Supply Chain Shortages Help North Carolina Furniture Town


HICKORY, NC — In six months of the coronavirus pandemic, as millions of workers lost their jobs and companies worried about their economic futures, something unexpected happened at Hancock & Moore, a supplier of custom upholstered leather sofas and chairs in this small North Carolina town. .

Orders started pouring in.

Families stuck at home had decided to upgrade their division. Singles, tired of looking at their sad futons, wanted new and prettier living room furniture. And they were willing to pay—which was good, because the cost of every piece of furniture production, from fabric to wood to shipping, was starting to skyrocket.

More than a year later, an unforeseen opportunity has been presented to furniture companies in Hickory, NC, at the foot of the Blue Ridge Mountains: The pandemic and the ensuing supply chain disruptions made factories in China and Southeast Asia cheaper in the 1980s and 1990s. greatly reduced American manufacturing by imports. At the same time, the demand for furniture is very strong.

Theoretically, this means they have a chance to rebuild some of the jobs they’ve lost to globalisation. Local furniture companies had quit their jobs after offshoring and reinvented themselves by switching to custom upholstery and handcrafted wood furniture to survive. Now, companies like Hancock & Moore have backlogs. The company is scrambling to recruit workers.

“It doesn’t sound ordinary, but it’s one-of-a-kind,” said Amy Guyer, vice president of human resources and benefits at the parent company, which includes furniture brands such as Hancock & Moore and Century Furniture.

Yet the same forces that make it harder for overseas manufacturers to sell their wares in the United States and give American workers a chance to manage higher wages are also removing barriers.

Most companies depend on overseas parts that are harder to obtain and more expensive. Few skilled workers are seeking employment in the industry to fill vacancies, and businesses are unsure how long demand will last, making some reluctant to invest in new factories or expand into towns with larger potential labor pools.

“We would love to increase capacity,” said Ms. Guyer, “but we are North Carolina’s furniture paradise – every other furniture company is in the same boat as us.”

Alex Shuford, CEO of the company that owns the Rock House Farm furniture brands, said that even if there are enough workers, “the surge is to go to a fully trained workforce and speed it up.”

The moment we are in is “abnormal in every way and in no way sustainable,” he added.

For now, companies in Hickory are seeing a massive upswing thanks to strong demand and limited supply. Prices for sofas, beds, kitchen tables and bedding have skyrocketed this year. 12 percent National until October. Furniture and bedding make up a small slice of the basket of goods and services tracked by inflation—around 1 percent—so this increase alone wasn’t enough to push overall prices to unsettling levels. However, the increase brought an increase in the costs of cars, fuel, food and rent, which pushed inflation up. 6.2 percentThe highest level in 31 years.

The question for policymakers and consumers is how long the increase in demand and constraints on supply will last. An important part of the answer lies in how quickly shipping lanes will open and whether manufacturers such as the artisans at Hickory will be able to increase production to meet growing demand. But at least within the country, this is proving to be a more challenging task than anticipated.

On a wet morning at the end of October, the hum of electric sanders and the steady rumbling of a craftsman planning a chair leg echoed through one of Century Furniture’s massive warehouses. The factory once housed 600 workers tending the assembly lines. It now builds about 250 busy tables, chairs and tables.

Its manager, Brandon Mallard, said the facility normally has 2,000 orders ready, but these days that number is approaching 4,000. Deliveries of ordered furniture would take six to eight weeks; now they can take six months.

The same supply chain issues that affect nearly every industry is hitting Century. Dresser drawer handles got stuck on container ships somewhere between Vietnam and North Carolina. Imported wood faced delays for some products.

Component delivery dates “keep getting longer,” Mr. Mallard said.

Labor has also been a challenge. Employees at Century work overtime to cover the backlog, but workers are running out and furniture margins are so low that paying overtime can eat into profits. Some of Mr. Shuford’s brands raise prices, but because parts are ordered weeks or months in advance, they sometimes have not been able to raise them quickly enough to keep up.

The experience at Hickory is a microcosm of what is happening in the global economy on a larger scale.

Demand that fell early in the pandemic has rebounded, supported by government stimulus controls and savings accumulated during the pandemic. Spending has shifted from services to goods, and this mix is ​​only slowly normalizing.

The sudden change upset a well-balanced global supply chain: Shipping containers struggled to get to the warehouses they needed. container ships it cannot clear ports fast enough, and when imported goods reach land, there will be enough trucks around to deliver everything. All this combined with the closure of foreign factories due to the virus.

The prices of products, parts and raw materials rose as foreign manufactured parts could not reach domestic manufacturers and warehouses. American factories and retailers are raising their own prices. And workers faced shortages of supply, encouraging companies to raise their wages and drive inflation further as they raise prices to cover those costs.

Chad Ballard, 31, went from $15 an hour to building furniture in Hickory at the start of the pandemic to $20 as he transitioned to a more specialized role.

Mr. Ballard said he came to the city four years ago after working in construction and tree services in Florida. He was ready for something more stable and less exposed to the weather, and he found it in furniture making. This business provided stability and adequate financial security as he was able to pay for his Jeep and was also planning to buy a house with his wife, who works in the industry.

But there is another side to some of the factors that are helping to reinvigorate workers like Mr. Ballard: If inflation continues to rise in a hot demand economy, it will mean increased costs for them and other consumers who eat and drink their paychecks. It is more difficult to meet daily needs such as food and shelter. Already the heating economy means that Mr. Ballard’s goal of buying a home will be a little more difficult. The typical price of a home in Hickory rose 21 percent last year to $199,187. Based on data from Zillow.

As price increases continue, economic policymakers worry that consumers and businesses may expect sustained inflation and charge steadily higher wages, resulting in a spiral in which wages and prices push each other up.

There is reason to believe that such a dire outcome could have been avoided. Many economists, including those under the Biden administration, believe demand will eventually moderate as life returns to more normal patterns and consumers reduce their savings, allowing supply to catch up, possibly by the end of next year.

“We have a tightening and shrinking labor market,” said Jared Bernstein, White House economic adviser. Mr. Bernstein said the administration predicts solid wage growth will outpace rapid inflation and improve worker leverage.

The White House also pledged to encourage more. domestic production. This moment can help the agenda as it exposes the fragility of far-flung supply networks.

But the pandemic employee shortages occurring in the United States, in part because many people are choosing to retire early, may also serve as a preview of the demographic shift that is coming as the nation’s workforce ages. Labor shortages are one reason the ambition to bring production and jobs back from overseas can be complex.

Hickory’s furniture industry had a hard time hiring even before the coronavirus hit. It has a particularly legacy workforce because a generation of talent has avoided an industry plagued by offshoring-related layoffs. Now, very few young people are entering to replace those who retire.

Local companies are automating – Hancock & Moore is using a new digital leather clipper to save labor – and are working to train employees more proactively.

Several large companies sponsor furniture academy of a local community college. One recent Thursday night, employers set up booths at a job fair there, forming a promising ring at the door of the school’s warehouse, and welcoming potential candidates with branded lanyards and informational materials. This was the first furniture-specific event of its kind.

But progress is slow as companies try to provide new assurance – and smaller — the younger generation for whom the field is worth following. Company representatives outnumbered job seekers for most of the night.

“It’s a very difficult market to find people,” said Bill McBrayer, human resources manager at Lexington Home Brands. Companies are turning to short-term workers, but even firms specializing in temporary assistance can’t find people.

“I’ve been in this business for 35 years,” he said, “and it’s never been like this.”



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