years, we feel really good that it's not toxic at the end of its life."
Gat Creek, a member of the Sustainable Furniture Council, reports that it has reduced hazardous emissions by 90 percent and VOC emissions by more than 40 percent.
"You know four or five years ago when most of these companies were closing their factories, we made the conscious decision that we wanted to be here. To do so, we had to be competitive worldwide."
One way was to invest heavily in the facility.
"We spent $7 million upgrading, improving and putting the finishing rooms. We are going to just compete from here," he said.
The building process is done by individuals. Craftsmen don't work on components of a piece; they work on the entire piece.
"When they finish it, they will sign and date it," says Mr. Caperton.
Gat Creek employs just more than 100 workers, which has been good for the small community around the factory.
"We would like to grow, and we are quite in tune with the goal of growing, but with the economy right now I can't tell you we are necessarily doing that," he says.