1

 The information and analysis provided in this report are for the purpose of this report only. 

Nothing in this report should be construed to indicate how the Commission would find in an

investigation conducted under statutory authority covering the same or similar subject matter.

i

PREFACE

In 1991, the United States International Trade Commission initiated its current Industry and

Trade Summary series of informational reports on the thousands of products imported into

and exported from the United States. Each summary addresses a different commodity/

industry area and contains information on product uses, U.S. and foreign producers, and

customs treatment. Also included is an analysis of the basic factors affecting trends in

consumption, production, and trade of the commodity, as well as those bearing on the

competitiveness of U.S. industries in domestic and foreign markets.1

This report on Furniture covers the period 1995 through 1999 and represents one of

approximately 250 to 300 individual reports on a wide range of products. Listed below are

the individual summary reports published to date on the minerals, metals, machinery, and

miscellaneous manufactures sectors.

USITC

publication Publication

number date Title

2426 November 1991 ......... Toys and models

2475 July 1992 .............. Fluorspar and certain other mineral 

 substances

2476 January 1992 ........... Lamps and lighting fittings

2504 November 1992 ......... Ceramic floor and wall tiles

2523 June 1992 .............. Prefabricated buildings

2546 August 1992 ............ Agricultural and horticultural machinery

2570 November 1992 ......... Electric household appliances and 

 certain heating equipment

2587 January 1993 ........... Heavy structural steel shapes

2623 April 1993 ............. Copper

2633 June 1993 .............. Textile machinery and parts

2653 June 1993 .............. Glass containers

2692 November 1993 ......... Refractory ceramic products

2694 November 1993 ......... Flat glass and certain glass products

2706 April 1994 ............. Aluminum

2738 February 1994 .......... Structural ceramic products

2742 March 1994 ............ Fiberglass products

2748 March 1994 ............ Brooms, brushes, and hair-grooming 

 articles

2756 March 1994 ............ Air-conditioning equipment and parts
ii

PREFACE—Continued

USITC

publication Publication

number date Title

2757 March 1994 ............ Builders hardware

2758 March 1994 ............ Semifinished steel

2765 April 1994 ............. Metalworking machine tools and 

accessories

2872 May 1995 .............. Abrasives

2857 May 1995 .............. Industrial food-processing machinery 

 and related equipment

2858 May 1995 .............. Precious metals

2880 June 1995 .............. Stainless steel mill products

3018 March 1997 ............ Gemstones

3161 March 1999 ............ Certain nonferrous metals

3350 September 2000 ......... Grain (Cereals)

3352 September 2000 ......... Edible nuts

3355 September 2000 ......... Newsprint

3373 November 2000 ......... Distilled spirits

3382 January 2001 ........... Furniture and motor vehicle seats
iii

CONTENTS

Page

Preface ............................................................... i

Abstract .............................................................. 1

Introduction ......................................................... 3

U.S. industry profile ............................................... 6

Investment ............................................................... 6

Employment and wages ..................................................... 7

U.S. business failures ...................................................... 8

Household furniture ........................................................ 9

Production technology ................................................... 13

Distribution ........................................................... 13

Environmental and regulatory issues ........................................ 15

Office furniture ........................................................... 15

Production technology ................................................... 18

Distribution ........................................................... 19

Motor vehicle seats ........................................................ 19

Production technology ................................................... 20

U.S. market .......................................................... 22

Consumer characteristics and factors affecting demand ............................. 22

Consumption ............................................................. 23

Production ............................................................... 26

U.S. trade ............................................................. 27

Overview ................................................................ 27

U.S. imports ............................................................. 27

Principal suppliers and import levels ........................................ 27

U.S. trade measures ..................................................... 30

Tariff measures .................................................... 30

Nontariff measures .................................................. 34
iv

CONTENTS—Continued

Page

U.S. trade—Continued

U.S. exports ............................................................. 34

Principal markets and export levels ......................................... 34

Foreign trade measures .................................................. 37

Tariff measures .................................................... 37

Nontariff measures .................................................. 38

Foreign industry profiles ......................................... 38

Canada ................................................................. 39

Mexico ................................................................. 41

Domestic industry ...................................................... 41

Maquiladora industry ................................................... 43

China and other East-Asian producers .......................................... 44

European Union ........................................................... 46

Italy ................................................................ 48

Germany ............................................................. 48

Central and Eastern Europe .................................................. 49

Appendix

A. Explanation of tariff and trade agreement terms ................................... A-1

Figures

1. Furniture and motor vehicle seats: Principal raw materials, producer types, 

 major products, and principal consumers .................................... 4

2. Furniture: U.S. producers’ shipments, imports, and exports, by category,

and share of total furniture in 1999 ......................................... 5

3. Furniture: Share of U.S. consumption, by product category, 1999 ..................... 25

4. Furniture imports: Product mix differs significantly among leading suppliers 

to U.S. market, 1999 .................................................... 29

5. Furniture: Motor vehicle seats and covers dominate U.S. exports to leading

markets in 1999 ........................................................ 36
v

CONTENTS—Continued

Page

Tables

1. Furniture: U.S. direct investment abroad and foreign direct

investment in the United States, 1994-98 ..................................... 7

2. Furniture: Comparison of employment for production workers, by

selected sectors, 1995-99 ................................................. 8

3. Furniture: Comparison of wage rates by selected sectors, 1995-99 ..................... 8

4. Furniture: Comparison of the number of business failures by sector, 1994-97 ............ 9

5. Household furniture: Top U.S. manufacturers, by revenues, 1999 ..................... 10

6. Office furniture: Top North American manufacturers, by revenues, 1999 ................ 16

7. Motor vehicle seats: Leading producers in North America, by revenue, 1998 ............. 21

8. Motor vehicle seats: North American-based joint ventures between U.S. and

foreign manufacturers ................................................... 21

9. Furniture: U.S. producers' shipments, exports of domestic merchandise,

imports for consumption, and apparent consumption, 1995-99 ..................... 24

10. Household furniture: U.S. producers' shipments, exports of domestic

merchandise, imports for consumption, and apparent consumption, 1995-99 ........... 24

11. Office furniture: U.S. producers' shipments, exports of domestic 

merchandise, imports for consumption, and apparent consumption, 1995-99 ........... 25

12. Motor vehicle seats: U.S. producers' shipments, exports of domestic

merchandise, imports for consumption, and apparent consumption, 1995-99 ........... 25

13. U.S. furniture imports: China sets pace for rapid growth among leading

suppliers, 1995-1999 .................................................... 28

14. Furniture: Harmonized Tariff Schedule subheading; description; U.S. col. 1

rate of duty as of Jan. 1, 2000; U.S. exports, 1999; and U.S. imports, 1999 ........... 31

15. U.S. exports of furniture: Canada is the most significant source, 1995-1999 .............. 35

16. Comparison of tariff rates on furniture from the United States, 2000: Harmonized

Tariff Schedule headings 9401,9402, 9403, and 9404 ........................... 38

17. Canadian furniture industry: Employment and exports gains pace market

improvements, 1995-99 .................................................. 40

18. Wood household furniture manufacturers in Mexico: establishments, employment

and average employment per firm, 1997 ...................................... 42

19. Furniture: Mexico’s imports from and exports to the United States, 1996-99 ............. 43

20. Wood and metal furniture: EU shipments, exports of domestic

merchandise, imports for consumption, and apparent consumption, 1994-98 ........... 47

1

 ABSTRACT

This summary addresses trade and industry conditions for the furniture

industry for the period 1995-99.

• Fully assembled mid- to upper-priced household furniture accounts

for the largest portion of the U.S. furniture market. High

transportation costs for such furniture constrain U.S. imports. U.S.

manufacturers are cost efficient producers of top quality household

furniture and are the industry leaders in the production and design

of motor vehicle seats and systems office furniture.

• NAFTA partner trade in motor vehicle seats has increased

significantly because of the integration of the North American

automotive sector, growing investments in auto assembly plants in

the United States and Mexico by Japanese and German producers,

and the introduction of modular assembly for the interiors of

automobiles.

• Furniture manufacturers and their dealer networks have overcome

initial resistence to e-commerce and now embrace that marketing

strategy to avoid losing business to competing virtual retailers.

“Clicks and mortar” are emerging as an internet strategy.

• Canada is the principal source of U.S. imports of furniture, followed

by China, Mexico, Italy, and Taiwan. The bulk of U.S. imports

from China are low- to mid-priced wood household furniture and

parts that can be cost efficiently shipped, especially ready-toassemble (RTA) furniture.

• East Asian producers have opened assembly/production facilities in

the United States for mid-to-upper priced, fully-assembled wood

household furniture. Higher profit margins in this U.S. market

segment are driving this strategy, although the lower-priced segment

remains dominated by imports from East Asian manufacturers.

• Canada’s close proximity to U.S. manufacturing locations makes it

by far the leading foreign market for U.S.-made household and

office furniture. Parts of motor vehicle seats shipped to Canada and

Mexico for assembly into finished seats or seat covers account for

the largest portion of U.S. exports. 

• High transportation costs for fully-assembled furniture greatly

reduces the cost competitiveness of U.S. furniture in other markets.

To service more distant markets, several U.S. producers of office

furniture and a few U.S. household furniture manufacturers have

established fabrication facilities in Europe and Asia.

 

1

 Furniture is defined as moveable, utilitarian articles that are generally placed on the floor

(e.g., sofas, bookcases, desks, chairs, chests, cabinets, and bed frames). For the purposes of tariff

classification, furniture such as motor vehicle seating, is considered movable even if it is

designed for bolting to the floor. See World Customs Organization, Explanatory Notes of the

Harmonized Commodity Description and Coding System, Section XX, Chapter 94--

Miscellaneous Manufactured Articles, Furniture, Volume V, p. 1697. For industry discussion on

pillows, and quilts see USITC, Industry and Trade Summary, Home Textiles, publication 3170,

Mar. 1999.

 

2

 Household furniture accounted for an estimated 52 percent ($38.4 billion) of U.S. producers'

shipments of products in 1999; office furniture accounted for 17 percent ($12.5 billion); and

motor vehicle seats and parts, 10 percent ($7.5 billion). All other types of furniture accounted for

the remaining 21 percent ($15.5 billion) of shipments in 1999. “Other furniture” consists of: (1)

kitchen cabinets; (2) fixtures for restaurants and stores (display cases and booths); (3) fixed

seating for stadiums, and theaters; (4) specialized furniture for laboratories, hospitals, public

buildings, libraries, churches, and schools; and (5) mattresses.

 

3

 The U.S. industries examined in the report are included in the following North American

Industrial Classification System (NAICS) categories: (1) Kitchen Cabinets NAICS Industry No.

3371A; (2) Household furniture, NAICS Industry No. 3371B-3371E ; (3) Institutional Furniture,

NAICS Industry No. 3371F; (4) Office Furniture, NAICS Industry No. 3372 A, 3372C, and

3372D; (5) Automobile Seat Covers, NAICS Industry No. 3363; (6) Mattresses, NAICS No. 3379

(7) Laboratory Furniture and Parts, NAICS Industry No. 3391; and (8) Medical Furniture,

NAICS Industry No. 3391.

 

4

 The American Furniture Manufacturers Association forecasts that the growth in U.S.

shipments of household furniture will be 2.8 percent in 2000, compared with 7.6 percent in 1999.

The Business Furniture Manufacturers Association forecasts office furniture shipments to

increase by 4 percent in 2000, compared with almost no growth in 1999. According to industry

sources, the private sector held back on office furniture purchases until they were certain that

U.S. economic growth would remain strong through 2000.

3

INTRODUCTION

This summary provides information on the U.S. and foreign industries producing furniture,1

U.S. and foreign tariff policies and nontariff measures in effect for these products, and the

U.S. industry's performance in domestic and foreign markets. The report covers the period

1995-99. The principal products covered by this summary are household furniture, office

furniture, and motor vehicle seats.2 Based on U.S. Department of Commerce, Bureau of the

Census data,3 there were more than 19,000 domestic manufacturers of furniture in 1999, with

U.S. producers’ shipments totaling an estimated $74 billion.4

The principal raw materials used to make furniture encompass a diverse range of products,

including fabrics, cushions, plastics, furniture hardware, metal mill shapes, and wood (figure

1). The principal types of lumber used by North American wood furniture manufacturers are

oak, cherry, yellow poplar, maple, and pine. Processes used in the manufacture of furniture

vary widely from customized work requiring skilled workers to mass production performed

by high-speed machines. U.S. producers of furniture consist primarily of:(1) integrated

manufacturers of either household or office furniture; (2) assemblers of pre-cut wood

household or upholstered furniture; (3) niche producers; or (4) automotive seat producers.

5

The United States, the European Union (EU), and the East-Asian countries of China, Taiwan,

Malaysia, and Indonesia were the major world producers and exporters of furniture in 1999.

EU furniture producers operate highly automated plants for ready-to-assemble (RTA)

household furniture; and according to industry sources, certain EU manufacturers have a

worldwide reputation for top quality, fully-assembled household and office furniture. Superior

quality and design have enabled certain Italian household furniture producers (especially those

concentrating on upholstered leather sofas) to compete successfully in world markets. EastAsian producers of RTA furniture are reported by industry sources as effectively competing

with U.S. manufacturers on the basis of having access to a skilled, low-cost labor force, and

steadily improving methods of wood working and finishing. Although Canada and Mexico are

the largest trading partners with the United States, the NAFTA partners are not major world

furniture exporters. A significant portion of U.S. trade with Canada and Mexico involves

integrated North American production of motor vehicle seats.
 

5

 RTA furniture can be assembled and knocked down (i.e. disassembled) any number of times.

As a result, it can be cost effectively shipped by manufacturers. Households that frequently

relocate have often preferred RTA furniture over fully-assembled furniture.

 

6

 USITC staff interviews with various industry sources.

 

7

 The staged elimination of U.S. tariffs on imports of mattresses from Canada under the U.S.-

CFTA was completed on January 1, 1998. 

 

8

 The staged elimination of U.S. tariffs on imports of mattresses from Mexico under NAFTA

will be completed on January 1, 2003.

 

9

 Canada, Hong Kong, Japan, Korea, Norway, Singapore, and Switzerland.

 

10 Given the concentration and limited number of producers in the motor vehicle seat industry

there are no published industry data on (1) U.S. Direct Investment Abroad, (2) U.S. employment,

(3) U.S. wage rates, and (4) U.S. business failures. 

6

International competition in the household furniture industry reportedly is becoming more

intense because: (1) the quality of East-Asian woodworking and finishing is now comparable

to furniture made in the United States and the EU, (2) demand for RTA furniture has

increased in response to design improvements that have made it closer in appearance to

traditional furniture and easy to assemble,5 and (3) reciprocal tariff reductions granted under

bilateral and multilateral trade agreements have reduced importers’ costs.6 Staged elimination

of U.S. tariffs on all furniture, except mattresses imported from Canada under the U.S.-

Canada Free-Trade Agreement, was completed on January 1, 1993.7 One year later, U.S.

tariffs on furniture from Mexico were reduced to zero under the North American Free Trade

Agreement.8 On January 1, 1999, the United States, seven other countries,9 and the EU

reduced their normal trade relations (formerly most-favored-nations) rates of duty on

furniture, except mattresses, to zero under the Uruguay Round of multilateral trade

negotiations.

U.S. INDUSTRY PROFILE

U.S. producers of household furniture, office furniture, and motor vehicle seats and parts10

are the principal focus of this summary. These firms account for the bulk of U.S. shipments

and trade. Firms employing over 200 workers will receive particular attention because they

account for most of the investment, employment, furniture innovation, and improvements in

technology.

Investment

U.S. furniture producers have established a modest number of foreign production facilities in

order to supply their overseas market. U.S. direct investment abroad in furniture and fixtures

during 1994-1998 (latest data available) averaged $1.2 billion annually (table 1). The bulk

of U.S. direct investment abroad was in Canada and the EU. Foreign direct investment in the

United States for furniture was less than half as large during this period. EU and East Asian

furniture manufacturers are believed to account for the bulk of foreign direct investment in the

United States. Klaussner, a German owned household furniture manufacturer located in
 

11 USITC staff interviews with various industry sources.

7

Asheboro, North Carolina, is the fourth largest furniture manufacturer in the United

States. A number of East Asian producers have established assembly operations in the

United States (see “foreign industry profile”).

Table 1

Furniture: U.S. direct investment abroad and foreign direct investment in the United States 

1994-981

(Million dollars)

Investment 1994 1995 1996 1997 1998

U.S. direct investment abroad ............................. 807 805 1,265 1,375 1,696

Capital outflow .................................... 50 101 275 205 329

Income3......................................... 6 29 63 185 265

Foreign direct investment in the United States ................. 290 331 (D) 618 618

Capital inflow ..................................... 68 45 (D) (D) 85

Income3......................................... 66 42 66 57 44

 1 Latest data available.

 2 Parent’s claim on affiliate’s income.

(D) Data that could potentially reveal information on individual companies has been suppressed.

Note.—“Furniture and fixtures” includes the following furniture categories: institutional; hospital; permanent seating

for movie theaters and stadiums; and fixtures such as restaurant booths, retail display cases, board room table. The

product category does not include motor vehicle seats, kitchen cabinets, and mattress.

Source: U.S. Department of Commerce, Economics and Statistics Administration, Bureau of Economic Analysis,

International Data, (1) Foreign Direct Investment in the United States, and (2) U.S. Direct Investment Abroad,

Industry Detail for Position, Capital Flow and Income, 1994-98, found at Internet address http://www.bea.doc,

retrieved June 7, 2000.

Employment and Wages

The rate of growth in employment in the furniture and fixture sector was significantly stronger

than that for all manufacturing during 1995-99 (table 2). Employment growth was strongest

in the office furniture industry because efforts to automate peaked in the mid-1990s, and

employment recovered during 1997-99. The modest growth in employment for the household

furniture industry during 1995-99 was due in part to increasing levels of productivity. The

automation of wood household furniture production has been prompted, in part, by intensified

international competition.11

Average hourly wages for production workers in the U.S. furniture and fixtures industry rose

by 14 percent during 1995-99, to $11.23 (table 3). These wage increases exceeded that for

production workers in all U.S. manufacturing, which rose by 12 percent. Higher wages for

household and office furniture employees reflect increasingly automated furniture production

that requires a more highly skilled labor force.
 

12 Dunn and Bradstreet, Business Failure Record, found at Internet address

www.dnbeconomics.com, retrieved June 14, 2000. 

8

Table 2

Furniture: Comparison of employment for production workers, by selected sectors, 1995-99

Industry 1995 1996 1997 1998 1999

Change, 1999

from 1995

))))))))))))))))1,000 employees )))))))))))))) Percent

Total private sector .................. 80,125 82,092 84,529 86,805 88,911 11

All manufacturing .................... 12,826 12,776 12,907 12,952 12,739 -1

Furniture and fixtures ................. 403 398 407 425 437 8

Household furniture .................. 234 231 234 239 247 6

Office furniture ...................... 47 46 48 52 54 15

All other ........................... 122 121 124 130 134 10

 

1

 Less that 0.5 percent.

Note.—“Furniture and fixtures” includes the following furniture categories: household, office, institutional; hospital;

permanent seating for movie theaters and stadiums; and fixtures such as restaurant booths, retail display cases,

board room tables. The product category does not include motor vehicle seats, kitchen cabinets, and mattresses.

Source: Bureau of Labor Statistics, Nonfarm Payroll Statistics, National Employment, Hours, and Earnings, found

at Internet address http://www.bls.gov/blshome.html, “selective access series,” retrieved June 14, 2000.

Table 3

Furniture: Comparison of hourly wage rates by selected sectors, 1995-99

Industry 1995 1996 1997 1998 1999

Change, 1999

from 1995 

)))))))))))))))))))))) dollars ))))))))))))))))))))) Percent

Total private sector ............... 11.43 11.81 12.28 12.77 13.24 16

All manufacturing ................. 12.37 12.77 13.17 13.49 13.91 12

Furniture and fixtures .............. 9.82 10.15 10.55 10.89 11.23 14

Household furniture ............... 9.29 9.60 9.96 10.28 10.68 15

Office furniture ................... 10.53 10.98 11.63 11.80 11.88 13

Source: Bureau of Labor Statistics, Current Labor Force, Employment and Earnings Statistics, found at Internet

address http://www.bls.gov/blshome.html, “selective access series,” employment and unemployment, Nonfarm

payroll statistics, by industry, average hourly wage rates of production or nonsupervisory workers, retrieved

May 5, 2000. 

U.S. Business Failures

Despite improvement in recent years, the furniture industry has a relatively high number of

business failures. According to a Dunn and Bradstreet survey of 20 manufacturing sectors,

the furniture industry experienced the fourth highest number of business failures (table 4)

during 1994-97 (latest data available).12 The apparel and other textile products sector was the

only consumer products industry with a higher number of business failures during the same

period. Most furniture producers are modest-sized operations employing less than 20
 

13 USITC staff interviews with various industry sources.

9

period. Most furniture producers are modest-sized operations employing less than 20

persons. These firms generally serve local markets and are more vulnerable to adverse

regional economic trends. Growing market dominance by large furniture retailers makes it

difficult for small firms to remain competitive because they often do not have the financial

resources to broaden their product lines or produce in the volumes required by major retailers

that supply markets nationwide.13

The number of business failures in furniture manufacturing peaked in 1992 at 398, coinciding

with declining growth during 1989-92. Such business failures have declined considerably

since economic recovery during 1994-97, as strong U.S. demand for furniture paralleled the

sustained growth of the U.S. economy. The reduced level of business failures during this

period for furniture wholesale or retail operations followed the pattern for furniture

manufacturing.

Table 4

Furniture: Comparison of the number of business failures by selected sectors, 1994-97

Industry 1994 1995 1996 1997

All manufacturing ......................................... 4,652 4,385 4,093 4,207

Furniture:

 Manufacturing ......................................... 253 229 184 163

 Wholesale ............................................ 286 208 179 170

 Retail ............................................... 2,058 1,547 1,470 1,432

 Total ............................................. 2,597 1,984 1,833 1,765

Source: Dunn and Bradstreet, Business Failure Record, Internet address http://www.dnbeconomics.com, retrieved

June 14, 2000. 

Household Furniture

Household furniture is divided into three principal categories: (1) case goods, which include

fully assembled wood furniture such as dining room tables and chairs, chests of drawers, and

china cabinets; (2) RTA furniture which is designed to be assembled by the consumer,

including book cases, home entertainment centers, computer stands, and other home office

furniture; and (3) upholstered furniture such as sofas, chairs, and motion furniture/recliners.

The top 10 U.S. manufacturers of household furniture ranked by revenues accounted for about

36 percent of total household furniture revenues in 1999; combined, the top 25 manufacturers

accounted for about 48 percent of such revenues in the same year (table 5). The remaining

portion of furniture revenues were accounted for by an estimated 4,000 firms. These firms

supply small but profitable market niches that major household furniture manufacturers

bypass because product volumes are too low to justify changing production lines. For the

same reasons, firms serving small niches are likely to face modest foreign competition.

Examples of these market niches are region-specific styles of furniture such as
10

Table 5

Household Furniture: Top U.S. manufacturers, by revenues, 1999 

Type and

Manufacturer and country of Revenues Foreign Operations 

U.S. headquarters ownership 1999 Divisions Location Type of arrangement1

Millions

dollars

Furniture Brands Public 2,088 Broyhill, Lane, and Canada Independent sales agent

 International United Thomasville EU Independent sales agent

 (St. Louis, MO) States Saudi Arabia Independent sales agent

La-Z-Boy Inc. Public 2,064 Centurion, Corsair, Canada Subsidiary

(Monroe, MI) United Hammary, Kincaid, Germany Licensee

States La-Z-Boy Canada, UK Licensee

 Sam Moore Furniture, Japan Licensee

 La-Z-Boy Residential, New Zealand Licensee

 American Drew, Thailand Joint venture

 American of Martinsville,

 Barclay, Clayton Marcus,

 Lea Inds, Pennsylvania

 House, and Pilliod

LifeStyle Public 1,830 Beacon Hill, BenchCraft, Canada Subsidiary

 International, Ltd. United Berkline,Drexel Heritage EU Subsidiary

 (High Point, NC) States Lexington, LifeStyle Hong Kong Subsidiary

 Contract Furnishings, Malaysia Subsidiary

 Maitland-Smith, The Taiwan Subsidiary

 Robert Allen Group, Indonesia Subsidiary

 Sunbury, Herendon China Subsidiary

 LaBarge, and Philippines Subsidiary

 Universal Thailand Joint venture

Klaussner Private 935 JDI, Klaussner-California, Mexico Independent sales agent

(Asheboro, NC) Germany Paoli and Realistic,

 Stylecraft, Klaussner

 International, Sentry,

 Bruce Furniture

Ashley Furniture Private 816 Ashley and Millennium Canada Independent sales agent

 Industries Inc. United Mexico Independent sales agent

 (Arcadia, WI) States

Ethan Allen Private 688 Ethan Allen, Knob Creek Canada Independent sales agent

(Danbury, CT) United Japan Independent sales agent

States Jordan Independent sales agent

Saudi Arabia Independent sales agent

Sauder Woodworking Private 550 None No foreign None

(Archbold, OH) United operations

States

Bush Furniture Public 412 Fournier Furniture Germany Subsidiary

(Jamestown, NY) United

States

See footnote at end of table.
 

14 USITC staff interviews with various industry sources.

 

15 Household furniture manufacturers also account for close to half of U.S. production of wood

kitchen cabinets. The remaining production is accounted for by firms that primarily manufacture

cabinets.

11

Table 5—Continued

Household Furniture: Top U.S. manufacturers, by revenues, 1999 

Type and

Manufacturer and Country of Revenues Foreign Operations 

U.S. headquarters ownership 1999 Divisions Location Type of arrangement1

Millions

dollars

O’Sullivan Public 407 None No foreign None

Winchester, VA United operations

States

Bassett Furniture Public 397 Bassett Furniture Regional sales None

 Industries Inc. United Industries Inc. of agents

(Bassett, VA) States North Carolina, and

 E.B. Malone

 1 Subsidiary and licensee arrangements are generally for production operations.

Source: Furniture Today, May 8, 2000, p. 21, and telephone contacts in 1999 with officials of the above companies.

(1) Santa Fe, which is a style of furniture influenced by both the Spanish hacienda and native

American culture; (2) Shaker, a simple style of furniture with its roots in the Shaker religion

and culture; and (3) Modern, which has its origin in the art movement of the same name.14

Two of the top 10 producers have located their corporate headquarters in North Carolina due

to various economic advantages. North Carolina has been a focal point for household furniture

production since the mid-1900s because of access in the State to lower cost labor relative to

the North East and Great Lakes regions, abundant hardwood forests, and proximity to Eastern

markets. However, because of the size of its market, California is the leading site for furniture

production facilities. In terms of manufacturing facilities, North Carolina and California

combined accounted for roughly one-third of all household furniture establishments in 1999.

The leading household furniture manufacturers concentrate their production on high quality,

fully- assembled, traditional furniture of wood (English colonial) that appeals to a broad range

of mid-to-upper income North American consumers.15 This production strategy enables these

manufacturers to maintain the volumes necessary for cost efficient semi-automated production

(see following section on production technology). The lower unit costs provided by automation

enable U.S. producers to compete more effectively with imports from Canada, Mexico, East

Asia, and the EU.
 

16 USITC staff interviews with a number of RTA firms including Sauder Woodworking,

O’Sullivan, and Bush, the three major U.S. producers of RTA furniture. Sauder is also a leading

supplier of RTA wood furniture for use in home offices.

 

17 Furniture Brands International formerly did business as Interco.

 

18 Divested operations include Highland House, Action Inds., Hickory Chair, Hickory

Business Furniture, Pearson, Venture, Royal Development, Action Industries, and Ridgewood.

 

19 Former subsidiaries included Ametex, Baldwin Brass, Frederick Edward, Hickorycraft,

IntroEurope, Marboro, Marge, Marvel, and Son & Crocker.

 

20 Mann, Armistead & Epperson Ltd. (Richmond VA), “Special Report No. 3–Consolidation"

(Jan. 1999), p. 16.

 

21 All but two (Sauder Woodworking and O’Sullivan) of the top household furniture

manufacturers located in the United States have foreign operations. A significant portion of

shipments by Sauder Woodworking and O’Sullivan is accounted for by RTA furniture.

Transportation costs for such furniture is much lower than that for fully-assembled furniture,

making direct exports price competitive with regionally-produced furniture. 

12

U.S. producers of RTA furniture compete with foreign manufacturers by providing a highly

functional and competitively-priced product.16 The ability of U.S. producers to respond more

quickly than foreign producers to the just-in-time inventory requirements demanded by U.S.

distributors also is a significant competitive advantage because RTA furniture is generally

sold by low-cost, high-volume firms (e.g., Ikea and Home Depot). These firms cut sales costs

by maintaining low inventories. U.S.-made RTA furniture is offered in a variety of solid

woods or artificial wood grain surfaces made from medium density fiber board and covered

with high-pressure laminates, whereas products offered by RTA furniture manufacturers in

East Asia are generally made from rubber wood. U.S.-made RTA furniture of artificial wood

grain surfaces competes with RTA furniture made in East Asia on the basis of price, while

U.S.-made RTA furniture of solid wood is considered of higher quality.

During 1995-99, several top manufacturers of household furniture (see table 5) underwent

restructuring as companies sought to redefine their core businesses and divest themselves of

operations that were unprofitable. For example, Furniture Brands International17 acquired

Thomasville, the sixth largest U.S. manufacturer in December 1995. Over the next two years,

Furniture Brands International consolidated all of its divisions into either Broyhill, or Lane

and Thomasville.18 Another leading company, Lifestyle International, was created in August

1996, when Masco sold its Home Furnishings Division to a group of private investors led by

Citicorp. Lifestyle consolidated the number of its subsidiaries from 20 to 12 during 1995-98.19

Other major household furniture companies involved in mergers or acquisitions during 1997-

99 included Bush, Rowe, Century, La-Z-Boy, and Klaussner.20

Most of the top U.S. household furniture producers have foreign operations, typically located

in Canada or East Asia.21 U.S. subsidiary or licensee operations in East Asia principally

manufacture RTA furniture for export to the United States, while those in Canada primarily

assemble or manufacture furniture for the Canadian market. U.S. operations in the EU are

generally local companies that assemble furniture from U.S.- and locally-made components

for the EU market.
 

22 For a discussion of furniture production processes and EPA environmental requirements see

“Profile of Wood Furniture and Fixtures Industries,” found at Internet address 

http://es.epa.gov/oeca/sector/index.htm/#wood.

 

23 Bassett Furniture officials interviewed by USITC staff, Oct. 1998 and Feb. 2000.

 

24 Gallery networks are often dedicated to a single manufacturer's merchandise (e.g., Ethan

Allen Galleries and La-Z-Boy Showcase Shoppes). Specialty stores focus on specific product

categories, styles, or market segments (for example, Pier 1 Imports and Ikea). Full-line furniture

(continued...)

13

Production Technology22

Despite the broader application of numerically-controlled machinery noted below that

facilitates new furniture designs, U.S. production of fully assembled wood household furniture

remains moderately labor intensive compared with other types of manufacturing operations.

Wood is cut, carved, and sanded into furniture components (table tops, legs, and seats) and

subsequently assembled using glue, nails, and bolts. The fully assembled furniture is then

finished. The finishing processes consists of spraying, drying, waxing, staining, and buffing

the wood furniture. Upholstered furniture construction requires building a wood frame and

attaching springs and padding to the frame. Fabric is then cut and sewn, along with zippers

and buttons, to make slip covers for the seat and cushions. The labor skills involved in the

production of wood and upholstered household furniture include skilled (upholstering and

wood carving), moderately skilled (sanding, assembly, and spray finishing), and entry-level

(packaging, and loading). 

Technological improvements in methods of production have principally been concentrated in

computer-numerically-controlled (CNC) wood working machinery. CNC equipment allows

operators to input complex, sequential commands to a computer which instructs the

production machinery on how to cut, rout, carve, or sand different furniture parts. Before the

introduction of CNC machinery, production line changes had to be made by hand. Increased

automation allows U.S. producers to lower their manufacturing costs because production lines

can be retooled more quickly and less expensively.

Bassett Furniture’s introduction of the highly successful "American Journey" furniture line

in the mid-1990s provides an example of how CNC machinery can greatly assist in the

creation of a new furniture line. The design of American Journey furniture originated in a

variety of architectural solutions (the door of the china cabinet was modeled after a front door

used in a 19th century home in Georgia, the latch was copied from those used on wrought iron

gates). According to Bassett officials, the ability to achieve such new designs with costefficient retooling of production lines using CNC equipment enabled the company to venture

from the traditional English colonial furniture styles that dominate U.S. showrooms. At

present, Bassett is focusing its investments on significantly improving the durability of wood

finishes.23

Distribution

Household furniture is typically distributed through three retail channels: (1) gallery

networks, (2) specialty stores, and (3) full-line furniture stores.24 Household furniture
 

24 (...continued)

stores are independently owned, represent a number of different furniture producers, and sell a

full line of furniture products (e.g., Levitz and Marlo).

 

25 Staff interview with Dr. Stefan Wille, Aktrin-Furniture Information Center, Oakville, ON,

Sept. 1999.

 

26 Neuborne, “The Net is Knocking”.

 

27 Staff interview with Dr. Stefan Wille, Aktrin Furniture Information Center, Quebec,

Canada, (aktrin@aktrin.com), Jan. 27, 2000.

 

28 Ellen Neuborne, “The Net is Knocking Furniture Sellers Out of Their Rockers,”

Businessweek Online: Business Week ebiz, found at Internet address

http://www.businessweek.com/cgi-bin/ebiz/ebiz, retrieved Jan. 27, 1999.

 

29 Ibid.

14

producers also sell directly to contract markets such as hotels, hospitals, and universities. The

contract market and the consumer market differ in that contract buyers place much larger

orders, and the furniture is more durable than that manufactured for residential use. For

example, hotel furniture is typically finished with high pressure laminates which resist

staining. These laminates last longer than the high gloss wood veneers that are used for

residential furniture.

Furniture distribution is expected to become more efficient with the increasing use of

electronic data interchange (EDI), video/computer catalogs, and the Internet. EDI systems,

for example, electronically link retailers to the account receivables of their manufacturers,

enabling electronic transactions and shipment verification to be completed in less than one

day. In contrast, it often takes 2 weeks to complete a comparable paper transaction. EDI also

reduces costly paperwork and overhead billing expenses. Video catalogs give a visual

presentation of how different pieces of furniture may best fit into a room setting. Access to

these catalogs is mostly limited to in-store use. EDI and video catalogs are currently being

adapted to a web format.

Most furniture manufacturers were initially opposed to marketing over the Internet because

it competed with established retail relationships.25 However, market forces have driven

manufacturers to establish websites in order to avoid losing business to competing virtual

retailers. Ethan Allen Interior encourages the use of e-commerce by their gallery owners.

Resistance from Ethan Allen’s independent licensees is mitigated by allocating licensees a

portion of the profit of each online sale.26

The Internet is expected to become a significant channel of distribution for furniture.27

Analysts predict that about 9 percent of household goods (including furniture) will be sold

online by 2003, up from less than two percent in 1999.28 Furniture purchases are particularly

well suited to e-commerce because the Internet reduces the amount of time and confusion

associated with viewing showrooms, comparing prices, and selecting fabrics.29, At present

there are three major e-commerce sites: (1) GoodHome.com, (2) HomePortfolio.com, and (3)

E-mattress.com. The market was re-aligned when Living.com, and Furniture.com filed for

Chapter 7 bankruptcy liquidation in 2000.
 

30 Consumer Product Safety Commission, “Flame Retardant Chemicals That May Be Suitable

for Use in Upholstered Furniture,” Notice of public hearing May 5-6, 1998, Federal Register:

Mar. 17, 1998 (Volume 63, Number 51), pp. 13017-13019.

 

31 Consumer Product Safety Commission, “Safety Standard for Bunk Beds-Final Rule,”

Federal Register: Dec. 22, 1999 (Volume 64, Number 245), pp. 71887-71915, 16 CFR Parts

1213, 1500, and 1513.

 

32 USITC staff interview with Andy Counts, Vice President of Environmental and Technical

Affairs, American Furniture Manufacturers, Sept. 2000.

 

33 Office furniture includes desks, seating, bookcases, files, partitions, shelving, storage racks,

and commercial fixtures, such as bank counters, retail display shelves, and reception areas.

15

Environmental and Regulatory Issues

The Consumer Product Safety Commission (CPSC) is in the process of issuing a flammability

rule specifically for the fabrics used in upholstered furniture. The rule will be issued after

scientists can evaluate the toxicity of the fire-retardant chemicals that would be used and the

adequacy of smoke detectors in providing early warnings on house fires.30 The industry has

focused on reducing the risk of upholstery fires from both small open flames (candles, lighters,

and matches) and cigarette ignition, and has complied with fabric safety standards issued by

the American Society for Testing and Materials. The CPSC has also recently issued a safety

standard to prevent infants from becoming entangled in the rails of children’s bunk beds. The

proposal requires that the gap between the top edge of the mattress and the lowest bed rail,

and the gap between consecutive bed rails, be no more than 3.5 inches.31 The furniture

industry had initiated voluntary standards for bunk beds and supports the CPSC efforts to

improve product safety.32

Office Furniture33

Steelcase, Herman Miller, and HON industries, the three largest manufacturers accounted for

more than 50 percent of U.S. office furniture production in 1999 (table 6). Large producers

dominate the market because the ability to compete in the office furniture industry is

characterized by the achievement of significant economies of scale.

According to industry officials, price is the principal factor of competition in the office

furniture industry as the product lines offered by different producers are fairly homogenous

because of the conservative design influences affecting the market. Fewer styles allow longer

production runs than can be achieved by producers of household furniture. In addition, office

furniture is made of materials (metal or plastics) that lend themselves to automated

production. These economies of scale conditions limit market entry and strongly favor firms

with access to significant amounts of investment capital.
16

Table 6

Office furniture: Top North American manufacturers, by revenues, 1999

Type/ Foreign Operations 

Manufacturer and country of Revenues Type of

U.S. headquarters ownership 1999 Divisions Location arrangement1

Million

dollars

Steelcase, Inc. Public/ 3,300 Brayton International,Inc., Canada Subsidiary

(Grand Rapids, MI) United Design Tex Fabrics, Inc., Mexico Subsidiary

States Office Details, Inc., Brazil Subsidiary

 Metropolitan Furniture Germany Subsidiary

 Corporation, Revest, Inc., France Joint venture

 Turnstone, Inc., Vecta United Kingdom Subsidiary

 Division, Wigand Portugal Subsidiary

 Corporation, Steelcase Spain Subsidiary

 Strafor S.A Morocco Subsidiary

Saudi Arabia Joint venture

Thailand Licensee

Herman Miller Inc. Public/ 1,800 Miller SQA, Cortz, Canada Subsidiary

(Zeeland, MI) United Meridan, Milcare, Miltech United Kingdom Subsidiary

States France Subsidiary

Netherlands Subsidiary

Germany Subsidiary

Japan Subsidiary

Australia Subsidiary

Mexico Subsidiary

HON Industries Public/ 1,790 Gunlocke Company, Canada Subsidiary

(Muscatine, IA) United Hon Export, Ltd., BPI, Inc. Mexico Subsidiary

States (including Panel Concepts)

 Hearth Technologies, Inc.

 Holga, Inc., The Hon

 Company (including Allsteel

 and Bevis)

Haworth, Inc. Private/ 1,580 Comforto, Ordo SA, Castelli, Canada Subsidiary

(Holland, MI) United Mobilier Int’l, Cortal, Germany Subsidiary

States Seldex Italy Subsidiary

France Subsidiary

Portugal Subsidiary

Thailand Joint venture

Japan Licensee

Australia Subsidiary

Malaysia Subsidiary

Hong Kong Subsidiary

China Subsidiary

Singapore Subsidiary

Brazil Subsidiary

Taiwan Joint venture

See footnote at end of table.
17

Table 6–Continued

Office furniture: Top North American manufacturers, by revenues, 1999

Type/ Foreign Operations 

Manufacturer and Country of Revenues Type of

U.S. headquarters ownership in 1999 Divisions Location arrangement1

Million

dollars

Knoll Group Public/ 960 Knoll Studio, Knoll Textiles, Italy Subsidiary

(East Greenville, PA) United Knoll Extra, Spinneybeck Japan Licensee &

States Joint venture

Argentina Licensee

Colombia Licensee

Global Group Private/ 850 Snyder, Forminco, Global Canada Subsidiary

(Downsview, Ontario) Canada Contract, Leif Jacobsen, United Kingdom Subsidiary

 Global Industries France Subsidiary

Australia Subsidiary

Brazil Joint venture

Malaysia Subsidiary

Israel Subsidiary

Kimball International Public/ 771 Kimball Office Furniture, United Kingdom Subsidiary

(Jasper, IN) United National Office Furniture,

States Harpers, Inc.

Teknion, Corp. Public/ 629 None Malaysia Subsidiary

Downsview, ONT Canada United States Subsidiary

KI (Kruegar Int’l) Private/ 600 None Canada Subsidiary

(Green Bay, WI) United EU Subsidiary

States

Virco Manufacturing, Public/ 267 None Mexico Subsidiary

 Inc. United Mexico Agent

(Torrence, CA) States S. America Agent

Australia Agent

New Zealand Agent

Australia Agent

 1 Subsidiary and licensee arrangements are generally for production operations.

Source: “The Contract Furniture Industry: the Big Get Bigger,” Wood & Wood Products, May 2000, p. 47; and

telephone contacts in 1999 with officials of above companies.
 

34 Vicky Jarrett, “E-Commerce Panel: Proactive Strategy Key to Winning on Web,” SoHo

Today, Special Supplement to Furniture Today, Nov. 1999, p.14.

 

35 “From Manufacturing to the Supply Chain,” Modern Materials Handling, vol. 54, No. 13

(Nov. 1999), p. W12.

 

36 A number of companies have minimized the number of variables that have to be inputted

into their MRP system by manufacturing only to order and using just-in-time inventory

procedures.

18

Office furniture producers must also be able to support nationwide service operations. Strong

service operations are reported by trade sources to be a significant competitive factor because

reliable delivery dates, repairs, product modifications, and timely installation are crucial to

meeting client needs. Major office furniture producers concentrate their production in the midto upper-priced modular systems furniture. However, a number of major manufacturers

(Steelcase, Haworth, Kimball, and Geiger) have formally entered the home office market.

Rising costs for office space and corporate downsizing, along with the development of

computer technology for the Internet and telecommuting, have fueled the steady growth of the

home office market, which is expected to exceed $4 billion in the year 2000.34

All of the top 10 manufacturers have established foreign operations, primarily to reduce

transportation costs and delivery times, and to direct effective marketing strategies. Most of

these foreign operations are located in countries with well developed markets for office

furniture, such as the EU and Canada. The principal foreign suppliers of office furniture in

the U.S. market are manufacturers located in Canada, some of which are U.S. subsidiary

operations.

Steelcase, Herman Miller, Haworth, the Global Group, and Teknion have operations in Asia

to both supply the Asian market from a regional manufacturing base and produce such labor

intensive products as seating. Steelcase expanded its foreign operations in the East Asian

market in 1994 through a licensing agreement with Modernform Group Company Ltd., a

leading furniture manufacturer in Thailand. Under terms of the agreement, products such as

seating, desks, and panels produced by Steelcase USA and Steelcase Strafor EU will be

manufactured in Thailand. The Steelcase/Modernform venture expects to export to Japan and

eventually to the rest of Southeast Asia.

Production Technology

Production technology for office furniture has focused on lowering manufacturing costs.

Lower production costs have been achieved with investments in Materials Resource Planning

(MRP), Flexible Manufacturing Systems (FMS), and CNC Equipment.35 MRP is a software

program that forecasts the effects of changes in production planning variables (such as

product design, inventory, and new orders) on a company's production planning (materials

input and labor, for example).36 An FMS enables producers to efficiently adjust their

production line to these variables through the use of CNC machine tools served by automated

material handling devices all linked to and controlled by a central computer.

The layout of an FMS production line allows parts to take a variety of paths, enabling the

system to accommodate different variations and lot sizes of the product without retooling,
 

37 Firms operating in each of these channels of distribution have established websites on the

Internet (see section on household furniture distribution for a more detailed discussion of the

Internet).

 

38 See World Customs Organization, Explanatory Notes of the Harmonized Commodity

Description and Coding System, Section XX, Chapter 94--Miscellaneous Manufactured Articles,

Furniture, Volume V, p. 1697.

 

39 Telephone interviews with industry officials of Lear, Magna, and Johnson Controls, May

(continued...)

19

as compared with the traditional forms of automation where parts follow a fixed path through

the production line. Since the production machinery and material handling devices are

computer controlled and reprogrammable, set-up costs are significantly reduced.

Production technology has also assisted in the cost efficient development of ergonomic

furniture. Computer-aided design and manufacturing (CAD/CAM) allow manufacturers to

provide a highly- contoured and adjustable product. Ergonomic furniture has a more complex

design than traditional office furniture because it must be contoured to provide more body

support and adjust to different users.

Distribution

The principal channels of distribution for office furniture are dealerships, wholesalers,

catalogs, and discount office-furniture outlets. Dealerships serve large corporations,

institutions, and federal, state, and local governments. These end users require a high level of

customer service as furniture purchased by these organizations must be installed and/or

modified to fit varying office spaces. Dealers generally represent one manufacturer.

Wholesalers often serve as middle men for discount outlets and catalog operations.37

Discount office furniture outlets are one of the fastest growing channels of distribution. They

primarily serve such budget conscious markets as medium and small-sized businesses and

home offices. Growth in these segments has been fueled by corporate and government

downsizing and the concurrent strong growth in new businesses.

Motor Vehicle Seats

Although automobile seat companies do not make other types of furniture and are not

considered part of the traditional furniture industry, by international agreement (Customs

Cooperation Council), seats used in vehicles (including cars, buses, trucks, airplanes, boats,

and trains) are classified as furniture for the purposes of trade statistics.38 As such, automobile

seats accounted for the greatest share of U.S. exports of furniture in 1999, and were the

second largest product category for imports. The cross-border integration of North American

vehicle manufacturing, and continued investment in U.S. assembly plants by Japanese and

German vehicle producers accounted for the vast majority of trade in automobile seats.

The seat-producing units of the motor vehicles industry’s Big Three have been spun off to

form independent companies that are able to introduce changes in product design, engineering,

and manufacturing methods more quickly than companies whose principal focus is vehicle

assembly.39 Two manufacturers, Johnson Controls and Lear Seating (a division of Lear
 

39 (...continued)

1999. Firms that make automobile seats generally make other types of auto parts as well.

 

40 Based on USITC staff telephone interviews with company officials at Johnson Controls,

Lear Seating, Magna, Findley, Seton Leather, and TS Tech, Nov. 1999. 

 

41 Canadian-owned Magna International purchased Douglas Lomason, the fourth-largest U.S.

motor-vehicle seat manufacturer, in Oct. 1996. For a complete listing of U.S.- and foreign-based

motor-vehicle, seat manufacturers operating in the United States, see “25th Annual Source

Guide,” Automobile Industry, June 1999, p. 79.

 

42 Joseph Pryweller, “Prince Automotive Offering One-Piece Interior Module,” Automotive

News, Jan. 12, 1998, p. 26VVVV.

20

Corporation), reportedly accounted for over one-half of North American automobile seat

production in 1999 (table 7).40 Magna International (Magna) is the third largest North

American manufacturer. All of the leading U.S. producers of automobile seats have assembly

plants in Canada and Mexico.41 Plants in the United States and Canada tend to assemble

relatively sophisticated, motorized seats for vehicles assembled by all North American trade

partners. Plants in Mexico assemble both finished seats and seat covers. The seat covers alone

reportedly account for close to one-half of the total cost of producing a finished seat,

attributable to labor-intensive sewing operations. Seat covers sewn in Mexico are shipped to

seat assembly plants in the United States and Canada or are used in the assembly of finished

seats in Mexico. The finished seats are, in turn, shipped to automobile assembly plants in the

United States and Canada or incorporated into vehicles assembled in Mexico.

Several Japanese producers have formed joint ventures with U.S. producers to assemble seats

in the United States, using a combination of imported and domestically-produced components

(table 8). These joint ventures supply seats to U.S. manufacturing subsidiaries of Japanese

auto companies. Major Japanese automobile seat manufacturers include Tachi-S Company,

Ikeda Bussan, and NHK Spring. 

U.S. automobile seat producers contract out the production of key components and

subassemblies, such as motors, metal frames, reclining mechanisms, foam cushioning, and

seat covers. Seat assembly is typically completed near the automobile assembly facilities.

Assembly involves attaching a foam seat cushion to a metal frame; the seat cover is then

placed over the seat assembly. Materials for the seat covers are cut by automated lasercutters. In contrast, the sewing machines used to stitch the covers are operated by hand.

Completed automobile seats are typically delivered to vehicle assembly operations on a justin-time (JIT) delivery schedule. 

Production Technology

Currently, automobile seats are one of a series of independent installations for a vehicle’s

interior. Industry analysts predict that over the next five years, automobile interior

installations will be consolidated from dozens of individual installations to six integrated

“modular assemblies” that mesh together as one piece.42 The likely six integrated assemblies

are (1) front bucket seats, (2) rear bench seat, (3) dash, (4) door panels, (5) headliner, and (6)

trunk liner. The electrical work for the six components will be completed before final
21

Table 7

Motor vehicle seats: Leading producers in North America, by revenue, 1998

Company Ownership

Revenues

(million

dollars) Foreign assembly locations

Principal

customers

Johnson Controls

(Milwaukee, WI)

Public 1[ ] Canada Belgium

Mexico France

Brazil Germany

Australia Italy

South Africa Netherlands

Portugal

Spain

United Kingdom

Czech Republic

General Motors

Ford

DaimlerChrysler AG

BMW

Mercedes-Benz

Volkswagen

Honda

Nissan 

Toyota

Lear

(South Field, MI)

Private 1[ ] Canada Austria

Mexico Belgium

Argentina France

Brazil Germany

Venezuela Italy

Turkey Portugal

Russia Spain

China Sweden

Thailand United Kingdom

India Czech Republic

Australia Hungary

South Africa Poland

DaimlerChrysler AG

Ford

General Motors

BMW

Fiat

Volkswagen/Audi

Volvo

Mazda

Magna

International

(Aurora, ON)

Private 1[ ] EU

United States

Mexico

Brazil

Korea

China

DaimlerChrysler AG

Ford

General Motors

VW Group

BMW/Rover

Mercedes

 

1

 Confidential data.

Source: USITC staff telephone interviews with industry representatives, Nov. 1999.

Table 8

Motor vehicle seats: North American-based joint ventures between U.S. and foreign

manufacturers

Company Foreign partner Location Operation

Johnson Controls

(Milwaukee, WI)

Tachi-S, Co. (Japan)

 -Technotrim, Inc.

 -Hyperion, Co., Setex, Inc. 

Recaro (German)

United States

United States

Mexico

United States

Seat covers

Seats

Seats

Seat covers

Lear Seating

(South Field, MI)

NHK Spring (Japan) Canada

United States

Seats

Seats

Magna International

(Aurora, ON)

Grammar (German) Canada

EU

Seats

Seats

Source: USITC staff telephone interviews with industry representatives, Nov. 1999.
 

43 Ibid.

 

44 Staff interview with various industry officials.

 

45 Joe Logan, Director of Financial and Economic Research, American Furniture

Manufacturers Association, more broadly identifies the significant indicators of demand for

household furniture as gross domestic product; unemployment rate; personal disposable income;

interest rates as measured by Moody’s AAA Corporate Bond Rate, and the 6- month Commercial

Paper Rate, and housing (measured by residential construction, housing starts, and housing

resales). Interview by USITC staff, Oct. 1999.

 

46 Consumer confidence in future earnings is a function of employment rates, growth in

personal disposable incomes, and strength of the economy. Competing expenses are costs

incurred for housing, transportation, medical treatment, and education.

22

installation. Integrated interior installations by independent contractors would enable the Big

3 automakers to focus attention on vehicle assembly and contracting operations. Industry

analysts report that this is part of an ongoing trend that has led to greater specialization of

motor vehicle production. The trend began in the 1980s and has continually narrowed the

manufacturing role of the Big 3 automakers. One source notes that “studies have shown that

integrated units developed by suppliers can yield a 10 percent weight reduction, use 20 percent

fewer parts, lessen warranty costs by as much as 55 percent, and offer double digit cost

savings.”43

Industry sources predict that major motor-vehicle seat manufacturers, including Lear, Johnson

Controls, and Magna will contract out increasing shares of their seat production to companies

that specialize in seat component manufacture, enabling these firms to place added focus on

the research, design, and quality control programs needed to develop car interior modules that

combine “in-sync” parts made by a variety of companies.44 Specific changes in motor-vehicle

seat design have centered on enhanced comfort for the driver and passenger, improved safety,

and reduced production costs. “Smart” airbags are being designed to respond to sensors that

determine the position and weight of the occupant. Other technical advances being sought are

improved thermal attributes for seat cushions. Foam, the current universal seat padding, is

cold in the winter and stores heat in the summer. Seat producers also are conducting biomechanical research to discover what causes leg stiffness, back aches, and fatigue associated

with long distance driving.

U.S. MARKET

Consumer Characteristics and Factors Affecting Demand

Heads of households account for the bulk of household furniture purchases, with age a

particularly important indicator for furniture consumers because it marks the life stages that

trigger furniture purchases: having children, buying homes, and increased earnings.45

Consumer purchases of household furniture are determined by expectations of future earnings

and competing expenses.46
 

47 According to Tom Reardon, Executive Director, Business and Institutional Furniture

Manufacturers Association, significant indicators of growth reported in data published by the

Department of Commerce are: (1) nonresidential fixed investment, (2) office building

construction, (3) nonresidential structure investment, (4) corporate cash flow, (5) white collar

employment, and (6) office vacancy rates. Interview by USITC staff, Nov. 5, 1999.

 

48 Gregory L. White and Sholnn Freeman, “New-Car Sales Remained Strong in March,” Wall

Street Journal, Apr. 4, 2000, found at Internet address http://library.northnlight.com, retrieved

Aug. 14, 2000.

 

49 United Nations data provide that totaled world imports of furniture and selected furnishing

(SITC 82) were $49 billion in 1998 (latest data available), with the United States accounting for

an estimated one-fifth of world imports of furniture.

 

50 The trends in U.S. imports of “all other furniture” are consistent with those for household

and office furniture. Other furniture are items that cannot be classified in a specific category and 

(continued...)

23

The major consumers of office furniture are corporations, small businesses, and federal, state,

and local governments. Private sector purchases of office furniture are primarily influenced

by economic growth and the creation of new businesses.47 Public sector demand is a function

of levels of government spending and services.

Demand for motor vehicle seats is linked to motor vehicle sales, which in the United States

are dominated by cyclical macroeconomic trends in the U.S. economy. Auto sales are highly

representative of the health of the U.S. economy and are considered to be an important leading

economic indicator. Typically, sales downturns follow several years of sales growth although

low rates of unemployment, higher incomes, and discounts on many automobiles have

encouraged sustained demand for motor vehicles and subsequently motor vehicle seats during

1995-99.48

Consumption

The United States was one of the world’s largest markets for furniture and selected

furnishings in 1999.49 U.S. consumption of furniture (including motor vehicles seats) rose by

$24.7 billion during 1995-99, to $85.3 billion or at an average annual rate of 9 percent (table

9). Household furniture accounted for the bulk of U.S. consumption in 1999 (tables 10-12),

followed by office furniture (figure 3). The average annual rate of increase in consumption

for the major product categories during 1995-1999 was 14 percent for motor vehicle seats to

$8.6 billion; and 9 percent for both household and office furniture, which rose to $46.7 billion

and $14.0 billion, respectively. 

Although the ratio of imports to consumption for all furniture rose from 13 percent in 1995

to 19 percent in 1999, domestic shipments continued to supply most of the U.S. furniture

market. The increased share of consumption garnered by imports, although largely attributable

to trends in household and office furniture, also reflects the cross-border integration of motor

vehicle seat production in North America.50 However, the much larger value of imports
 

50 (...continued)

are purchased to complement office or household furniture. Examples of “other” furniture

include end tables, book cases, and book stands.

 

51 USITC staff interviews with various industry sources.

24

of household furniture dominates the increased market penetration by imports. Canadian

furniture producers have become more competitive in these two U.S. markets. East Asian

household furniture producers, particularly China, expanded their U.S. market share by

significantly improving the quality of their woodworking and finishing operations.51

Table 9

Furniture:1 U.S. producers’ shipments, exports of domestic merchandise, imports for

consumption, and apparent consumption, 1995-99 

Year

Producers’

shipments Exports Imports

Apparent

consumption

Ratio of

imports to

consumption

 ))))))))))))))))))))))))))) Million dollars ))))))))))))))))))))))))))) 

Percent

1995 ............... 55,700 3,223 8,174 60,651 13

1996 ............... 57,900 3,440 9,234 63,694 14

1997 ............... 62,550 4,063 10,930 69,417 16

1998 ............... 68,250 4,514 13,026 76,762 17

1999 ............... 74,000 4,475 15,799 85,324 19

 1 Furniture primarily includes: household, office, institutional, and hospital furniture; furniture fixtures such as

retail display cases, kitchen cabinets, restaurant booths, and stadium and theater seating; motor vehicle seats

such as automotive and airplane seats; and mattresses.

Source: Compiled by the Commission from official statistics of the U.S. Department of Commerce.

Table 10

Household furniture: U.S. producers’ shipments, exports of domestic merchandise, 

imports for consumption, and apparent consumption 1995-99

Year

Producers’

shipments Exports Imports

Apparent

consumption

Ratio of

imports to

consumption

 ))))))))))))))))))))))))) Million dollars ))))))))))))))))))))))) 

Percent

1995 ................... 29,250 561 4,604 33,293 14

1996 ................... 30,140 597 5,180 34,723 15

1997 ................... 31,730 696 6,141 37,175 17

1998 ................... 34,700 773 7,347 41,274 17

1999 ................... 38,400 782 9,128 46,746 20

Source: Compiled by the Commission from official statistics of the U.S. Department of Commerce.
25

Table 11

Office furniture: U.S. producers’ shipments, exports of domestic merchandise,

imports for consumption, and apparent consumption, 1995-99

Year

Producers’

shipments Exports Imports

Apparent

consumption

Ratio of

imports to

consumption

 ))))))))))))))))))))))))) Million dollars )))))))))))))))))))))) 

Percent

1995 .................. 9,435 357 893 9,971 9

1996 .................. 10,040 371 1,084 10,753 10

1997 .................. 11,460 461 1,380 12,379 11

1998 .................. 12,350 512 1,652 13,490 12

1999 .................. 12,500 506 1,956 13,950 14

Source: Compiled by the Commission from official statistics of the U.S. Department of Commerce.

Table 12

Motor vehicle seats: U.S. producers' shipments, exports of domestic merchandise, imports for

consumption, and apparent consumption, 1995-99

Year

Producers’

shipments Exports Imports

Apparent

consumption

Ratio of

imports to

consumption

 )))))))))))))))))))))) Million dollars ))))))))))))))))))))))) 

Percent

1995 ..................... 4,700 1,097 1,724 5,007 34

1996 ..................... 4,900 1,203 1,946 5,383 36

1997 ..................... 5,862 1,452 2,185 6,173 35

1998 ..................... 6,540 1,748 2,451 6,883 36

1999 ..................... 7,520 1,711 2,772 8,581 32

Source: Compiled by the Commission from official statistics of the U.S. Department of Commerce.
 

52 For more detailed information on the use of production sharing in the North American

motor-vehicle seat industry, see U.S. International Trade Commission, Production Sharing: Use

of U.S. Components and Materials in Foreign Assembly Operations 1995-1998, USITC

publication 3265, Dec. 1999.

 

53 USITC staff interviews with industry officials at Lear Seating, Johnson Controls, and

Magna International.

 

54 Automotive News, Market Data Book–1998 Data on Disc, Front Seat Installations.

 

55 Transplant automakers in North America and U.S.-foreign joint ventures include

AutoAliance (Ford and Mazda), BMW, CAMI (GM and Suzuki), Honda DaimlerChrysler,

Mitsubishi (makes Chrysler vehicles), Nissan, NUMMI (GM and Toyota), Subaru-Isuzu, Toyota,

VW (Mexico), Volvo (Canada), and Nissan-Renault (Mexico).

26

Motor vehicle seats accounted for the highest ratio of imports to consumption (32 percent)

during 1995-99, reflecting rationalization of production and the integration of the North

American motor vehicle industry.52 Trade with Canada and Mexico accounted for 87 percent

of U.S. exports of motor vehicle seats and parts in 1999 and 91 percent of U.S. imports of

such seating. North American trade consists of: (1) U.S. exports of parts of motor vehicle

seats to affiliated seat assembly plants in Canada and Mexico; (2) exports of finished seats

to DaimlerChrysler AG, Ford, and General Motors vehicle assembly plants in Canada and

Mexico; (3) imports of seat covers from affiliated sewing operations in Mexico; and (4)

imports of finished seats from assembly plants in Canada and Mexico that are affiliated with

U.S. seat producers.53

Production

U.S. producers’ shipments of furniture rose at an average annual rate of 7 percent during

1995-99, to $74.0 billion. Household and office furniture accounted for the bulk of the growth

in production. U.S. shipments of both household and office furniture grew at an average

annual rate of 7 percent during 1995-99 to $38.4 billion and $12.5 billion, respectively.

U.S. producers’ shipments of motor vehicle seats increased at an average annual rate of 14

percent during 1995-99 to $7.5 billion. GM, Ford, and DaimlerChrysler AG accounted for

77 percent of the North American-built cars and trucks that had front seat installations in

1998.54 U.S.-based subsidiaries of Honda and Toyota accounted for 5 percent and 4 percent,

respectively, of all such seat installations in 1998.55 Lear supplied seating to all of the Big

Three car manufacturers, the U.S. subsidiaries of Mitsubishi and Subaru, and the U.S.-

Japanese joint ventures of CAMI and AutoAlliance. Johnson Controls supplied the Big Three,

the U.S. operations of Nissan, Toyota, and Honda, and the U.S.-Japanese joint venture

NUMMI.
 

56 According to United Nations trade data, the United States accounted for an estimated 28

percent of world imports of furniture in 1998 (latest data available), followed by the EU with an

estimated 16 percent. Found at Internet address http://dataweb.usitc.gov, retrieved May 1, 2000.

 

57 The U.S. real gross domestic product (GDP) rose by slightly over 4 percent in both 1998

and 1999. By comparison, the real GDP in Japan declined by 2.5 percent in 1998 and rose by just

0.3 percent in 1999. Growth in the real GDP in European Union was 2.7 percent in 1998 and 2.3

percent in 1999. International Monetary Fund (IMF), World Economic Outlook 2000,

(Washington, DC: IMF, Apr. 2000), p.10, found at Internet address http://www.imf.org, retrieved

Apr. 18, 2000.

27

U.S. TRADE

Overview

The United States had a significant deficit with all of its leading trade partners (Canada,

China, Mexico, Italy, and Taiwan) in the furniture sector during 1995-99. Demand for

imported furniture is stronger and more sustained in the United States than in other

industrialized countries,56 reflecting higher growth rates in the U.S. economy.57 Although U.S.

firms are considered to be efficient, competitively-priced producers of high quality furniture,

transportation costs of exporting such fully assembled furniture has limited U.S. producers’

success in foreign markets. As a result, leading U.S. household or office furniture producers,

as well as U.S. producers of kitchen cabinets and mattresses, tend to supply non-NAFTA

markets from regional manufacturing bases instead of exporting from the United States. 

U.S. furniture exports consist mostly of fully-assembled household furniture shipped to

Canada, and motor-vehicle seat parts supplied to assembly plants in Canada and Mexico.

Imports, however, chiefly consist of: (1) fully-assembled wood household furniture from

Canada (where producers benefit from proximity and relatively inexpensive lumber resources

in both Canada and the United States); (2) wood household furniture and rattan furniture from

countries in East Asia with related natural resources and low labor costs; (3) motor-vehicle

seats from U.S.-owned assembly plants in Canada and Mexico; and (4) top-quality, fashionoriented furniture from Italy. The U.S. merchandise trade deficit in furniture more than

doubled during 1995-1999 from $5.0 billion to $11.3 billion. During this period, Canada,

China, and Mexico accounted for the most significant expansions in the deficit.

U.S. Imports

Principal Suppliers and Import Levels

U.S. imports of all types of furniture rose at an average annual rate of 18 percent during

1995-99 to $15.8 billion (table 13). Canada was the leading source of U.S. imports in 1999

(27 percent of the total), followed by China (19 percent) and Mexico (18 percent).

Collectively, the East Asian countries of Taiwan, Malaysia, Indonesia, the Philippines, and
28

Thailand accounted for another 16 percent of U.S. imports. China has been the fastest

growing principal source of U.S. furniture imports, increasing slightly more than two-fold

during 1995-99. Italy was the leading European source of U.S. imports (7 percent).

The product mix supplied by Canada, Mexico, China, and Italy differed significantly in 1999

(figure 4). U.S. imports from Canada were fairly evenly split among household, office, and

motor-vehicle furniture, whereas those from Mexico were principally motor-vehicle seats.

U.S. imports from China were mostly of household furniture. Principal product categories of

U.S. imports from China were RTA furniture and moderately-sized, fully-assembled

household furniture (e.g., dinette sets, occasional furniture–secretaries, end tables, coffee

tables) that can be cost-efficiently shipped because it is compact. High-quality wood and

upholstered household furniture accounted for the bulk of imports from Italy.

U.S. imports of household furniture grew at an average annual rate of 19 percent during 1995-

99, to $9.1 billion, while imports of office furniture rose at an average annual rate of 22

percent to $2.0 billion. U.S. imports of motor vehicle seats and parts increased at an average

annual rate of 13 percent to $2.8 billion, as both importers and U.S. producers benefitted from

the expansion in the U.S. economy.

Table 13

U.S. furniture imports: China sets pace for rapid growth among leading suppliers, 1995-99

Country 1995 1996 1997 1998 1999 Change 1999 from

1995

)))))))))))))))))Million dollars ))))))))))))))) Absolute Percent

Canada .......... 2,398 2,871 3,422 3,951 4,306 1,908 80

China ............ 739 957 1,398 2,018 3,022 2,283 309

Mexico ........... 1,168 1,490 1,864 2,239 2,882 1,714 147

Italy ............. 634 678 769 898 1,078 444 70

Taiwan .......... 1,054 973 932 975 1,020 -34 -3

Malaysia ......... 326 396 414 406 469 143 44

Indonesia ......... 229 236 280 346 436 207 90

United Kingdom .... 146 167 204 276 331 185 127

Philippines ........ 167 169 197 227 263 96 57

Thailand ......... 173 174 179 211 267 94 54

All other .......... 1,140 1,123 1,271 1,479 1,725 585 51

 Total ........... 8,174 9,234 10,930 13,026 15,799 7,625 93

Source: Compiled by the Commission from official statistics provided by the U.S. Department of Commerce.
29

China and Canada were the principal sources of U.S. imports of household furniture during

1995-99, as China’s shipments to the United States nearly quadrupled during 1995-99 (from

$553 million to $2.1 billion) while such trade with Canada more than doubled (rising by $860

million to $1.5 billion). Industry sources state that the sharp import increase from China

reflects the growing acceptance in the U.S. market of RTA furniture and successful efforts

in China to improve the quality of its manufacturers’ products. Imports from other suppliers

also exhibited strong growth during 1995-99 as imports rose steadily from Italy, Mexico,

Malaysia, and Indonesia. Taiwan was the only significant supplier of household furniture to

experience reduced U.S. imports during 1995-99, which fell by $94 million
 

58 See appendix E for relevant pages of the President's Memorandum of December 23, 1994--

Acceptance of the WTO Agreement.

 

59 To qualify for duty-free entry under the NAFTA, articles of furniture must meet one of four

tests: furniture must (1) be wholly produced in the NAFTA territory, (2) be produced entirely

from North American originating materials, (3) be produced from non-originating material but

having gone through a manufacturing process that gave it a qualifying change in tariff

classification, or (4) contain the required regional value-content share.

30

(13 percent) to $627 million. Taiwan’s share of U.S. imports of household furniture also fell

from 17 percent in 1995 to 8 percent in 1999. Rising labor costs in Taiwan have resulted in

furniture producers in Taiwan becoming less cost-competitive with producers in China.

Taiwan’s furniture producers have relocated a significant portion of their furniture operations

to China.

Canada maintained its dominance among foreign suppliers of office furniture, accounting for

55 percent ($1.1 billion) of total U.S. imports in 1999. China and Taiwan were the next

largest sources of imports, respectively accounting for $229 million and $129 million in 1999.

U.S. imports from Canada were principally of systems furniture, and fully-assembled office

furniture such as executive desks, file cabinets, and meeting tables. The production of systems

office furniture is highly automated, thereby minimizing the labor cost advantage of East

Asian producers. High transportation costs for large, fully assembled office furniture provides

Canada with a significant competitive advantage in the U.S. market over more distant

producers in Taiwan and China.

Mexico and Canada accounted for 91 percent of total U.S. imports of motor vehicle seats in

1999. All U.S. seat producers have production/assembly facilities in Canada and Mexico

which rely extensively on U.S. produced parts and materials. Imports of motor vehicle seats

from Mexico rose by $1.0 billion during 1995-99, to $1.8 billion, while imports from Canada

(chiefly motorized seats) fell by 9 percent ($65 million) to $698 million, reflecting the

expanding role of Mexican manufacturers in the labor intensive assembly of motor vehicle

seats.

U.S. Trade Measures

Tariff measures

In the Uruguay Round of multilateral trade negotiations, major trading countries agreed to

reduce the tariffs to zero on most furniture and mattress supports as of January 1, 1999 (table

14). The exceptions are tariffs on certain mattresses, which will be reduced through the year

2004.58 The 2000 column-1 general rate of duty for mattresses ranged from 3 percent to 6

percent. 

All "qualifying" trade in mattresses between the United States, Mexico, and Canada enter

duty-free under NAFTA.59 NAFTA tariffs on cotton futon mattresses from Mexico were 1.8

percent in 2000. Mattresses receive duty-free treatment under the United States-Israel Free

Trade Agreement, the Andean Trade Preference Act, and the Caribbean Basin Economic

Recovery Act.
31

Table 14

Furniture: Harmonized Tariff Schedule subheading; description; U.S. col. 1 rate of duty as of 

Jan. 1, 2000; U.S. imports, 1999; and U.S. exports, 1999

Col.-1 rate of U.S. U.S.

HTS duty Jan. 1, 2000 imports, exports,

subheading Description General Special1 1999 1999

)))Thousand dollars )))

9401.10.40 Leather upholstered aircraft seats ....... Free 65,409 106,143

9401.10.80 Aircraft seats other than leather

upholstered ...................... Free 186,997 70,762

9401.20.00 Seats for motor vehicles .............. Free 159,996 155,857

9401.30.40 Swivel seats with variable height

adjustment with wooden frames ...... Free 26,157 3,075

9401.30.80 Swivel seats with variable height 

adjustment with frames not of wood ... Free 467,513 59,504

9401.40.00 Seats other than garden seats or 

camping equipment, convertible

 into beds ....................... Free 69,195 12,955

9401.50.00 Seats of cane, osier, bamboo or 

similar materials .................. Free 82,439 2,413

9401.61.20 Upholstered chairs with teak frames ..... Free 8,192 5,621

9401.61.40 Upholstered chairs with frames

 not of teak ...................... Free 347,186 74,685

9401.61.60 Upholstered seating with wood frames, 

except chairs ..................... Free 604,635 113,046

9401.69.20 Bent wood seats without upholstery ..... Free 13,657 777

9401.69.40 Teak chairs without upholstery ......... Free 32,990 137

9401.69.60 Chairs, without upholstery, with 

wooden frames, other than of

bent wood or teak ................. Free 583,288 4,421

9401.69.80 Seats without upholstery, with wooden

 frames, other than chairs and seats

 of bent wood .................... Free 112,394 17,577

9401.71.00 Upholstered seats with metal frame ..... Free 368,049 43,887

9401.79.00 Seats with metal frames without 

upholstery ....................... Free 728,049 35,217

9401.80.20 Seats of reinforced or laminated 

plastics ......................... Free 18,509 1,330

See footnote at end of table.
32

Table 14—Continued

Furniture: Harmonized Tariff Schedule subheading; description; U.S. col. 1 rate of duty as of 

Jan. 1, 2000; U.S. imports, 1999; and U.S. exports, 1999

Col.-1 rate of U.S. U.S.

HTS duty as of Jan. 1, 2000 imports exports

subheading Description General Special1 1999 1999

)))Thousand dollars )))

9401.80.40 Seats of rubber, unreinforced plastics,

 or unlaminated plastics ............. Free 115,088 35,457

9401.80.60 Seats not of wood, metal, rubber,

plastics, cane, osier, or bamboo ...... Free 27,768 7,535

9401.90.10 Parts of seats for motor vehicles ........ Free 2,588,274 1,818,302

9401.90.15 Parts of bent-wood seats ............. Free 2,936 2,016

9401.90.25 Seat parts of seats cane, osier, 

bamboo or similar material .......... Free 8,007 6,049

9401.90.35 Seat parts of rubber or plastics ......... Free 64,247 32,259

9401.90.40 Seat parts of wood .................. Free 101,198 36,291

9401.90.50 Seat parts not of bent-wood; cane;

osier; bamboo; rubber; plastics;

or wood ......................... Free 365,853 137,100

9402.10.00 Dentists', barbers' or similar chairs

and parts thereof .................. Free 35,124 42,430

9402.90.00 Medical, surgical, dental or

veterinary furniture; other than 

dentists', barbers', or similar

 chairs and parts thereof ............ Free 82,341 191,863

9403.10.00 Metal furniture of a kind used in

offices, other than seats ............ Free 462,204 243,307

9403.20.00 Metal furniture other than seats 

and office furniture ................ Free 1,474,851 472,585

9403.30.40 Bent-wood office furniture, other

than seats ....................... Free 2,504 798

9403.30.80 Wood office furniture, other than 

bent-wood and seats ............... Free 547,156 79,019

9403.40.40 Bent-wood kitchen furniture, other 

than seats ....................... Free 2,071 244

9403.40.60 Wood kitchen furniture for use in 

motor vehicles, other than seats ...... Free 133 731

9403.40.90 Wood kitchen furniture, other than

bent-wood, motor vehicle,

and seats ....................... Free 528,817 48,763

See footnote at end of table.
33

Table 14—Continued

Furniture: Harmonized Tariff Schedule subheading; description; U.S. col. 1 rate of duty as of 

Jan. 1, 2000; U.S. imports, 1999; and U.S. exports, 1999

Col. 1 rate of U.S. U.S.

HTS duty as of Jan. 1, 2000 imports exports

subheading Description General Special1 1999 1999

))))Thousand dollars )))))

9403.50.40 Bent-wood bedroom furniture, other 

than seats ....................... Free 3,784 1,061

9403.50.60 Wood bedroom furniture for use in

motor vehicles, other than seats ...... Free 81 1,161

9403.50.90 Wood bedroom furniture excluding 

bent-wood, motor vehicle,

and seats ....................... Free 1,186,802 103,975

9403.60.40 Bent-wood furniture other than 

office, kitchen, bedroom, or seats ..... Free 6,107 3,757

9403.60.80 Wood furniture other than office,

kitchen, bedroom, seating 

or bent-wood ..................... Free 2,751,858 371,910

9403.70.40 Reinforced or laminated plastics

furniture other than seats ........... Free 49,478 10,466

9403.70.80 Plastic furniture except seats, other

than of reinforced or

laminated plastics ................. Free 170,911 84,685

9403.80.30 Furniture of cane, osier, bamboo

or similar material, other than seats ... Free 118,421 44,218

9403.80.60 Furniture not of metal, wood,

plastic, cane, osier, bamboo or rattan,

other than seats .................. Free 174,759 27,101

9403.90.10 Parts of furniture of a kind used in

motor vehicles, other than seat parts . . Free `23,318 8,172

9403.90.25 Parts of furniture of cane, osier, bamboo

or similar materials, other than

seat parts ....................... Free 4,019 6,540

9403.90.40 Parts of furniture of reinforced or

laminated plastics, other than seat

parts ........................... Free 14,806 4,786

9403.90.50 Parts of furniture of rubber, or plastics

other than reinforced or

laminated, other than seat parts ...... Free 29,105 19,144

9403.90.60 Parts of furniture of textile material

except cotton, other than seat parts ... Free 14,275 15,260

9403.90.70 Parts of furniture of wood, other

than seat parts ................... Free 478,662 83,017

See footnote at end of table.
 

60 U.S. exports to Canada were estimated to account for 71 percent of world furniture exports

to Canada in 1997 according to U.S. & Foreign Commercial Service and the U.S. Department of

(continued...)

34

Table 14–Continued

Furniture and selected furnishings: Harmonized Tariff Schedule subheading; description; U.S. 

col. 1 rate of duty as of Jan. 1, 2000; U.S. imports, 1999; and U.S. exports, 1999

Col. 1 rate of U.S. U.S.

HTS duty as of Jan. 1, 2000 imports exports

subheading Description General Special1 1999 1999

 ))))Thousand dollars ))))

9403.90.80 Parts of furniture not of cane, osier,

bamboo, rubber, plastics, textile

material (except cotton), or wood,

other than seat parts ............... Free 433,037 196,202

9404.10.00 Mattress supports ................... Free 5,552 9,784

9404.21.00 Mattresses of cellular rubber or

plastics, whether or not covered ...... 3.0% Free (A,CA,E,

 IL,J,MX) 26,643 9,683

9404.29.10 Mattress of cotton ................... 3.0% Free (A+,CA, 7,110 4,900

 E,IL,J) 

2.4% (MX)

9404.29.90 Mattresses not of cellular rubber

or plastics, or cotton ............... 6% Free (A, CA, E, 17,156 19,601

IL, J MX)

 

1

 Programs under which special tariff treatment may be provided, and the corresponding symbols for such programs

as they are indicated in the "special" subcolumns are as follows: Generalized System of Preferences (A); Automotive

Products Trade Act (B); Agreement of Trade in Civil Aircraft (C); United States-Canada free-Trade Agreement (CA);

Caribbean Basin Economic Recovery Act (E); and United States-Israel Free Trade Area (IL); Andean Trade Preference

Act (J); Other goods of Mexico, under the terms of general note 12 (MX).

Source: U.S. exports and imports compiled by the Commission from official statistics of the U.S. Department of

Commerce.

Nontariff measures

No known U.S. nontariff trade measures significantly influence trade in the covered products.

U.S. Exports

Principal Markets and Export Levels

U.S. furniture exports rose at an average annual rate of 9 percent during 1995-99, to

$4.5 billion (table 15). Canada60 accounted for the bulk of U.S. exports of
 

60 (...continued)

State publication, Furniture FY98, http://www.stat-usa.gov/; Globus and NTDB, Best Market

Reports, retrieved June 9, 1998.

 

61 U.S. exports to Mexico accounted for 74 percent of world exports to Mexico in 1998

according to the World Trade Atlas-Mexico, Global Trade Services Inc.

 

62 U.S. furniture exports to Japan were estimated to have accounted for less than 10 percent of

the Japanese import market in 1997 according to U.S. Department of State publication, Furniture

FY98, 1997, Globus and NTDB, SINGAPORE - SURVEY OF THE FURNITURE INDUSTRY -

ISA950701, Market Research Historical Archive found at Internet address

http://www.stat-usa.gov, Mar. 3, 1998.

35

furniture in 1999, followed by Mexico,61 and more distantly by the United Kingdom and

Japan.62

Table 15

U.S. exports of furniture: Canada is the most significant source, 1995-99

Country 1995 1996 1997 1998 1999 Change, 1999 from 1995

))))))))))))Million dollars )))))))))))))) Absolute Percent

Canada ................. 1,453 1,433 1,641 1,829 2,062 609 42

Mexico .................. 551 578 734 970 784 233 42

United Kingdom ........... 98 117 138 176 265 167 170

Japan .................. 223 287 320 345 202 -21 -9

Germany ................ 56 57 73 85 82 26 46

Saudi Arabia ............. 77 72 87 87 72 -5 -6

Netherlands .............. 25 29 31 42 52 27 108

France .................. 37 43 49 51 51 14 38

China ................... 13 20 18 29 48 35 269

Egypt ................... 5 6 10 12 43 38 760

All Other ................ 685 798 962 888 814 129 19

 Total .................. 3,223 3,440 4,063 4,514 4,475 1,252 39

Source: Compile by the Commission from official statistics of the U.S. Department of Commerce.

The product mix of U.S. exports to Canada and Mexico was dominated by motor vehicle

seats, reflecting the highly integrated nature of North American automobile manufacturing

(figure 5). U.S. exports of motor vehicle seats and parts to Mexico are chiefly precut seat

covers of U.S.-origin textile material or leather to be sewn in maquiladora operations, while

exports to Canada typically consist of sewn seat covers and parts for the assembly of top-ofthe-line, electronically-adjustable automobile seats. Leather aircraft seat covers accounted for

the largest share of U.S. exports to the United Kingdom in 1999. Total U.S. exports of motor

vehicle seats rose at an average annual rate of 12 percent during 1995-99, to $1.7 billion.

U.S. household and office furniture exports each grew at an average annual rate of 9 percent

during 1995-99, to $782 million and $506 million respectively. Canada purchased 31 percent

($246 million) of U.S. household furniture exports in 1999 and 33 percent ($155 million) of

U.S. office furniture exports. According to industry sources, Canada is the leading foreign

market for U.S.-made household and office furniture because of proximity, which lowers
36

shipping costs, as well as because of shared tastes in furniture. U.S. furniture is competitively

priced in the Canadian market because U.S. producers operate at higher volumes than

Canadian producers. As a result, U.S. manufacturers are able to pass on greater cost savings

to the consumer. In addition, U.S. producers have established efficient distribution channels

in Canada. The United States' chief competitors in the Canadian market are East Asian

producers of low-cost RTA furniture.
 

63 USITC staff interviews with various industry representatives.

 

64 Certain furniture companies in Eastern Europe designated by their former governments to

produce furniture for the export market have entered joint ventures with a number of EU

furniture firms to produce furniture for export.

 

65 President Clinton raised duties on imports of Mexican broom corn brooms pursuant to

section 203 of the Trade Act of 1974 (19 U.S.C. 2253).

37

Mexico was the fourth largest market for U.S. household furniture exports ($37 million or 5

percent) in 1999 and the second largest office furniture market ($40 million or 18 percent).

As with Canada, low transportation costs enable fully-assembled U.S. household furniture to

be competitive in the Mexican market compared with imports from Asia and Europe.

U.S. household furniture exports to the United Kingdom, the largest EU market for U.S.

exports, totaled $38 million in 1999 while U.S. office furniture exports to the UK amounted

to $30 million. Although office furniture exports to the EU as a whole were $77 million in

1999, U.S. household furniture exports to the EU are comparatively more limited because of

higher transportation costs and cultural preferences for contemporary designs by

manufacturers in Italy, Germany, and Sweden. While many EU consumers of fully-assembled

household furniture prefer the wood finishes offered by U.S. producers (oak, walnut, oak,

beech, and ash), household furniture made in the EU is reportedly considered by industry

sources to be of higher quality and style than that made in the United States.63

The level of transportation cost to the EU market is a key factor in determining principal

sources of EU imports. According to Eurostat data, the United States accounted for only 5

percent ($379 million) of EU furniture imports in 1997 (latest data available). Poland was the

largest source of EU imports in 1997, accounting for 17 percent ($1.2 billion) of the total,

followed by China and Indonesia, each accounting for 8 percent ($515 million). Other leading

sources of EU furniture imports in 1997 (all former Eastern Bloc countries) were the Czech

Republic, 7 percent ($481 million); Slovenia, 5 percent ($372 million); and Romania, 5

percent ($364 million).64

Germany is the largest market for foreign-made furniture, accounting for 43 percent ($2.9

billion) of intra-EU imports in 1997. The United Kingdom was the second largest market in

1997, with 13 percent ($900 million); followed by France, with 11 percent ($742 million).

Foreign Trade Measures

Tariff measures

The Mexican government raised tariffs on a number of products in response to a U.S. trade

action implementing a temporary duty increase on imported broom corn brooms from Mexico,

as set forth in Presidential proclamation dated November 28, 1996.65 Mexican tariffs on U.S.-

made wood furniture were raised from 6.0 percent to 15 percent. Mexico reduced its duty on

wood furniture to free as of January 1, 1999, after the U.S. safeguard action taken in

November 1996 was terminated in late 1998.
 

66 Motor-vehicle seat industries in Canada and Mexico are generally limited to subsidiaries of

U.S. motor vehicle seat and interior manufacturers or are operations that perform contract

assembly for U.S. firms. Japanese motor-vehicle seat manufacturers supply the U.S. market from

joint venture assembly plants in the United States and Mexico. For the most part, motor-vehicle

producers in Japan purchase seat components from independent suppliers in Japan.

 

67 USITC staff interviews with industry sources.

38

In 2000, the principal countries serving as major markets for U.S. exports (Canada, Mexico,

the EU) applied the tariff rates on furniture and selected furnishings shown in table 16. By

comparison, the U.S. duty applied on imported furniture ranged from free to 6.0 percent.

Table 16

Comparison of foreign tariff rates on furniture from the United States, 2000: Harmonized Tariff

Schedule headings 9401, 9402, 9403, and 9404

Percent ad valorem

Medical Furniture except 

furniture seats and medical Mattresses

Country Seats HS 9401 HS 9402 HS 9403 HS 9404

Canada Free Free Free 1.2 - 2.5

Mexico Free Free Free Free - 10.0

European Union Free - 5.6 Free Free - 5.6 3.7

Japan Free - 4.0 Free-1.0 Free 4.2 - 4.6

Source: ITA country desks of the U.S. Department of Commerce.

Nontariff measures

There are no known foreign nontariff trade measures that significantly influence trade in

furniture.

FOREIGN INDUSTRY PROFILES

The key global competitors in the U.S. market include the North American furniture and

automobile seat producers,66 China and other East Asian suppliers of household furniture, the

large furniture producers in the predominantly Northern European countries, Italy, and certain

producers in Central and Eastern Europe. Importantly, East Asian producers have been able

to offset high transportation cost to the U.S. market with lower wage rates and an export

strategy that focuses on furniture and components that can be cost effectively shipped such

as RTA furniture, and compact fully-assembled furniture. Certain East Asian furniture

manufacturers also ship labor-intensive furniture components and parts to the United States

for assembly in U.S. subsidiary operations.

67

Profiles for the major country competitors which follow highlight general characteristics,

economic developments, aspects of industry structure, trends in market segments, and

operating arrangements that are important to understanding foreign producer activity in the

U.S. market.
 

68 The U.S.-CFTA was implemented on Jan.1, 1989.

 

69 National Trade Data Bank, International Trade Administration, Report on CanadaHousehold Furniture , ISA9311, 1994.

 

70 Canadian consumer demand had been weak due to persistently high rates of unemployment

and virtually no growth in Canadian disposable incomes between 1992 and 1996, according to

the Scotiabank, The Bank of Nova Scotia, Global Economic Outlook (Nova Scotia, Canada, Jan.

1997), p.1.

 

71 Michael J. Knell, “Free Trade Puts Canadian Producers in Shape for Global Era,” Furniture

Today, Jan. 5, 1998, p. 29.

 

72 Statistics Canada, Capital and Repair Expenditures, Canada-manufacturing, Sectors 31-33,

Furniture and Related Products, MATROX 11504, industry #D87201, found at Internet address

http://www.statcan.ca, retrieved June 23, 2000.

 

73 Most R&D on the development of materials, machinery, and equipment is done outside

Canada by industry suppliers. The Canadian furniture industry also imports a significant portion

of its material inputs, according to Industry Canada, “Sector Competitiveness Frameworks:

Household Furniture,” (Ottawa, Canada, 1996), p. 2.

 

74 USDOC, The Canadian Furniture Market Overview, May 1999, p. 2, found at Internet

address http://strategis.ic.gc.ca, retrieved Apr. 26, 2000.

39

Canada

Canadian furniture manufacturers have focused their production strategy almost exclusively

on products for the U.S. market, largely encouraged by its proximity, shared infrastructure,

and similar consumer tastes for furniture. Consolidation of the Canadian furniture industry

during the early and mid 1990s has improved production efficiencies enabling Canadian

manufactures to compete more effectively in the U.S. market. The U.S.-Canada Free Trade

Agreement,68 which gradually phased out or eliminated Canadian tariffs that had previously

insulated the industry from U.S. competition, coincided with more than 400 Canadian

furniture manufacturers leaving the industry between 1989 and 1992.69 Several years of weak

Canadian economic growth and consumer demand70 reportedly caused another 259 firms to

exit during 1992-96.71 However, the number of Canadian furniture manufacturing firms

increased steadily during 1996-99 largely attributable to stronger Canadian demand for

furniture owing to an improving Canadian economy.72 Production efficiencies were also

improved by significant increases in Canadian capital expenditures during 1995-98 (latest

data available). Capital expenditures in the furniture industry rose from $128 million in 1995

to $237 million in 1998. Investments have focused on the acquisition of CAD equipment and

CNC machinery in order to achieve higher levels of productivity.73

According to Statistics Canada, the Canadian furniture industry included 1,460 manufacturers

in 1999 with 62,919 employees (table 17). Canadian shipments of furniture rose by $2.1

billion (58 percent) during 1995-99 to $5.7 billion. A significant portion of Canadian furniture

shipments were destined for the U.S. market as Canadian exports of furniture to the United

States rose by $2.0 billion (78 percent) during 1995-99 to $4.5 billion.

The bulk of Canadian furniture manufacturers are located in Ontario and Quebec along the

northeastern border of the United States.74 These border firms have been particularly

successful selling "modified European contemporary" furniture to the U.S. market. Canadian

producers provide this type of furniture at a lower price than their European competitors
 

75 Michael Knell, “Exports Prove Major Factor in Manufacturing Growth,” Furniture Today,

Oct. 2, 1995, p.3.

40

because they have greater access to lumber and significantly lower transportation costs. Dorel

and Palliser, the top-two Canadian furniture manufacturers, indicated that exports to the

United States made up one-half or more of their production.75

Table 17

Canadian furniture industry: Employment and export gains pace market improvements, 1995-99

Indicator 1995 1996 1997 1998 1999

 Change, 1999 from 1995

 Absolute 

Percent

Number of establishments ... 1,200 1,150 1,330 1,410 1,460 260 22

Number of employees ....... 46,028 52,266 58,830 60,463 62,919 16,891 37

Shipments (million dollars) .... 3,643 4,095 4,669 5,209 5,743 2,100 58

Exports (million dollars) ...... 2,524 3,026 3,581 4,134 4,493 1,969 78

Imports (million dollars) ...... 1,900 1,860 2,183 2,426 2,794 894 47

Apparent consumption

 (million dollars) ........... 3,019

 

2,929

 

3,271 3,501 4,044 1,025 34

Trade balance (million dollars) . . 624 1,166 1,398 1,708 1,699 1,075 172

Note.—The market exchange rates (rf) of Canadian dollars per U.S. dollars were: 1995= 1.3724, 

1996 = 1.3635, 1997= 1.3846, 1998 = 1.4835, and 1999 = 1.4857, as provided by the International

Monetary Fund in International Financial Statistics, May 2000.

Source: For employment, shipments, and establishments, Statistics Canada, Furniture and Fixtures 

Industries, found at Internet address http://www.statcan.ca/datawarehouse/cansim.cgi, retrieved

June 6, 2000. For imports and exports, Statistics Canada, Strategis, International Business Opportunities 

Trade and Investment, trade data found at Internet address http://strategis.ic.gc.ca, retrieved

March 13, 2000.

According to Statistics Canada, Canadian shipments of household furniture rose by $709

million (53 percent) during 1995-99 to $2.0 billion (see tabulation).

1995 1996 1997 1998 1999

Canadian household furniture

 shipments (million dollars)

1

.............. 1,335 1,481 1,611 1,785 2,044

1

 Found at Internet address http://www.statcan.ca retrieved June 2, 2000.

Canadian shipments of office furniture doubled during 1995-99 to $1.8 billion (see

tabulation). Canadian producers are export-oriented, shipping well over half of their 1999

domestic production to the United States. The Canadian subsidiaries of U.S. producers

Steelcase and Knoll accounted for a significant portion of Canada’s production of office

furniture.

1995 1996 1997 1998 1999

Canadian office furniture

 shipments (million dollars)

1

............... 938 1,111 1,432 1,647 1,830

1

 Data provided by Statistics Canada, found at Internet address http://www.statcan.ca

retrieved on June 2, 2000.
 

76 Mexico accounts for 1.3 percent of the world's total forest resource. However, Mexico is

exceptionally rich in pines and has 72 species of trees, more than any other country in the world.

The largest areas of temperate-cold forest that account for 90 percent of Mexico's forest

production are in the states of Chihuahua, Durango, Jalisco, Michoacan, Oaxaca, Chiapas, and

Guerrero. Tropical forests are located in the states of Chiapas, Quintana Roo, Yucatan,

Campeche, Tabasco, and Oaxaca. Over 90 percent of all hardwood lumber production is

consumed by Mexico’s furniture manufacturing industry. (Found at Internet address

http://www.vpm.com/wfi/mexico.htm, retrieved June 18, 1998, Document date: 23 June, 1997.)

 

77 Telephone interview with George Fabre, Equipo Muebles, Guadalajara, Mexico, June 1998.

 

78 Reportedly, the last five collections of Rustic furniture introduced at trade shows in Mexico

have been from Indonesia. Brian Carroll, “Next Generation Rustic Expands Reach,” Furniture

Today, July 19, 1999, p. 9.

 

79 Powell Slaughter, “Expo Mueble Keeps Raising the Bar,” Furniture Today-supplement

Latin America, Spring 2000, p. 10.

 

80 USITC staff interview with various industry sources.

41

Mexico

Domestic Industry

The Mexican furniture industry's competitive strength lies in its highly skilled, yet low-cost

labor force, proximity to the United States, and sustained access to domestically milled lumber

suitable for furniture production.76 Mexican producers have a particular comparative

advantage in the U.S. market for fully assembled, rustic-style wood household furniture and

certain upholstered leather furniture.

Rustic furniture is designed as a pre-industrial style, with slightly uneven surfaces, and a

transparent finish that shows the wood grain. This low-cost production strategy specifically

avoids the highly finished and polished segment of the U.S. wood household furniture market

where U.S. producers dominate. In addition, rustic furniture usually consists of large, laborintensive items such as cabinets with drawers, dining room tables with matching chairs, and

storage chests.77 Since these items are costly to ship, furniture producers in Mexico have a

competitive advantage over other foreign producers in the U.S. market. However, the U.S.-

Canadian market for rustic furniture has recently reached volumes that enable low-cost, East

Asian producers, particularly Indonesia, to compete with producers in Mexico.78 In response

to competition from East Asia, furniture producers in Mexico are beginning to shift

production toward mid-priced furniture styles influenced by European designs, such as

contemporary, worked-metal tables, and labor-intensive, hand-carved armoires

(cupboard/wardrobes) that can be used as part of wall systems.79

Upholstered leather furniture manufacturers in Mexico are competitive in the U.S. market

principally because the quality of leather furniture made in Mexico is comparable to that of

some Italian producers despite Mexico’s use of lower technology manufacturing methods.

Moreover, lower cost labor in Mexico allows for more man-hours per product.80

The furniture industry in Mexico is more fragmented than the U.S. industry (table 18). The

average Mexican household furniture firm employed 12 persons in 1997, compared with an
 

81 Major furniture manufacturers in Mexico include: Triplay y Aglomerados de Ocotlan,

Mobel Prince S.A. De C.V., Dixy Homero, Terna Terciopelera Nacional, Devane, Segusion,

Sabone, and Camas Lamas.

 

82 There are an estimated 150 companies in Mexico that manufacture rustic furniture. Of these

firms, more than 30 companies are capable of producing 40,000 rustic furniture pieces per

month. These top 30 companies export to 48 countries. Juan Manuel and Reyes Brambila,

“Market for Rustic Furniture Opens July 24,” Furniture Today/NotiMuebles, July 1997, p. 50.

 

83 Muebles y accesorios de madera, Establecimentos en la Industria Manufacturera,

Bimestres, 1997, Instituto Mexicano del Seguro Social.

42

estimated 45 persons employed by the average U.S. wood household furniture firm (latest data

available). The relatively consolidated group of large Mexican household furniture

manufacturers, those employing an average of 468 persons, are competitive in world markets

for price and quality.81 Mexican household furniture production destined for the United States

generally consists of low- to mid-priced, fully assembled, rustic-style furniture of solid

wood.82 Wood household furniture accounted for over 50 percent of total Mexican furniture

production in 1999. 

Table 18

Wood household furniture manufacturers in Mexico: establishments, employment, and average

employment per firm, 19971

Size Establishments Employment

Average

employment

per firm

Family run ...................................... 5,610 20,896 4

Small .......................................... 750 26,726 35

Medium ........................................ 101 15,773 156

Large .......................................... 35 16,411 468

 Total ....................................... 6,496 79,806 12

 

1Latest data available.

Source: Muebles y accesorios de madera, Establecimentos en la Industria Manufacturera, Bimestres, 1997,

Instituto Mexicano del Seguro Social.

Metal furniture manufacturers accounted for about one-third of furniture production in

Mexico in 1997 (latest data available).83 The bulk of production was accounted for by office

furniture (filing cabinets, desks, and metal frame chairs), metal bed frames, and metal diningroom and patio furniture. As with the household furniture industry, only the largest producers

are competitive in world markets.
 

84 The Maquiladora Program provides duty-free entry of parts into licensed export-oriented

assembly plants in Mexico. Up to 80 percent of a maquiladora’s annual production can be sold to

customers in Mexico, but duty must be paid on parts used to produce furniture for domestic sales.

Beginning on Jan. 1, 2001, components used by the maquiladora industry that are not of North

American origin will be subject to the higher of the U.S. or Mexican duties if the assembled

product is exported to the United States.

 

85 The Program for Temporary Importation of Goods to Produce Exports (PITEX) operates in

nearly identical fashion to the Maquiladora Program. The differences between the two programs

relate to subtle distinctions in Mexico’s tax codes.

43

Maquiladora Industry84

A number of U.S.-owned automobile seat and wood household furniture firms have assembly

operations in Mexico’s maquiladora industry. Most parts and materials imported by these

operations are of U.S. origin, with the bulk of the finished articles subsequently exported to

the United States. The total value of U.S. furniture imports into Mexico from the United

States was $573 million in 1999 (table 19). Motor vehicle seats and parts accounted for

almost one-half of all furniture imports into Mexico that year. Virtually all motor vehicle seats

and parts entered Mexico under the Maquiladora or PITEX programs.85 Other U.S. furniture

imported into Mexico in 1999 consisted mostly of household and office furniture.

Table 19

Furniture: Mexico’s imports from and exports to the United States, 1996-99

Imports from the United States Exports to the United

States

Type of furniture 1996 1997 1998 1999 1996 1997 1998 1999

))))))))))))))))))))))))) Million dollars ))))))))))))))))))))))))))

All furniture:

 Maquiladora and PITEX ................ 240 283 276 306 1,134 1,389 1,525 1,963

 Other .............................. 160 196 230 267 156 243 195 206

 Total ............................. 400 480 506 573 1,289 1,632 1,720 2,169

Motor vehicle seats and parts:

 Maquiladora and PITEX ................ 215 248 234 265 715 852 853 1,211

 Other .............................. 6 8 13 9 20 24 17 16

 Total ............................. 222 257 247 274 735 876 870 1,226

Other furniture:

 Maquiladora and PITEX ................ 25 35 42 41 419 537 672 752

 Other .............................. 154 188 217 258 137 219 179 190

 Total ............................. 178 223 259 299 555 756 850 943

 

1

 Both the Maquiladora Program and the PITEX program allow companies to import components and materials

into Mexico free of duty provided that they are used for the assembly of goods that are exported. Companies

registered under the Maquiladora Program tend to be foreign-owned, whereas companies operating under the

PITEX program are registered as Mexican companies, although many PITEX firms are subsidiaries of foreignowned multinational companies.

Source: CD-ROM: World Trade Atlas: Edition 1996-1999, Preliminary (Columbus, SC), Global Information

Services: (1999). Export data on this disc for Mexico’s PITEX industry are classified under “Definitive exports with

returns” while imports are classified under “temporary imports.” All other trade (not Maquiladora or PITEX) is

classified as “definitive.”
 

86 This estimate includes the seat covers assembled in Mexico that are incorporated in motor

vehicles assembled in Mexico for the U.S. market.

 

87 USITC staff interview with various industry sources.

 

88 Telephone interviews by USITC staff with firms listed in The Complete Twin Plant Guide

(El Paso, Texas: Solunet Publications, 1996), May 1998.

 

89 From official statistics of Mexico’s Department of Commerce and Industrial Development

(SECOFI).

 

90 Furniture produced in East Asia is principally of rubber wood, tropical hardwoods

(mahogany, rosewood, teak), and rattan. Rubber wood comes from trees that were initially grown

for their natural latex sap. Rubber wood became an inexpensive source of lumber when methods

for killing the fungus in such trees was developed in the mid-1970s. Rubber wood can be made to

look like oak or pine. Rattan is the most popular material used in woven furniture. It is derived

from the stems of rattan palms and can only be found in the Asian tropics and subtropics

(primarily Indonesia, Singapore, Vietnam, Malaysia, Thailand, and the Philippines).

 

91 USITC staff interview with various industry sources.

44

Total furniture exports to the United States from Mexico were $2.2 billion in 1999. Motorvehicle seat covers sewn in Mexico by companies operating under the Maquiladora and

PITEX Programs and using U.S. fabrics or leather cut in the United States accounted for

more than one-half of furniture exports from Mexico in 1999.86 The finished seat covers are

shipped directly to the United States or used to cover motor-vehicle seats assembled in

Mexico. The next leading furniture export item, rustic style wood household furniture, is

produced in Mexico without the use of imported parts and materials. 

There were more than 50 U.S. furniture firms assembling wood household furniture in

Mexico’s maquiladora industry in 1999. Another dozen U.S. firms are believed to assemble

furniture in Mexico as a secondary product line. For example, furniture for home

entertainment centers is often assembled by companies that make electronic-related

equipment.87

Most of the U.S.-owned firms assembling household furniture in Mexico’s maquilidora

industry have never manufactured furniture in the United States, although many use U.S.-

made furniture components exclusively in their furniture assembly operations. Assembly in

Mexico enables these firms to compete more effectively with low-cost East Asian producers

in U.S. markets. Most of the furniture assembled in Mexico is destined for California,

Arizona, New Mexico, and Texas.88 In 1998, the total value of shipments of wood household

furniture to the United States from Mexico’s maquiladora operations were an estimated $150

million.89

China and Other East-Asian Producers

East-Asian producers, principally China, Malaysia, Indonesia, Taiwan, and the Philippines,

are major world exporters of furniture to the United States.90 According to industry sources,

furniture firms in East Asia are successful in the U.S. and EU markets because they have

access to low-cost labor, use highly efficient methods of manufacture, and employ effective

marketing strategies.91
 

92 Kristen Hoff, Nona Fisher, Sandra Miller, and Alan Webb, “Sources of Competitiveness for

Secondary Wood Product Firms: A Review of Literature and Research Issues,” Forest Products

Journal, Feb. 1997, vol. 47, pp. 31-37.

 

93 Ibid. 

 

94 USITC staff telephone interview with Gerry Epperson, Partner, Mann, Armistead, and

Epperson, Richmond, VA, Apr. 13, 1998.

 

95 Brian Carroll, “Universal Revamps Structure,” Furniture Today, Nov. 24, 1997, p. 1.

 

96 Ibid.

45

Initially, East Asian exporters focused on producing low- to mid-priced wood furniture

shipped either fully assembled (e.g. compact dinette sets, end tables, or secretaries) or as RTA

(e.g. bookcases or stereo stands) to the U.S. market. Low-cost, East Asian producers

reportedly are successful because U.S. consumers in these markets are more cost-conscious

and appreciate the solid construction of wood household furniture. Low wage rates and the

focus on types of furniture that can be shipped in RTA or knock-down form can, according

to trade sources, offset high transportation costs to the U.S. market.

Several leading East Asian furniture producers have adjusted their manufacturing strategies

to reduce costs and/or cut delivery times. As domestic wages in Taiwan, Korea, and Singapore

began to rise, many furniture producers in these countries shifted their low-cost, laborintensive, export-oriented production to China, Malaysia, Indonesia, Thailand, and the

Philippines in order to remain cost competitive.92 Some East Asian producers, seeking to enter

the U.S. market for fully assembled, mid- to upper-priced furniture established

assembly/manufacturing operations in the United States and retooled Asian facilities to

manufacture mid- to upper-priced wood furniture components suitable for Western markets.93

Examples of Asian companies investing in U.S. assembly facilities include Kiani of Indonesia

and Hyundai of Korea.94

Universal, originally a Singapore-based subsidiary of Hong Kong Teak Works and currently

a division of Lifestyle Furnishings, has three U.S. production facilities.95 One of the facilities

manufactures mid- to upper-priced bedroom furniture. Production is shared between the

United States and East Asia. Highly labor-intensive carved bedposts, table and chair legs, and

drawer fronts are imported into the United States from China. These parts are combined with

flat, capital-intensive furniture components made in highly automated, U.S. production

facilities (bed rails, drawer sides, and tops).96

The number of Asian furniture companies with manufacturing subsidiaries in the United

States is expected to increase over the next several years. Profit margins are higher in the fully

assembled, mid- to upper-priced segment of the U.S. furniture market than they are in market

segments currently dominated by East Asian manufacturers (RTA furniture; and compact,

low- to mid-priced, fully assembled furniture such as dinette sets, stacking chairs, end tables,

and coffee tables). High transportation costs for mid- to upper-priced, fully assembled

furniture (chests of drawers, dining room tables, China cabinets) also provides an incentive

to invest in U.S. production facilities.
 

97 USDA, Foreign Agricultural Service, China; Forest Products Annual Report, p. 10, found

at Internet address http://www.stat-usa.gov, retrieved Apr. 24, 2000.

 

98 USDOC, International Trade Administration, Diane Shen and Merry Cao, China Furniture

Sales, Sept. 1998, p. 3, found at Internet address http://www.stat-usa.gov, retrieved Apr. 24,

2000.

 

99 Brian Carroll, “China Imports Booming,” Furniture Today, Nov. 8, 1999, p.1.

 

100 Tom Edmonds, “Malaysian Manufacturers Come on Strong,” Furniture Today, Mar. 28,

1994, p. 9.

 

101 Ibid.

 

102 The British Antique Furniture Restorer’s Association (BAFRA), The BAFRA Furniture

Report, found at Internet address http://www.bafra.org.uk, retrieved Mar. 1, 2000.

46

According to the China National Furniture Association, the furniture industry in China

consists of over 30,000 furniture manufacturers with an estimated 2 million employees.97 Of

these domestic furniture manufacturers, about 8 percent are foreign-owned firms or joint

ventures.98 The production of these firms is export oriented, much of which is directed towards

the U.S. market. The principal foreign investors in the Chinese furniture industry are from

Hong Kong, Taiwan, and Singapore. Although certain U.S. producers have established

production facilities in China, the majority of U.S. firms sourcing furniture in China do so

through contract operations. U.S. producers that have such operations in China are reportedly

able to achieve cost savings of 30 percent to 50 percent over domestically made furniture

components.99

The Malaysian furniture industry has evolved to a large degree as a result of the maturation

and rising labor costs characterizing the Taiwanese industry, and the destruction of factories

in most of the furniture-producing area of what was once Yugoslavia.100 In addition, the

development of the domestic furniture industry is a priority of the Malaysian Government.

Furniture is classified as a primary industry, entitling its participants to tax exemptions,

rebates for training, and tariff exemptions on all equipment and supplies used by the industry.

Malaysian furniture production is focused on wood household furniture.101

European Union

EU shipments of wood and metal furniture rose at an average annual rate of 8 percent during

1994-1998 (latest data available) to 69,670 million EMU (table 20). In 1998, household

furniture was estimated to have accounted for roughly three-quarters of the total value of EU

furniture shipments and accounted for 90 percent of employment in the furniture industry. 

EU manufacturers have a worldwide reputation for top quality, pre-industrial style wood

furniture such as Louis XV, Victorian, and French Provincial, which continue to dominate

current furniture designs.102 The bulk of EU furniture production consists of: (1) mid- to

upper-priced, fully assembled household furniture; (2) office furniture; and (3) RTA furniture

made from plastic-coated particle board. EU producers do not have access to large sources

of competitively priced lumber, and much of the wood used in their fully assembled, household

furniture is imported from the United States. The largest EU producers of furniture,
 

103 Mark Lorenzen, Specialization and Localized Learning in the European Furniture

Industry, Handelshojskolens Forlag, (Copenhagen Business School Press), 1998, p. 14.

47

Table 20

Wood and metal furniture: EU shipments, exports of domestic merchandise, imports for

consumption, trade balance, and apparent consumption, 1994-98

Year Shipments Exports Imports Trade Balance Consumption

)))))))))))))))))))))))))))))) EMU millions ))))))))))))))))))))))))))))

1994 ........................... 50,587 5,141 3,704 1,437 49,150

1995 ........................... 58,315 5,034 3,292 1,742 56,573

1996 ........................... 61,850 5,460 3,540 1,920 59,930

19971........................... 65,650 5,930 3,820 2,110 63,540

19981........................... 69,670 6,430 4,110 2,320 67,350

 1 Estimated by the U.S. International Trade Commission.

Source: Panorama of EU Industry 1997, Commission of the European Communities.

furniture, with the exception of Italy, are located in Northern Europe (see tabulation).

Producers located in the southern member States of Greece, Portugal, and Spain are still

largely artisan, with a high presence of small firms.

Company Home country

Skandinavisk Gruppe ................. Denmark

Groupe Parisot, Steelcase-Strafor ........ France

Alno, Nobilia, Schieder Gruppe, Klaussner Gruppe

 Steinhoff Gruppe, Welle Gruppe, Wellmann,

 Skane-Grupen, Volka .............. Germany

Natuzzi, Snaido ..................... Italy

Samas Groep ....................... Netherlands

Christie-Tyler ...................... United Kingdom

Competition is intensifying in the EU in response to the single EU market and low-cost

furniture imports from East Asia and Eastern Europe. In order to remain competitive with

imports, certain EU furniture firms are concentrating on the design and distribution of

furniture, rather than the manufacturing operations. An example of such a firm is IKEA, a

Swedish distributor of furniture. The furniture distributed by IKEA is designed in-house but

manufactured in contract operations located in Eastern Europe, Asia, or Mexico. Establishing

an international contract operation is a strategy generally pursued by large furniture firms

because foreign contract operations often require capital investments and a managerial

framework that can focus on international operations.103

Other EU furniture manufacturers have improved their productivity by shifting production

from labor-intensive, fully assembled furniture, to the capital-intensive production of RTA

furniture. Greater emphasis on RTA furniture production and investments in machinery and
 

104

 Panorama of EU Industries-1997: Furniture, European Commission, pg. 18-2.

 

105 Ibid., pg. 1.

 

106 Gabriella Lojacono and Mark Lorenzen,“External Economies and Value Net Strategies in

Italian Furniture Districts,” Specialization and Localized Learning in the European Furniture

Industry, ed. Mark Lorenzen, Handelshojskolens Forlag, Copenhagen Business School Press,

1998, p. 73.

 

107 Massimo Florio, Franco Peracchi, and Paolo Sckokai, “Market Organization and

Propagation of Shocks The Furniture Industry in Germany and Italy,” Small Business

Economics, pp. 169-182, 1998.

 

108 Ibid.

48

equipment have resulted in steady productivity gains.104 By 1997 (latest data available),

continuing advances in automation reduced the wage share to 28 percent of company sales

compared with about 50 percent of company sales in the 1960s.105

According to Eurostat data, Italy was the largest EU exporter of furniture in 1999, followed

by Germany. The principal products exported by Italy were upholstered leather sofas and

chairs and living-room and dining-room furniture, other than seating. Furniture exported by

Germany consisted mostly of wood kitchen cabinets, upholstered wood seating, and wood

living-room and dining-room furniture, other than seating.

Italy

Italian furniture production is concentrated in the industrial districts in regions of Veneto,

Lombardia, Marche, Toscana, Campania, and Basilicata.106 Many furniture plants in Italy are

relatively small (under 50 employees) and a large number of these companies work together

under cooperative agreements. The Italian furniture industry is particularly adept at

recognizing both domestic and international market trends by meeting regularly with

representatives of furniture production cooperatives to discuss furniture designs, use of

materials, and technological innovations. Many moderate-sized Italian furniture producers

(50-250 employees) purchase the wood components used to make finished furniture from

domestic manufacturers. This allows such furniture firms to focus on the assembly and

finishing of furniture.107 Italian production destined for export markets is concentrated in the

living room and bedroom sectors. The low levels of concentration in the Italian furniture

industry allow producers to be highly responsive to the frequent changes in design in these

sectors.108

Germany

German manufacturers provide top-quality, RTA furniture and fully-assembled furniture.

Producers in Germany maintain state-of-the art furniture processing machinery and are

particularly skilled in refining methods of manufacture that make use of particle board,

plywood, and veneers that are less costly than solid wood. German manufacturers are

perfecting machining and finishing techniques that come very close to the look of solid wood

(consisting of polyvinyl-chloride foil and various other veneers). Nevertheless, the Germans,

like other EU furniture producers, lag behind the Italians in their ability to quickly change
 

109 Association of German Chamber of Industry and Commerce, Foreign Trade and

Competitiveness of the German Economy, found at Internet address

http://www.handelskammer.de/aktuel, retrieved Mar. 16, 2000.

 

110 European countries of the former Eastern Bloc are currently Albania, Belarus, Bosnia,

Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia,

Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Ukraine, and Yugoslavia.

 

111 International Trade Center UNCTAD/GATT, Wooden Household Furniture: Study of

Major Markets, 1990, p.13.

49

designs to meet changing consumer tastes. German-made furniture is generally marketed

towards the upper-priced market segments in the United States.109

Central and Eastern Europe

Poland and Romania are the largest furniture producers in Central and Eastern Europe,

accounting for a significant share of total EU imports of furniture. Before the re-unification

of Germany, furniture manufacturers in East Germany and elsewhere in Central and Eastern

Europe were geared towards long-term contracts with the Soviet Union or other Eastern Bloc

countries within the region.110 Most of these plants were unable to compete in world markets

owing to low-technology methods of manufacture, poor distribution networks, lack of quality

control, and outdated accounting procedures. However, the manufacturing capabilities of a

certain number of furniture companies in Central Europe, particularly those in the former

Yugoslavia, Poland, and Romania, made use of the latest technology because their production

was designated by their national ministries of industry to produce higher quality furniture for

export markets to gain foreign exchange.111 Other producers made lower quality furniture for

domestic markets. Wood household furniture production in Yugoslavia (particularly Bosnia)

declined dramatically during the 1990s with the start of civil warfare in 1991.

APPENDIX A

EXPLANATION OF TARIFF AND TRADE

AGREEMENT TERMS
A-2

TARIFF AND TRADE AGREEMENT

TERMS

In the Harmonized Tariff Schedule of the United States (HTS), chapters 1 through 97 cover

all goods in trade and incorporate in the tariff nomenclature the internationally adopted

Harmonized Commodity Description and Coding System through the 6-digit level of product

description. Subordinate 8-digit product subdivisions, either enacted by Congress or

proclaimed by the President, allow more narrowly applicable duty rates; 10-digit

administrative statistical reporting numbers provide data of national interest. Chapters 98 and

99 contain special U.S. classifications and temporary rate provisions, respectively. The HTS

replaced the Tariff Schedules of the United States (TSUS) effective January 1, 1989.

Duty rates in the general subcolumn of HTS column 1 are normal trade relations rates, many

of which have been eliminated or are being reduced as concessions resulting from the Uruguay

Round of Multilateral Trade Negotiations. Column 1-general duty rates apply to all countries

except those listed in HTS general note 3(b) (Afghanistan, Cuba, Laos, North Korea, and

Vietnam) plus Serbia and Montenegro, which are subject to the statutory rates set forth in

column 2. Specified goods from designated general-rate countries may be eligible for reduced

rates of duty or for duty-free entry under one or more preferential tariff programs. Such tariff

treatment is set forth in the special subcolumn of HTS rate of duty column 1 or in the general

notes. If eligibility for special tariff rates is not claimed or established, goods are dutiable at

column 1-general rates. The HTS does not enumerate those countries as to which a total or

partial embargo has been declared.

The Generalized System of Preferences (GSP) affords nonreciprocal tariff preferences to

developing countries to aid their economic development and to diversify and expand their

production and exports. The U.S. GSP, enacted in title V of the Trade Act of 1974 for 10

years and extended several times thereafter, applies to merchandise imported on or after

January 1, 1976 and before the close of September 30, 2001. Indicated by the symbol "A",

"A*", or "A+" in the special subcolumn, the GSP provides duty-free entry to eligible articles

the product of and imported directly from designated beneficiary developing countries, as set

forth in general note 4 to the HTS. A related program (see general note 16) established under

the African Growth and Opportunity Act (AGOA), effective from October 2, 2000, through

the close of September 30, 2008, provides duty-free entry to other eligible goods the product

of and imported directly from qualified, designated sub-Saharan African beneficiary countries,

as indicated by the symbol “D” in the special subcolumn; additional tariff benefits are

authorized for specified textile and apparel products under subchapter XIX of chapter 98 of

the HTS.

The Caribbean Basin Economic Recovery Act (CBERA) affords nonreciprocal tariff

preferences to developing countries in the Caribbean Basin area to aid their economic

development and to diversify and expand their production and exports. The CBERA, enacted

in title II of Public Law 98-67, implemented by Presidential Proclamation 5133 of November

30, 1983, and amended by the Customs and Trade Act of 1990, applies to merchandise

entered, or withdrawn from warehouse for consumption, on or after

January 1, 1984. Indicated by the symbol "E" or "E*" in the special subcolumn, the CBERA

provides duty-free entry to eligible articles, and reduced-duty treatment to certain other
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articles, which are the product of and imported directly from designated countries, as set forth

in general note 7 to the HTS. A related program (see general note 17) enacted in the United

States-Caribbean Basin Trade Partnership Act and known as the CBTPA is effective from

October 2, 2000, through the close of September 30, 2008 (unless beneficiary countries

earlier join a possible Free Trade Area of the Americas). Indicated by the symbol “R” in the

special subcolumn in chapters 1 through 97 of the HTS, the CBTPA provides duty-free or

reduced-duty entry (identical to the rate of duty in effect for like goods of Mexico under the

terms of general note 12) to certain products of qualified, designated CBTPA beneficiary

countries imported directly therefrom; such tariff treatment is also provided to specified textile

and apparel products under the provisions of subchapter XX of chapter 98 of the HTS.

Free rates of duty in the special subcolumn followed by the symbol "IL" are applicable to

products of Israel under the United States-Israel Free Trade Area Implementation Act of

1985 (IFTA), as provided in general note 8 to the HTS. 

Preferential nonreciprocal duty-free or reduced-duty treatment in the special subcolumn

followed by the symbol "J" or "J*" in parentheses is afforded to eligible articles the product

of designated beneficiary countries under the Andean Trade Preference Act(ATPA), enacted

as title II of Public Law 102-182 and implemented by Presidential Proclamation 6455 of July

2, 1992 (effective July 22, 1992), as set forth in general note 11 to the HTS.

Preferential free rates of duty in the special subcolumn followed by the symbol "CA" are

applicable to eligible goods of Canada, and rates followed by the symbol "MX" are applicable

to eligible goods of Mexico, under the North American Free Trade Agreement, as provided

in general note 12 to the HTS and implemented effective January 1, 1994 by Presidential

Proclamation 6641 of December 15, 1993. Goods must originate in the NAFTA region under

rules set forth in general note 12(t) and meet other requirements of the note and applicable

regulations.

Other special tariff treatment applies to particular products of insular possessions (general

note 3(a)(iv)), products of the West Bank and Gaza Strip (general note 3(a)(v)), goods

covered by the Automotive Products Trade Act (APTA) (general note 5) and the Agreement

on Trade in Civil Aircraft (ATCA) (general note 6), articles imported from freely

associated states (general note 10), pharmaceutical products (general note 13), and

intermediate chemicals for dyes (general note 14).

The General Agreement on Tariffs and Trade 1994 (GATT 1994), pursuant to the

Agreement Establishing the World Trade Organization, is based upon the earlier GATT 1947

(61 Stat. (pt. 5) A58; 8 UST (pt. 2) 1786) as the primary multilateral system of disciplines

and principles governing international trade. Signatories' obligations under both the 1994 and

1947 agreements focus upon most-favored-nation treatment, the maintenance of scheduled

concession rates of duty, and national treatment for imported products; the GATT also

provides the legal framework for customs valuation standards, "escape clause" (emergency)

actions, antidumping and countervailing duties, dispute settlement, and other measures. The

results of the Uruguay Round of multilateral tariff negotiations are set forth by way of

separate schedules of concessions for each participating contracting party, with the U.S.

schedule designated as Schedule XX. Pursuant to the Agreement on Textiles and Clothing

(ATC) of the GATT 1994, member countries are phasing out restrictions on imports under

the prior "Arrangement Regarding International Trade in Textiles" (known as the Multifiber
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Arrangement (MFA)). Under the MFA, which was a departure from GATT 1947

provisions, importing and exporting countries negotiated bilateral agreements limiting textile

and apparel shipments, and importing countries could take unilateral action in the absence or

violation of an agreement. Quantitative limits had been established on imported textiles and

apparel of cotton, other vegetable fibers, wool, man-made fibers or silk blends in an effort to

prevent or limit market disruption in the importing countries. The ATC establishes

notification and safeguard procedures, along with other rules concerning the customs

treatment of textile and apparel shipments, and calls for the eventual complete integration of

this sector into the GATT 1994 over a ten-year period, or by Jan. 1, 2005.