International competition, changing workforce dynamics and evolving service/distribution systems and are among the many trends impacting Northeast Mississippi’s furniture industry. Compound that with seemingly unyielding fuel costs, as well as materials availability issues in the aftermath of Hurricanes Katrina and Rita, and it’s clear that flexibility and versatility are imperative skill sets for industry executives.
“Foreign competition has affected North Carolina’s case goods industry before Mississippi’s upholstered furniture industry, but that is changing as these competitors find ways around the transportation and quality issues of the past,” said Dr. Liam Leightley, director of the Institute for Furniture Manufacturing and Management at Mississippi State University.
While the challenges continue to heighten, Community Development Foundation (CDF) president David Rumbarger observes that Northeast Mississippi furniture manufacturers that “have made it this far” are “very competitive and are increasingly trying to find better ways to do things.” And while the region still has much of a promotional price point reputation, Rumbarger says that many furniture companies in the area have diversified their products and that the definition of promotional has improved.
The importance of these manufacturers is evident in their employment numbers. In Lee County alone, according to figures provided by Rumbarger, more than 7,600 people work in the furniture industry, and furniture jobs have increased by 17% in Lee County from 2001 to 2004. Rumbarger also estimated that the Lee, Pontotoc, Itawamba, Monroe and Chickasaw county areas accounted for approximately 11,500 jobs in the furniture sector.
Foreign-based competitive pressures are clearly a challenge, and Leightley says that many foreign competitors are proving their toughness on a number of fronts, one notably being cost of production. For example, Leightley says that Asian manufacturers enjoy lower wage costs, lower operational costs and fewer environmental issues than U.S. companies. Moreover, he states that capacity can be increased at a much lower cost per square foot in China than in the U.S. Additionally, Chinese manufacturers are upgrading quality of products while reducing transportation times.
To counter these trends, Leightley says that U.S. manufacturers have three notable options: one, focus attention on increasing production efficiencies, improving quality and service and reducing lead times from order to delivery; two, shift domestic production components to other countries with lower production costs (such as cut and sew operations); and three, some combination of the above two strategies.
Additionally, Leightley says that changes in the workforce will have an effect on furniture manufacturing trends. He said that research shows that workers will be older and will include more women and minorities. Health issues will become a more important component in the recruitment and retention mix.
“This will impact the way the industry has to look at training and compensation in order to keep good employees,” Leightley adds.
Improvements in time from order to delivery will also distinguish viable competitors, as Leightley notes that better service to customers, and faster and more efficient logistics systems will continue as critical success factors.
He also states that manufacturers must embrace nontraditional trends in retailing because “to stay the same and do the same things leads to being left behind by the competition.”
One example of innovation is the trend of furniture manufacturers expanding into furniture retailers, according to CDF’s Rumbarger, who observes that this trend “may be one of the most dominant factors domestically in the next three to five years.”
Leightley talks about other manufacturers who are focusing retail models around the concept of furniture shopping as a family activity.
Additionally, the “whole room” marketing concept is having a significant impact in the industry. Web, catalog and nontraditional furniture retailers are also having an influence on the industry’s way of doing things.
From an operational standpoint, Leightley says that the cost of fuel will continue to be watched closely, given the cost of moving raw materials, components, waste and product in the industry. Additionally, he states that availability of polyurethane foam used in upholstery and bedding may be in short supply because of the impact of Hurricanes Katrina and Rita on several makers of a key chemical in that manufacturing process.
On the positive side, however, there are educational/training collaborations among groups such as Mississippi State University (MSU), CDF and Itawamba Community College to provide worker training programs directly targeted to the furniture industry.
Leightley says the effort among MSU, CDF and ICC is being designed with “direct input from the manufacturers and is focused on filling gaps identified by the furniture manufacturers in the area.”
Some of the areas of focus, according to Leightley, include ergonomics, leadership, teamwork, safety and employee health promotion.
On a separate but related issue of importance, many in the industry are looking closely at the impact of the Las Vegas market on the Tupelo Furniture Market, as well as High Point.
Bill Cleveland, president and COO of the Tupelo Furniture Market, says Tupelo is still deemed as the “value” market, and strategies such as the “Tupelo Only” savings incentive have been well received. However, he acknowledged that Las Vegas provides many attractions and amenities, and the Tupelo area must continue to enhance hospitality issues, such as hotel accommodations.
“There are challenges, but I’m optimistic that this community will continue to find ways to work together to support this effort,” Cleveland said.
Contact MBJ contributing writer Karen Kahler Holliday at email@example.com.