Focusing on the future

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One large area of the woodworking business that often goes unrecognized, but is crucial to custom millwork, cabinet and furniture shops, is the wood components industry. Outsourcing, the practice of purchasing parts or finished products from outside companies, is a common way of doing business for small custom shops. Participating shops that do their homework are able to obtain a quality product while saving machinery and labor costs.

During the last 10 years, the U.S. wood components industry has suffered through a confusing and complicated period. The main factors contributing to the turbulent time have been the substantial increase in imports, the downslide in the housing market, and the current uncertainties associated with the nation’s economy. Much of the wood components industry is directly tied to the successes and failures of the housing market, and therefore companies that lack diversity in product selection and are solely dependent on the residential market are fighting to survive.

Despite the doom and gloom expressed by many in the components segment of the wood products industry, there are several factors that offer a ray of hope that the situation may slightly change for the better during the next several years. Those include increased labor costs in China, the devaluation of the Chinese yuan to the U.S. dollar, improved technology, and the escalation of energy costs, which ironically may result in what industry representatives hope will be a rebirth in U.S. manufacturing that has been previously lost to overseas manufacturers.

Hard times
Despite the potential of a change for the better, any quick turnaround in the U.S. wood components industry is several years away, at best. Economic conditions in the U.S. have not been this bad since the 1970s when the country was suffering from a slowing economy, rising inflation, an unpopular war, rising oil prices, a declining stock market and more, says Steve Lawser, executive director of the Wood Components Manufacturers Association.

“The main reason why the woodworking industry is struggling more than I have ever seen it is because of the downturn in our leading market, which is building products for the housing and remodeling markets,” he says. “We manufacture components for a variety of non-structural, building-related products for interior applications such as cabinetry, flooring, staircases, interior trim, moldings, millwork, fireplace surrounds, wall paneling, etc.

“Building products replaced furniture as our No. 1 market for components in 1996 and had grown to a high of 46 percent of our members’ business in 2006. In 2007, it dropped down to 41 percent and we expect it to decline again in 2008. Total housing starts peaked at two million in 2005 and are projected to drop below one million in 2008, so it’s like cutting your No. 1 market in half.”

Import statistics
The influence of imports on the wood components industry is reflected in the latest figures from the U.S. Department of Commerce, as provided by Lawser.