Lack of Innovation, Not Globalization, Killed U.S. Furniture Industry
The following is from a review by Marc Levinson, one of our leading experts on process innovation. I'm guessing that there is more wisdom in the review than in the book being reviewed:
(p. C6) . . . it was not by chance that the U.S. furniture industry provided easy pickings for foreign manufacturers.
In the 1990s, U.S. furniture making was a backward industry. Its productivity--the efficiency with which capital and labor are put to use--grew only one-third as fast as in manufacturing overall. While firms in other industries were investing in laser cutters and five-axis milling machines, furniture makers were devoting only 2.6% of their revenue to capital investment. Instead, they relied heavily on cheap labor, paying their average worker 29% less than the average in all manufacturing.
Nor was there much innovation. When Ikea's flat-pack furniture, designed to minimize shipping costs and leave assembly to the purchaser, arrived in the United States in 1985, American manufacturers had nothing like it. Ms. Macy reports that Universal Furniture cut costs by designing for efficient production at high volume; U.S. manufacturers did not. Similarly, when JBIII countered the distant Chinese by guaranteeing that Vaughan-Bassett would deliver orders within a week, his own company's credit and delivery departments couldn't cope.
Globalization takes the blame for many ills these days. But the implosion that Ms. Macy chronicles owes less to import competition than to executives in a sheltered industry who failed to keep up with a changing world.
For the full, largely negative, review, see:
(Note: ellipsis added.)
(Note: the online version of the review has the date July 18, 2014, and has the title "Book Review: 'Factory Man' by Beth Macy; It's not easy to copyright a furniture design--and somebody will always come along and make it for less.")
The book being mainly panned is:
Macy, Beth. Factory Man: How One Furniture Maker Battled Offshoring, Stayed Local - and Helped Save an American Town. New York: Little, Brown and Company, 2014.