The pandemic has had several huge impacts on the cabinet industry. Some regional markets in North America are booming while others are collapsing. Many employers are finding it hard to keep healthy staff on the shop floor, while others have faced mandatory closures while they watched unrestricted competitors across a state line eat into their customer base. Or woo their suppliers. Woodshops everywhere are upgrading automation, investing in larger CNCs and robotics, and tweaking software so that machines (which don’t catch viruses) can do more and more tasks. Overseas suppliers have faced obstructions in back-logged ports and warehousing, government lockdowns, silent railroads and quarantined workforces. All of this has led to an unprecedented rise in the cost of materials.
So, how does a cabinet shop that has spent years fine-tuning a lean approach to manufacturing now deal with global shortages in materials? Just-in-time purchasing may not look quite as rosy today as it did back when we all had a little too much inventory on hand.
Woodshops are dealing with the combination of high prices and low supply in a number of different ways. One is a further shift toward outsourcing through domestic suppliers. And one of the factors at play here is a matter of scale. Warehouses are feeling compelled to channel limited resources toward larger customers. That is, they’re often selling to big buyers with deep pockets rather than occasional customers who may not repeat. And in many cases, those big buyers are outsourcing suppliers – which is a good thing, because those factories are in turn helping a lot of smaller cabinet shops to stay afloat.
Reasons to outsource
One obvious reason that outsourcing is a good way to go right now is that a shop can continue to produce all it can in-house and then add outsourced casework to that production, to help meet immediate high demand. The woodshop is not choosing one route or the other but is using a combination of two production methods to meet goals.
Then, there’s focus. Outsourcing can free up some staff members to deal with customer care, purchasing, shipping and other concerns that are eating up increasing amounts of employees’ and owners’ days. It can also help a shop deal with absences, or with a few employees who are taking advantage of various government programs to replace rather than augment their paychecks.
Outsourcing can free up some time to buy and install new equipment, and then train employees to operate it. A shop that plans on increasing in-house production can shop out jobs to keep cash flowing while there are temporary delays in its own production schedule. Many shops are concentrating on niche areas such as curved casework or perhaps turned accents that can best be completed in-house on multiple axis CNCs, and they’re shopping out all the square boxes.
Others are going the other route, adding outsourced accents to the bread-and-butter products that they’re more comfortable making.
Being able to buy in some jobs also helps keep some competition at bay. In the current market, buyers who can afford inflated prices expect immediate gratification. They’re not willing to wait months or more for the boom to quiet down. Shops that simply can’t keep up with demand have the option of satisfying those demanding clients by having a factory build their boxes rather than turning them down – an act that might harm the woodshop’s reputation.
Outsourcing now is also a prudent investment in the future. Someday, things will return to normal. Woodshops that have established a strong relationship with a supplier in these turbulent times are building a strong foundation to help get them through any more post-pandemic inflation or, and this may be hard to imagine right now, eventual deflation. At some point, prices will drop.
One of the strangest twists in this strange year has been the phenomenon of vast armies of people working from home. In the woodworking world, such a concept seems utterly futile – how do you ask an employee to make face frames in a home office? Outsourcing is playing a larger role here. Designers and estimators can obviously get along well as virtual commuters, but cabinetmakers not so much. Being able to order RTA cabinets and have them delivered to a jobsite means that many shops don’t even need to turn on the lights some days, but their employees can still do some work.
One aspect of casework and especially countertops that has changed a lot since the pandemic began is the demand for antibacterial and easily cleaned surfaces. That’s true of hardware too – there’s a big movement toward touch-free or push operated doors and drawers where handles and knobs are conspicuous by their absence. Some outsourcing suppliers are focusing more in this area, where they use antimicrobial laminates and coatings, or copper accents and even hinges (copper is gaining a reputation as being naturally nasty to some viruses). Paints are fairly easy to treat for bacteria, mold, mildew and fungus, and larger suppliers that have access to robotic paint lines and large ovens can offer this service to woodshops that are not quite equipped to meet the need.
Buying ‘local’ has always been a watchword for micro economies such as town and cities, where the proceeds are generally streamed back into the immediate community. That may change for woodshops after COVID-19, especially in areas that aren’t geographically close to lumber and sheet good mills. Outsourcing suppliers that are located near sawmills and plywood factories will probably be able to offer significantly lower pricing on casework in the immediate aftermath of the pandemic than third-party local suppliers will be able to offer for raw materials. It may take several years for the supply chain to realign fully with demand.
The labor force is changing. The pandemic hit poor people the hardest, and many of them have lost their jobs and sometimes even their homes. The numbers of homeless people in some sunnier states is becoming alarming. A fair number of these people worked in the growing, harvesting and processing of raw materials that the woodworking industry uses. Or they worked in related industries such as flooring, tiles and natural countertops. Those who have become migrant or homeless are going to be hard to replace, and so will the higher end products that they used to make. Look for a trend toward more easily produced, imported or less labor-intensive materials for which consumers won’t need to wait so long. But also look at an even more intense shortage of qualified or skilled employees who are available to work in woodshops in some geographical regions. Again, outsourcing will probably help fill this void as it becomes more and more an integral part of the way that woodshops work in the near future.
The pandemic and the shortages it caused are affecting how governments handle tariffs and trade wars. Expect an ongoing easing of import duties, especially with lumber and plywood from Canada and China, if demand remains high. For now, lead times are still expanding. That has become painfully obvious of late, especially to smaller shops. Larger outsourcing suppliers are in a much better position to predict when materials will be available, and also to bargain with manufacturers and brokers on both schedules and prices. One problem with building in-house right now is that if the pallet of plywood doesn’t arrive, the customers subs may not wait around for the woodshop. Buying from a trusted supplier who gives a delivery date or at least a trustworthy estimate can help a cabinet shop to schedule installations when the plumber and electrician are still around.
What to watch for
Woodshops aren’t the only businesses riding rough waters right now. Some of those outsourcing suppliers are having hiccups of their own, and a few have already folded. Those were the ones without enough resources to ride out the pandemic. Be careful when establishing a relationship with an outsourcing supplier and make sure that the company has a sound reputation and a long history. One tip-off for trouble is if they ask for full payment up front when that wasn’t their pre-pandemic policy. They may be short of cash. A woodshop owner may also want to check with his/her bank regarding the use of credit cards to pay for orders rather than using debit cards or checks. The former can sometimes offer a degree of protection if a payment is made but the order never arrives, while there is little recourse for a cash transaction that goes bad.
Read the contract. Of late, many larger corporations have changed the boilerplate in their paperwork, which usually isn’t on paper anymore. It’s a virtual document that can be easy to dismiss, and in doing so a shop may be giving up any recourse that it has in certain situations. These will most likely include delays or cost increases beyond the control of the factory. The new provisions are often logical and not designed to be nefarious in any way, but they may cost a small shop a big job. A woodworker who takes the time to read and understand any new provisions related to the supply chain or unanticipated price hikes can explain those impacts to the client before the job is sold. It might be a good idea to check with a lawyer on some wording on the woodshop’s client contract, so that both parties are well informed and in full agreement up front.
Manage the cashflow. Keep in mind that the outsourcing supplier will want to be paid in full on delivery, but the client won’t be settling the bill until after the installation. A small shop that takes on several jobs using outsourced cabinets or parts can find itself in trouble in these strange days. Just like woodshops, some house builders are having problems keeping subs onsite and buying materials, so they may not be ready for the installation when the cabinet shop is. If several jobs are delayed, that can put a real crimp in a cabinetmaker’s wallet.
Control the conversation. Have one person in the woodshop handle all communications with the outsourcing supplier on each job. If a single project manager is handling the purchase, he/she will be more likely to avoid any duplication, reduce communication errors, and increase both accountability and accuracy. On the other hand, it’s absolutely critical that more than one member of the team knows how to place orders properly. If someone becomes ill, or needs to quarantine, or finds another job there has to be an alternate in place to keep things rolling. Right now, the pace of business can be too fast to train or learn new skills. Familiarity with the system means that nuances such as discounts or fast service can continue uninterrupted, especially if the person one is dealing with on the other end (in the factory) goes missing, too, even temporarily.
Mind what’s being bought. Just because a factory can supply copper range hoods or frameless cabinets doesn’t mean the woodshop has the expertise on staff to install them, especially if the products or the employees are new to the shop. Experienced shops will selectively offer the outsourcing catalog to their customers, eliminating some lines of product or at least adding a surcharge and a waiver if the client insists on purchasing something unfamiliar. You can always give a discount or a refund if things go well, but it’s nice to be covered if they don’t.
Keep the client informed. It’s okay to let a customer know that some parts are being made in a reputable factory with excellent quality control, rather than being handmade one at a time in-house. The client deserves the courtesy of disclosure. The cabinetmaker still plays a vital role, especially if some of the job is indeed being built in the shop, and always when it comes to measuring, ordering and installing the casework. The woodshop’s tasks may also include carefully removing an existing kitchen and disposing of it; working with other subs on utilities, countertops and flooring; coordinating with the contractor and dealing with building inspectors or damaged parts. Those are valuable skills.
Be open to design concepts. One of the great advantages of pairing up with an outsourcing supplier is that their catalog can become the shop’s catalog. Big outfits pay a lot of attention to design trends, and they usually know where the market is headed. Woodworkers can sometimes get caught up in familiarity – they’ve been building face framed natural wood cabinets for thirty years and it can be hard to switch to paint or foil. The toughest thing to learn is that ultimately, we’re here to make the client happy when it comes to style and finish. We must get our joy from a job well done, even if it’s a job that we’d never install in our own home.
There was a plague in London in 1665 that killed a hundred thousand people. At the time, folks were fond of saying that ‘adversity makes strange bed-fellows’, which often described acts of cooperation and kindness that ultimately helped many more survive. Custom woodworkers and cabinet factories might seem at first glance to be unlikely partners, but they have been fostering a mutually beneficial symbiosis for many years. Now in a new time of adversity, their relationship and reliance on each other will, in all likelihood, continue to mature.
This article was originally published in the June 2021 issue.