I suggest everyone read yesterdays Wall Street Journal story “China’s newest export: your kitchen table” by Dan Morse.
34,000 americans have lost there jobs in the american wood-furniture industry in the last two years because of unfair Chineese competition. I know what your thinking”their tools are crap so there furniture will be too” Wrong….the Chinese use near slave labor, savy experienced american designers and production experts and wood looted from endangered forrests to turn out VERY WELL MADE furniture that is nothing like the junk they turned out a couple years ago. American designed 5 ft. tall entertainment centers can be sold in the U.S. for under $600 bucks. They also can import our oak and return a finished peice of furniture cheaper than a North Carolina plant can produce the same quality piece!
It is tough enough to make a consistant buck in this business now. Imagine when many of these 34,000 guys and girls starting there own one-man custom furniture businesses. We need to stop this dumping before the Chinese control the whole mid-priced market. I think the ability of international corporations to buy off our leaders will make it impossible to stop this. The hign end market may be next. I think we are screwed.
See-ya at the 7-eleven employment line
Replies
Jerryk,
The same thing happened in the steel industry ~20 yrs ago. The U.S. steel market is improving but it has a ways to go. We have to go thru these cycles before we understand how we are hurting ourselves.
dlb
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The same thing happened to the domestic furniture market in the early 80s. Except then it was the cheap Taiwanese imports that were putting domestic furniture companies out of business.
I first got into finishing working at a furniture factory here in Oregon that was one such factory in a 33 or 34 factory chain nationwide. That was in early 1983. Two years later the entire corporation declared bankruptcy, tried to reorganize for a couple years with just a handful of the factories being opened and finally went out of business for good in 87 I think. All thanks to cheap Taiwanese imports that looked great on the showroom floor but which were clearly of inferior craftsmanship that was sure to not last a fraction as long as what we were building.
Regards,
Kevin
All thanks to cheap Taiwanese imports that looked great on the showroom floor but which were clearly of inferior craftsmanship that was sure to not last a fraction as long as what we were building.
Talk about inferior crap, have you ever gotten any furniture from Ikea? My youngest daughter bought a chest of drawers and as entertainment center from them. Within 18 months I had to redo all the drawers because the slides broke and the bottoms came out. The entertainment centr was leaning to the right because the legs on that side gave out. When I get the chance I am going to build her a chest of drawers, nothing fancy, just functional.
Dave in Pa.
Stay tuned, Jerry. They're digging themselves a hole, just like the Japanese did...and countless other dumpers since the time of Ur. It hurts at first, and you may have to sustain yourself with creativity and custom options. In other words, concentrate on the up scale market where skill is more important than price. If you're good, you can win there. And if you're not, you don't deserve to...But these Oriental low-ballers eventually fall on their swords.
But, with a world full of low ballers, we end up a nation of paper pushers and min. wage store clerks.
People want everything dirt cheap, but fail to realize that they're driving their own paychecks down.
Gonna be interesting to see what it's like to be a nation that makes nothing and imports everything. Don't need to explain the end result of that.
The trend isn't limited to low-end jobs. The big news now is that the same thing is happening in hi-tech, as high-paying software and customer-service jobs are exported to India. The chances are that when you call a telephone number to have your General Electric dishwasher repaired, the person you're speaking with is on a different continent. IBM just announced that it is moving lots of hi-tech jobs overseas, to keep up (or down) with the competition.
It's even happening in the legal market, as people in India and other countries are handling "routine" research and filings for American firms, taking advantage of lower wages and the time difference (they work while we're sleeping).
Trying to stop this trend is like trying to keep the tide from rising. No matter what barriers we may try to put up, the desire of consumers to buy things at the lowest possible cost will always prevail in the long run. Like it or not, we live in a trans-national world. Does it even make sense anymore to think of companies or products as "American" or "French" or "German"? Companies operate all over the world and each of buys products every day from all over the world.
A couple generations ago, a guy who grew up in Ohio probably stayed in Ohio. Today that guy thinks nothing of moving to California or Florida, whether for a job or a lifestyle. Our children or grandchildren may decide to live in Poland or China with the same relative indifference.
Not to take a tangent, but I guess the resurgence of a kind of super-nationalism in America and other countries today is a reaction to the fact that national boundaries are becoming less and less significant in reality.
Each of us has to find a niche where we can add value for our customers - more value than the guy or gal in India or China. If we can't, we're screwed. I suppose that means that in a generation, all high-volume production furniture making will be done overseas. But the high-end, one-of-a-kind stuff will probably always find a market.
Finally, to make a long post even longer, there are two good things about this process. One, as foreign workers earn money building things for the American market, they achieve greater wealth and become consumers for American products, whether movies, software or even high-end, one-of-a-kind furniture. Two, as the foreign workers achieve greater wealth their wages will increase, giving them less of relative advantage over American workers. But this process will take a long time, and there are going to be lots of casualties along the way.
Well said, Mark. You're starting to sound like an enlightened Conservative. For those who feel the answer rests in pressuring our government into setting up trade barriers, they should look at the prescription drug industry. Now there's a real preview of coming attractions...if we take the Liberal, protectionist approach to this one.
Edited 7/23/2003 10:13:32 AM ET by Jon Arno
Edited 7/23/2003 10:14:40 AM ET by Jon Arno
Boy, was I duped by NAFTA. Now we get to eat that crummy, chemical saturated produce from Mexico.
From a free-trade guy, I'm now: hey! hey! tarriffs all the way. Close dem dam doors.
Hey, Boatman. You just get to eat that crumby chemically saturated Mexican stuff when you decide you don't want to pay twice as much form the organically grown stuff...But the point is, it's YOUR choice.
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...And as for low-skill, high-pay jobs...I'd say we have been supporting a lot of them for literally decades. For example, how does an auto assembly line worker taking home $50,000 per year or more in total benefits here in Detroit justify the premium, while a fruit picker up in Traverse City sweats just as much picking cherries and only makes minimum wage? How much more complicated is "righty-tighty" than "red's ripe?"
Edited 7/23/2003 12:57:00 PM ET by Jon Arno
"...$50,000 per year or more in total benefits here in Detroit..."
What happened, did they all finally get pay cuts? I had a neighbor 8 years ago that was an assembly worker for Ford and he made 70K easy, 10 years ago, plus benefits that I only dream of. He'd tell me stories of how they work; "put the red colored nut on the red stud and torque it with the pre set red colored torque wrench then pass it to the next guy who does the yellow assembly."
You're in Detroit area? I'm in Walled Lake.
>>"What happened, did they all finally get pay cuts? I had a neighbor 8 years ago that was an assembly worker for Ford and he made 70K easy, 10 years ago, plus benefits that I only dream of. He'd tell me stories of how they work; "put the red colored nut on the red stud and torque it with the pre set red colored torque wrench then pass it to the next guy who does the yellow assembly."<<
At $50,000 per year, I was talking entry level. You and Napie must be talking about the more experienced guys. The ones who've learned to hang up their neumatic torque wrenches rather than bouncing them off the floor...while they take a coffee break, waiting for the next chassis to come along.
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>>"You're in Detroit area? I'm in Walled Lake."<<
Yes, I'm over in Troy where you have to pack a lunch, if you want to drive around the block during rush hour. Walled Lake probably isn't quite so bad yet...But you have my condolences anyway (I guess misery loves company.)
I can remember when going to Walled Lake involved a drive out in the country...and how good the cotton candy was at the amusement park out there. But that's more than a half century ago.
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Edited 7/23/2003 2:35:41 PM ET by Jon Arno
You're in Troy, that's pretty cool, I never knew that. Maybe if I actually read your book instead of just looking at the pictures, I'd known that. Actually, I live in Fowlerville and work in Walled Lake. I can't stand the city and congestion so I moved out to the country. I get most of my hardwoods from Armstrong's and Lauensteins. Can you think of anybody else out near me worth trying? Johnson's workbench is a great place to visit, but it's a long drive even for me. I should come check out Durst some day.
You seem to be pretty well wired into the better cabinet grade hardwoods sources in our area. In my experience, the folks at Armstrong's are exceptionally nice to work with and I've also gotten some extremely good deals on larger quantities from Johnson's. I used to source some of our hardwoods through Johnson's when I was the hardwood buyer for Durst. They're also a family operation, and they put on a great "house cleaning" sale every fall in conjunction with the Pioneer Days festival in Charlotte. That event is always worth the trip, if you happen to have so fun money to work with at show time. I used to attend it regularly until my health hit the skids. Difficult for me to travel anymore.
Since I've retired though, I don't think Durst has kept up inventories of many of the specialty hardwoods I was carrying. The current management is more hardware oriented than was the company in its earlier years. They're still a great place for unusual hardware items (especially repair items for older plumbing and electrical systems) fasteners (scews, bolts and nails of every description) and also traditional, quality hand tools. But their lumber department is now pretty much building supply oriented.
I can second those good deals at Johnson's every September. I once got 250 bdft of FAS walnut for $55.00. They love to clear out the wherehouse.
Not that long ago, (about 250 years, short in the time scale of human endevor), the Crown attempted to stiffle growth in the colonies because of competition to the home industries. That all worked out quite well in the end and England survived.
Most of those with a protectionist bent today thought nothing of pillaging those same countries they disparage daily for their natural resourses to feed our factories or as markets for our goods. The cold fact is that there will be no more high paying low skill jobs here, the market will not support it. Some of that crap our industrial giants pushed on us in the heyday of US production, (1950-60's), was no value for the money, we learned that the hard way here in SE Michigan. So welcome to the global economy, don't whine, just find the next way to make a buck on it.
>>The cold fact is that there will be no more high paying low skill jobs here, the market will not support it.<<
When in history were there ever high-paying, low-skilled jobs?
I have been reading the posts on this topic.It frustrats me some.For added info. did you know Russia and China have large tracts of forests,I mean LARGE,that justs sit around.WOOD magazine put out a topical map that shows the forests of the world and stats on how there used.This article was surprising.For further reading on whats really going on from a conservative perspective,read The New American Magazine.
You must not have ever lived in Detroit. See Jon's post, I know, (personaly), illiterate assembly line workers grossing $70K, even in this "bad" economy.
But, with a world full of low ballers, we end up a nation of paper pushers and min. wage store clerks.
It is happening right now as we speak. Sears and a few other retailers are hiring kids right out of high school to replace all the experinced help they let go over the last few years.
People want everything dirt cheap, but fail to realize that they're driving their own paychecks down.
Don't tell me about "dirt cheap". I have been selling major appliances for over 12 years and I see it everyday. People want the cheapest junk they can buy because they don't care about it. When it breaks down after 18 - 24 months they come back to me and want a new one, no cost, because the one they have is broken down. Hey, you bought it, live with it. It comes with a one year manufacturers warranty against defects in workmanship and materials. If you had spent more then $239 for a washer it would have lasted you longer. Then they proceed to rant and rave, threaten me with my job, call me names and demand that the manager do something like fire me and give them a new one. Like thats going to happen. Slim chance. Sorry to rant but it just burns me up everytime this happens.
Dave in Pa.
It is not just the Home Furniture industry that is headed this direction, and not just "Low End" furniture. It includes Office, Hospitality (Hotel/Motel), Healthcare, etc... And Jerry is correct, this stuff is not junk it is very well made and is being done in state of the art manufacturing plants. While the labor costs are what we consider slave labor, to them it is very competive, and in many cases very good pay.
Also it is not China or other counties dumping this stuff, it is American companies contracting with them and making it to our specification and designs. But for American compaines to stay competive and stay in business they have no choice. If you are competing against a company that is selling product similar to yours in function, looks, quality, etc and the cost is much less, unless you make the jump you are not going to last long.
I am by no means saying that I agree with the direction that this is headed, but I can see some of the logic behind it. And while there are many people in these industries that have lost jobs, there are also many people that have kept jobs because of it. There have been many companies that have not gone to overseas manufacturing and are no longer in business.
Will the small custom shops be hurt by this, probably not. It is like Kevin said,
"the customer who is looking for the cheapest dining room table they can find isn't going to buy it from you or me anyway, and the customer who is lookig for an $8,000 custom table could care less about what Ikea has on sale. Regardless of wht China is selling, you're never going to sell your custom table to the family sho is shopping at Target or Ikea for a table." We are the people our parents warned us about. J. Buffett
I posted this concern on the e-cabinet forum and received a reply from an industry respected expert. On another matter I was doing some work for an heir of the Gable family last month and was lucky to see some arts&crafts style furniture made in China in the 20's. Just beautiful stuff
Below is the good news for us(bad for them)
Ken SusnjaraYesterday 10:50 PM
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View ImageKeep the faith, things are changing and, I believe for the better. Only today has the media, WSJ for example, began to openly talk about the fact that China has been at the core of our three year old recession (depression if you are in most manufacturing sectors). There are changes going on, both here and in China that will open incredible opportunities for woodworking shops like our Members.China currently builds much of our furniture because greedy executives in the industry would rather pay poor Chinese pennies a day to build their products a half a world away then to modernize their US factories and pay a decent wage. As with most slave labor in history, it will not last. Forces are already in motion to change the balance and those that bet on the Chinese source will regret it.Although not openly reported, labor riots are common in China. When faced with disgruntled workers, the Chinese government has been backing down and paying more. They must either back down or face a revolution that could topple the last major communist regime. The Chinese are only competitive on a world market because they artificially cut the value of their currency in half and then rigidly pegged it to the US dollar. This practice has been coming under intense pressure from much of the world and just last week four US Senators partitioned the Treasury Secretary to investigate the practice, which is banned under the UTO rules.In addition to unfair currency practices, the Chinese have also been selling at below cost. I know of one instance where they purchased a veneer log from the US, shipped it to China, turned it into veneer and then sold it back at a lower price then they paid for the log. The government condones this to try and create jobs and quell labor unrest. When the factory runs out of money for payroll, they simply borrow it from their bank, which is controlled by the government. As a result, bad loans in the Chinese banking industry amount to over two thirds (66%) of their gross national product. It is less than one tenth of one percent in the US. For all practical purposes they are bankrupt.Here is what I think will happen. First, the Chinese government will lose control of the value of their currency and it will begin trading, at least partially, on market forces. As the US dollar continues to drop the cost of everything from China will rise. At the same time, actual manufacturing cost will rise as people demand better wages and benefits like health insurance and workmen's compensation. They have access to the Internet and know how the rest of the world works and they will not tolerate less. As a result, the cost of Chinese goods will return to the same relative level they were at in 1990 when they were not competitive on world markets. Finally, the government will begin to heavily tax foreign factories to try and shore up their failing economic system. There is more than a small chance that the whole place could collapse.There will be a mad scramble to again begin building furniture in the US. Although my book was written over two years ago, the program described is still viable and we are about half way through establishing the infrastructure needed for the furniture network. This network, which you are all already part of, will offer the lowest cost approach to furniture manufacturing and distribution. Furniture companies that have dimantled their US factories will be ill equipped to take advantage of the rapid
It really doesn't seem possible to fight much of this.
My uncle owns a small lollipop company in Idaho. He's come very close to moving to Mexico many times. Not only is labor cheaper, both wages, benifits, no SS taxes, medicare, unemployment insurance ect.. But, his material costs would drop by nearly 50%. Due to sugar subsidies, sugar costs twice as much in San Diego as in Mexico.
These stupid sugar subsidies congress has in place are a big reason that there have been so many stories in recent years about Hershy's, life savers, and other big candy compainies moving or thinking about moving to Canada or Mexico. Real hard to compete when your raw materials cost twice as much.
Fact is, compainies like WalMart demand the lowest price. Period. They don't buy from you if they can get it a nickle cheaper elsewhere. They used to try to contract with US companies, and made a big deal in their adds when they bought from US companies. 15 jobs created making teddy bears in this or that town. Now, they don't care, as they're a multi-national company, and the bottom line is all that counts.
Of course, all other stores have to compete with Walmart, as most people shop price first.
The situation in the UK is just as bad. And it isn't just China that's the problem. Most of the cheap stuff comes from China, but medium and expensive items are far more likely to have come from Germany, Italy and France (and the USA!). The problem is made worse by the attitude of the people who can afford the higher prices. They don't care where it comes from as long as it's European and NOT English. Stand outside an expensive school at closing time, you won't see a single English car being used to pick up the kids. Go to an expensive kitchen shop in London, everything is German or Italian. If I wanted to try to get into that market I would use a German name, pretend that the stuff was imported and double the price.
I've noticed in the many American TV movies that one of the quickest way of esatablishing a character as rich and 'tasteful' is to show them driving a Mercedes, so I guess you have the same problem over there
John
I'm gonna refrain from saying anything about American free trade policy or economic theory or anything like that, but it occurred to me that if you're a small one man shop, the customer who is looking for the cheapest dining room table they can find isn't going to buy it from you or me anyway, and the customer who is lookig for an $8,000 custom table could care less about what Ikea has on sale. Regardless of wht China is selling, you're never going to sell your custom table to the family sho is shopping at Target or Ikea for a table.
Just like Bentley or Ferrari have nothing to fear from Honda or Daewoo.
I know I can't slam particle board together to compete with Ikea so I don't even try. But neither can I produce and sell an $8000.00 table. I don't have the skill nor the contacts and I'd bet that a very small percentage of even the most serious woodworkers out there are working in that arena.
I try to compete for the Stickey, Henredon, Ethan Allen etc. customer who purchases a fairly sound and reasonably priced table between $1000 and $2500. Since many of these goods are imported, and I pay nearly full retail for wood, I'm finding it very difficult to compete. Building time is tough enough but finishing time is eating me alive. I can try to "educate" a prospective client regarding types of wood, fakery, honest joinery, etc but price usually wins out in the end. I enjoy what I do, just wish it was a lot easier to make a living.
Ian Cummins
A word from the other side of the fence - Canada is and has been your largest trade partner for many years. (something few Americans realize). Yet hardly a week passses that we don't see US attempts to keep Canadian goods out.
It seeems the attitude is "Buy American " but God help us if we try to sell in the US. Perhaps its time to spread that American sense of fair play we hear about beyond your borders.
Whatdya mean this isn't "fair play", I thought all you Canadians were Liberals?... Should make perfect sense to you: Why should we buy your timber when we can grow our own for only twice as much?
Seriously, Shorty, I think you've got a very strong argument. What we're doing will ultimately backfire on we Americans. It will encourage you to process your resources on to more "value added" products before you export...and that will ultimately cost us more jobs than we're saving by keeping your commodities out.
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