Ricci Street < Port 80 < Boardwalk || search | sitemap | help gazette | theater | bistro

|

Furniture: Can't See the Forest for the Trees other pages in this Furniture Industry web stakeholders | history pressures this page industry portrait | learn more

Overview

This portrait of the furniture manufacturing industry focuses mostly on the wood household furniture manufacturing industry.

Companies in this industry grew large early in the 1900's and their business model hasn't changed much since then. While enduring and resilient, it has been slow to adapt and thus has become vulnerable to foreign competition. Recent U.S. government free-trade policies and treaties have globalized the industry and flooded the U.S. retail market with imports. The industry has also been marked by the consolidation of large companies via merger and acquisition. They have adapted better to CNC (computer-numeric controlled) machines and the lean and green manufacturing movements better than the hundreds of smaller companies.

Now comes the Internet. It is putting pressures on almost every business model, but is late to get to atom-based manufacturing. That puts the furniture manufacturing industry in the enviable position of being able to learn from the bit-based service and manufacturing industries like popular music distribution.

B2C e-commerce threatens to disintermediate the retailers. B2B e-business threatens to open and flatten the corporate-secret hierarchy. Microprocessor chips embedded in the furniture's fabrics and wood, "smart furniture" will open ergonomic and information possibilities as hard for us to imagine as, for example, the National Enquirer would have been for someone reading Gutenberg's first Bible.

People will always need furniture, so furniture manufacturing will thrive in the Information Age. I also expect it to work differently. Whether the organizations that dominate today will be agile enough to survive remains to be seen.

Industry Portrait

Wood furniture manufacturing is a durable consumer goods industry. The United States has roughly 3,000 such companies manufacturing primarily wood household furniture. They employee a little over 120,000 people. That's an average of 40 employees. In fact, only 700 of them have more than twenty employees. Taking away the top twenty companies, which employee most of the people, you can see that the industry has a large quantity of very small companies reflecting the cottage industry from which it came a hundred years ago.

Few of them, however, compete in every sector across the whole industry: upholstered, wood, metal, and increasingly plastic; assembled and knock-down; every room of the house including home offices, garage, home workshop, porch, and backyard. Household furniture is used outside the household in offices and institutions. It can be produced one-of-a-kind under contract, say a boardroom table for a company. It can be mass-produced under contract, say household living quarters for foreign-based corporate or government staff.

Nor are companies in this industry vertically integrated. None as far as I have learned own forests, sawmills, or factories that make plywood and particle board let alone hinges, handles, and varnish.

As a result of NAFTA, the U.S. Commerce department's taxonomy has recently changed from Standard Industry Codes (SIC) to the North American Industry Classification System (NAICS). In the SIC system, the furniture manufacturing industry was SIC 25; the Wood Household Furniture Manufacturing industry was SIC 2511. It is now the Furniture and Related Product Manufacturing industry, NAICS 337, specifically the Nonupholstered Wood Household Furniture Manufacturing industry, NAICS 337122.

Furniture initially is classified based on the type of furniture (application for which it is designed) rather than the material used. For example, an upholstered sofa is treated as household furniture, although it may also be used in hotels or offices. When classifying furniture according to the component material from which it is made, furniture made from more than one material is classified based on the material used in the frame, or if there is no frame, the predominant component material.

On the other end of the supply chain, the distribution channels are well-established. Many manufacturers have factory outlet stores or even small retail chains, but the bulk of their products go to retailers. The way the U.S. government classifies furniture stores creates another complication. The new NAICS code for the industry adds some retail outlets into the industry where the old SIC system kept them far apart.

Furniture stores (SIC 5712)

Establishments primarily engaged in selling new household furniture, beds, mattresses, springs, and other sleep equipment. Also included in this classification are establishments selling household appliances, phonographs, radios, television sets, and floor coverings, provided the receipts from sales of furniture and sleep equipment exceed those from sales of other merchandise. Furniture warehouse showrooms, sleep shops and waterbed stores, and specialty furniture stores such as baby furniture stores are classified here. If sales of new office furniture account for more than half of the total sales, the establishments are classified in SIC 5021.

Every house has furniture, even if it was inherited, purchased used, or made from other objects. Typically, couples buy new high-quality wood furniture in their early forties when their children are teenagers. "Mom, you've had that couch since you were in college. I can't ask my friends over to sit on it!"

The table below of the whole NAICS 337 section shows what is not included in the government figures used for this report:

note about comparable statistics

What is the comparability of SIC and NAICS data?

337122 Nonupholstered Wood Household Furniture Manufacturing

This U.S. industry comprises establishments primarily engaged in manufacturing nonupholstered wood household-type furniture and freestanding cabinets (except television, radio, and sewing machine cabinets). The furniture may be made on a stock or custom basis and may be assembled or unassembled (i.e., knockdown).

The data published with NAICS code 337122 include the following SIC industries:
2511 Wood household furniture
5712 Furniture stores

This definition comes from the 1997 NAICS manual. However, for this industry, the 1997 Economic Census Manufacturing did not fully implement the conversion to NAICS. Data for NAICS industry 337122 include establishments primarily engaged in manufacturing wood box spring frames. The NAICS definitions will be fully implemented with the 2002 Economic Census.

Industry size

What the SIC system used to call "Furniture and fixtures" is a $26 billion industry. Even though it has almost doubled in size over the past 15 years, it has remained at about 0.3 % of U.S. Gross Domestic Product for that whole time. By comparison, Americans spent over $6 billion on bottled water in 2001, much of it imported.

Gross domestic product
in Current Dollars
[Billions of dollars]

source: Bureau of Economic Analysis
Industry Accounts Data
Gross domestic product by industry

Within furniture and fixtures, this report focuses on the wood household furniture manufacturing industry. Statistics from related industries in the table below (for 1992, not in current dollars) give a sense of context. Wood household furniture manufacturing is about a fifth of the total for furniture and fixtures, giving it a 0.06% contribution to the nation's GDP. It is a little larger than the bottled water industry.

source: U.S. government's 1992 Economic Census of Manufactures
Furniture and fixtures

mission

Furniture manufacturers come from a craft tradition. Until late in the 19th century, furniture was made by hand. The factory is working with unique pieces of wood, but it strives for uniformity, which is more cost effective.

The wooden furniture manufacturers must make a profit. To do that, they must make functional yet attractive furniture for costs below prices that furniture stores are willing to pay.

revenue

While some furniture manufacturers sell directly to consumers, most sell into a supply chain of retailers. Some manufacturers do contract work or specialty work directly for consumers, especially institutions. Few sell any ancillary or support services.

expenses

salaries

raw materials

Learn more

Trade mags

Furniture Today magazine -- Furniture Indicators | Message Boards

The weekly publication of record for the furniture industry, Furniture/Today reports critical business and fashion news, industry data and exclusive research that enables home furnishings industry leaders to make key business decisions. Furniture/Today reports on those social and economic changes that impact the productivity and profitability of home furnishings retailing and manufacturing.

Furniture/Today reaches virtually every key decision-maker among retailers, manufacturers, suppliers and sales representatives in the U.S. and Canadian marketplaces and an increasing number of industry leaders abroad.

Furniture World magazine

Furniture Info's Message Center

FDMOnline

You will soon find that FDMOnline is much more than a replica of the magazine.

At FDMOnline we strive to bring you the most up-to-date industry news, events and products information. In addition, we offer our exclusive online monthly feature bringing you comprehensive information on topics that are timely and interesting to you--our readers.

Furniture Highlights
Institute of Furniture Manufacturing and Management
Mississippi State University

government info

International Trade Administration (ITA)

Bureau of Labor Statistics' 2000 National Industry-Specific Occupational Employment and Wage Estimates -- SIC 251 - Household Furniture

Department of Commerce Consumer Goods Industries Household Furniture Index

Associations

American Furniture Manufacturers Association

National Home Furnishings Association

The Grinderman’s Association - Dedicated to Wood Moulder Training-->

Home Furnishings International Association's Trends And Observations

Furniture Today 2002 Leadership Conference agenda
E-business survivors. Panel discussion

The e-marketplace has seen major changes in the past year. The dot.com failures were highly publicized, but what is less obvious is how companies are carving out viable niches online. At the Conference, hear from companies who have survived the first big shakeout phase and are working hard to harness the power of the Internet.

Advice to Today’s AFMA Leaders
by John D. Bassett III, President and CEO of Vaughan-Bassett Furniture
The Furniture Executive  -- AFMA newsletter January 2002 (only current issueavailable online)

Keep everybody under the tent. The 800-pound gorilla, as far as AFMA is concerned, is importing. Who are we going to allow in the AFMA? Where are we going? Manufacturers today fall into four categories. There are those seeking to go into retail. There are those expanding a brand name as a way to differentiate themselves from the imports. Some are going heavily into importing. And last there are the domestic manufacturers who say we’re going to compete in this country. ...

Some manufacturers are a combination of these things, but the question for AFMA’s future is, how do we get all four of these groups under the tent and keep them under the tent. I think it’s important that we try to work together, because we’re going to be a lot more effective together than if we go our separate ways.

International Home Furnishings Center's High Point Market -- over 9,500,000 square feet of display space, over 150 exhibition buildings and over 2600 exhibitors.

The International Woodworking Fair - August 22 - 25, 2002, Georgia World Congress Center

owned and sponsored by American Furniture Manufacturers Association (AFMA), Wood Machinery Manufacturers of America (WMMA), Woodworking Machinery Industry Association (WMIA)