Supply chain shortages are helping North Carolina furniture city

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Hickory, NC Six months after the corona virus outbreak, something unexpected happened at Hancock & Moore, which provides custom-set leather beds and chairs in this tiny North Carolina town as millions of workers lost their jobs and companies worried about their economic future. .

Orders began to arrive.

Families stranded at home had decided to upgrade their units. Individuals who were tired of seeing their sad futons wanted new and beautiful living room furniture. They were willing to pay it turned out well, because the price of every piece of furniture from fabric to wood to shipping began to rise rapidly.

A year later, furniture companies in Hickory, NC, at the foot of the Blue Ridge Mountains, have been offered an unexpected opportunity: an epidemic and subsequent supply chain disruptions have hit factories in China. Southeast Asia, which decimated U.S. production through cheap imports in the 1980s and 1990s. At the same time, the demand for furniture is very strong.

In theory, they have a shot at rebuilding some of the businesses they lost due to globalization. Local furniture companies quit their jobs and renewed themselves. Now, companies like Hancock & Moore have orders backlog. The company is struggling to hire workers.

Said Amy Guerre, vice president of human resources and benefits for the parent company, which includes rock house farm furniture brands such as Hancock & Moore and Century Furniture.

Nevertheless, the same forces that make it difficult for foreign manufacturers to sell their wares in the United States and offer higher wages to American workers are also imposing sanctions.

Many companies rely on overseas parts that are harder to obtain and more expensive. Very few skilled workers are looking for work in the industry to fill the open positions, and some are reluctant to invest in new factories or expand to cities with large labor groups as businesses do not know how long the demand will last.

“We want to expand the capacity, but we’re North Carolina’s furniture mecca all the other furniture companies are on the same boat as we are.”

Despite the shortage of workers, Alex Schoford, chief executive of the company that owns the Rock House Farm furniture brands, said, “This upsurge will not last until it takes a fully trained staff to go and get it. They will accelerate. “

The present moment, he added, is “extraordinary in every way, not static in any way.”

For now, companies in Hickory are seeing huge growth due to strong demand and limited supply. Prices for couches, beds, kitchen tables and beds have risen 12 percent nationally until October this year. A small piece of the basket of goods and services is furniture and bedding. Inflation measures only 1 percent so this increase is not enough to automatically raise overall prices to a comfortable level. But rising car, fuel, food and rental costs pushed inflation to 6.2 percent, the highest level in 31 years.

The same question for policymakers and consumers alike is how long the limitations on demand increase and supply will last. The key part of the answer lies in how quickly the shipping lanes can be aligned and whether manufacturers like the artisans in Hickory can increase production to meet the growing demand. But at least domestically, it has proven to be a much more challenging task than one can imagine.

On a wet October afternoon, the sound of electric sanders spinning and the constant noise of an artisan planning his feet in a chair echoed in one of Century Furniture’s caves. At one time in the factory 600 workers were overseeing the assembly lines. Now about 250 people are busy building tables, chairs and desks.

The plant typically has 2,000 orders, but these days it is like 4,000, said its manager Brandon Mallard. Ordered furniture will be delivered within six to eight weeks; Now they can take six months.

The same supply chain problems that affect almost every industry are hitting the century. Dresser drawer handles are stuck on container vessels somewhere between Vietnam and North Carolina. For some items, the imported wood faced delay.

Component delivery dates will “keep moving out,” Mr. Mallard said.

Labor has also been a challenge. Employees in Century work overtime to catch up on arrears, but workers are burned out, and the edges of the furniture are so thin that paying extra labor rates can eat away at profit. Mr. Many brands of Schoford have been raising prices, but because the pieces were ordered weeks or months ago they sometimes failed to increase enough to keep them going.

The experience in Hickory is a micro-scenario that is being played on a large scale around the world economy.

After a fall in the onset of epidemics, the demand for government-induced checks and savings accumulated during epidemics re-emerges. Costs have moved away towards services and goods, and that mix is ​​slowly normalizing.

This abrupt change has thrown an elegant symmetrical global supply chain: shipping containers find it difficult to get to stockyards where they need to be, port containers cannot quickly clear ports, and there are not enough trucks when imported goods go to dry land. Around to deliver everything. All of this is compounded by foreign factory closures linked to the virus.

Prices of finished goods, parts and raw materials have gone up as foreign-made parts do not reach domestic manufacturers and warehouses. American factories and retailers are raising their own prices. More and more workers are in short supply, and companies are raising their wages and raising prices to offset those costs, further fueling inflation.

Chad Ballard, 31, has risen from $ 15 an hour building furniture to $ 20 an hour in Hickory at the onset of the epidemic.

He came to the city four years ago to work in construction and timber services in Florida. Ballard said. He was more stable and less exposed to the weather, and he found it in the making of furniture. This job provided stability and adequate financial security so he was able to pay for his jeep and plan to buy a house with his wife who works in the business.

But Mr. There is another side to some of the factors that help motivate workers like Ballard: if inflation continues to rise in a hot-demand economy, it means costs to them and other consumers will rise. It is difficult to buy everyday necessities like food and shelter. Already, if the heating economy, Mr. Ballard’s goal of buying a home can be a little difficult. According to Zillow data, the typical price of a home in Hickory is up 21 percent last year to $ 199,187.

Economic policymakers are concerned that consumers and businesses may expect steady inflation and higher wages as prices rise, and wages and prices rise as a result.

There is reason to believe that such a bad outcome can be avoided. Many economists, including those in Biden’s management, believe that demand will be moderate as life returns to more natural patterns and consumers will reduce their savings, allowing them to catch up by the end of next year.

Jared Bernstein, the White House’s economic adviser, said: “We have a labor market that is tight and tight.

The White House has also pledged to promote domestic production. This moment may help that agenda as it exposes the weakness of remote distribution networks.

But the epidemic of labor shortages across the United States will also serve as a prelude to the aging population change of the country’s workforce, as many have opted to retire early. Lack of labor is one reason why ambitions to bring back production and jobs from abroad prove complex.

Even before the corona virus hit, Hickory’s furniture industry was having a hard time hiring. It has a particularly old workforce because redundancies are linked to offshore as a generation of talented people leave an industry. Now, very few young people are entering in place of retirees.

Local companies are automating saving labor using Hancock & Moore’s new digital leather cutting machine and they are actively involved in training employees.

Many large companies fund the local community college furniture academy. Last Thursday night, employers set up booths at a job fair there, creating a confidence ring at the entrance to the school warehouse and welcoming potential candidates with branded lanyards and information items. This is the first furniture based event of its kind.

But progress is slow and companies are trying to ensure that the new and younger generation of young people are qualified to pursue this field. Corporate representatives outnumber job seekers overnight.

Bill McBrayer, human resources manager at Lexington Home Brands, said: “Finding people is a very difficult market. Companies turn to short-term employees, but even companies that specialize in temporary assistance cannot find people.

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

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