Focusing on the future - Small shops are big business

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Imports of furniture, moldings, flooring and related wood products declined slightly in 2007 because of the decrease in overall demand for wood products. However, WCMA expects imports to continue because low-cost developing countries such as China, Vietnam, other areas in Southeast Asia, Brazil, Eastern Europe and others have built woodworking factories to employ their workers and depend on the export markets for sales.

Source list

Alexander Dodds Co. Tel: 800-843-6337.
Augustin Morley Cabinetmakers. Tel: 315-685-2411.
Blum Inc. Tel: 800-438-6788.
Cab Fab. Tel: 315-701-4380.
Classic Designs by Mathew Burak. Tel: 800-748-3480.
Conestoga Wood Specialties. Tel: 800-964-3667.
Contemporary Kitchens. Tel: 804-758-2001.
CVH International. Tel: 973-470-7177.
Dykes Lumber Co. Tel: 212-246-6480.
Enkeboll Designs. Tel: 800-745-5507.
Horizon CNC Products. Tel: 800-768-1495.
Lewis Lumber Products. Tel: 800-233-8450.
Odhner & Odhner Fine Woodworking. 800-870-0900.
Russell Plywood. Tel: 800-373-1004.
Top Drawer Components. Tel: 800-745-9540.
Turnings Unlimited. Tel: 937-588-4050.
WCMA. Tel: 770-565-6660.
Wohners Inc. Tel: 201-568-7307.

In the United States, imports represent 59 percent of wood household furniture, 37 percent of wood moldings, 30 percent of components, 28 percent of upholstered furniture, 22 percent of office furniture, 14 percent of wood flooring, and 4 percent of wood kitchen cabinets.

However, many of the low-cost offshore manufacturers are facing rising energy and shipping costs, higher currency valuations, and higher costs of doing business that will make them less competitive, so there may be a leveling off of imports in the future.

Almost all manufacturers and small shop owners involved with imported wood components failed to return phone calls placed by Woodshop News or were reluctant to talk about the business of importing on the record. It seemed as though shop owners didn’t want to appear as though they were unpatriotic by dealing with imports, specifically from Asia. However, importing hardware from Europe, especially Germany, was discussed openly and viewed as a smart business decision.

Small shops are big business
Until this year, sales volume at Lewis Lumber Products in Picture Rocks, Pa., has been about 60 percent hardwood and 40 percent millwork. This year, it’s about a 50-50 split, and small custom shops are a sizeable portion of the company’s clientele.

“Small shops probably represent about 70 to 80 percent of our customer base by numbers. By volume, it’s the opposite. It’s the old 80-20 rule [20 percent of the customer base might make up 80 percent of the sales volume], but it is a significant portion of our customer base,” says Keith Atherholt, president of Lewis Lumber Products and the WCMA’s vice president. “We do business with a lot of one-man, two-man and five-man shops.”

Most of the millwork produced is moldings and custom profiles, and to a lesser degree, cut-to-length parts for furniture and cabinet shops. The company also produces “program work,” which is the same profile time and again, but maybe using different species and different quantities on a just-in-time basis.

There’s no doubt outsourcing has become a far more prominent feature or option for businesses to look at, and for a lot of different reasons, Atherholt says.

“The cost of labor is considerably higher; just the cost of general operating is higher — insurance, fuel, utilities … So, if you’re going to carry overhead, you’re going to have to capture that overhead somehow. And in a growing economy, where sales are growing, you have that opportunity to capture those costs. But we’re in a declining economy — or whatever we’re in — and to try to capture those costs is just brutal. You’re losing sales and then you have to try to capture increasing costs. I think that it makes sense, in particular for smaller shops, to be able to have options on outsourcing parts, millwork, whatever.”

Conestoga Wood Specialties, based in East Earl, Pa., has seven facilities in the U.S. and is one of the largest wood component manufacturers in the country. Conestoga has two separate operating units — an OEM side and a high-end custom side.

“We service over 3,000 custom cabinet shops in all 50 states, and the vast majority of those shops would be 20 people and under,” says Chris Watson, president of the custom side of Conestoga’s business and current WCMA president. “The statistics are a little bit misleading. They probably make up 90 percent of our customer base, but they may only account for 30 to 40 percent of our overall business, just because we do service some of the very large manufacturers.”