The U.S. Furniture Industry: Yesterday 

and Today ... Will There Be a Tomorrow? 

I

n the United States, furniture and related 

manufacturing (including kitchen cabinets) 

is currently concentrated in three geographic locations: the Midwest (Michigan, Indiana, 

Ohio, Wisconsin, Illinois), the South (North 

Carolina, Mississippi, Virginia) and the Southwest 

(California, New Mexico, Texas). 

The U.S. furniture industry started out in the 

Northeast (New York, Pennsylvania and New 

England), then moved to the Midwest, and then 

the South. Each move was essentially a move 

to a region with cheaper manufacturing costs 

and an ample supply of good quality hardwood 

lumber. This sort of “manufacturing capacity 

migration” happens in most industries, both in 

North America and offshore. Today, the top 12 

producing states manufacture about two-thirds 

of the furniture and kitchen cabinets produced 

in the United States.

There is a growing dichotomy in the “furniture industry.” For purposes of this case study, we 

include kitchen cabinets as part of the furniture 

industry — it is called “the furniture and related 

industry” — NAICS code 337 — which includes 

kitchen cabinets along with the more traditional 

furniture sectors. We do because the furniture and 

related sectors that are seeing most of the negative 

impact from globalization are the sectors that use 

wood primarily — this includes kitchen cabinets, 

wood household furniture, wood office furniture 

and upholstered furniture. The furniture industry, 

excluding the kitchen cabinet sector, lost 108,000 

jobs or 21 percent of its workforce between 1997 

and 2005. Only two sectors within the U.S. furniture industry — kitchen cabinets and office 

furniture — have shown growth in terms of 

employees, payroll and value of shipments. This 

is in contrast to the institutional and household 

furniture sectors, which experienced only slight 

growth and a major decline, respectively, during 

this same period. 

For example, between 1997 and 2005*, the 

value of shipments for kitchen cabinets more than 

doubled (up 111 percent), office furniture shipments increased 22 percent, upholstered furniture 

shipments increased a modest 27 percent; institutional furniture shipments increased a meager 

9 percent while shipments of nonupholstered 

furniture (i.e., wood furniture) actually fell 7 percent. The reason for this disparity is competition 

from cheaper imports has impacted the household 

furniture sector, particularly wood household furniture. For the wood household furniture sector, 

employment has fallen 36 percent and payrolls 

by 19 percent despite the fact that demand actually grew by 27 percent in the United States. In 

essence, imported wood furniture from Canada 

and offshore sources, particularly China, captured most of the growth in the wood furniture 

market during the past seven years. Demand was 

driven in large part by the phenomenal growth 

in residential construction over this period, but 

domestic manufacturers did not share in the 

“good times.” 

Unfortunately, like many mass-produced consumer goods, household furniture has become 

more of a commodity and is sold on price. 

Consumers are mainly interested in furniture that 

looks good and appears to be a good value. No longer do they look at furniture as a long-term investment as something to pass on to their children or 

keep as an antique. As a result, the consumer is 

spending less and less on furniture. There is also 

more competition for the consumer’s dollar from 

electronic gadgets, home entertainment, travel 

and leisure products. Because of this emphasis 

on price, profit margins for U.S. furniture manufacturers are extremely low, while the costs of 

manufacturing continue to rise. This has created 

a severe profit squeeze that has led to a significant 

decline in plant and equipment investments. As a 

result, many U.S. furniture plants are not up-todate with the latest technology and equipment. 

Many U.S. furniture manufacturers are choosing to have their furniture made in China and 

other low-cost countries rather than produce their 

own products. This has allowed offshore furniture 

competitors to increase their penetration into U.S. 

and world markets. If this does not change, most 

U.S. household furniture will be made offshore 

as U.S. furniture manufacturers continue to close 

their domestic manufacturing operations and 

become wholesalers and/or retailers. As offshore 

manufacturers gain more experience from supplying U.S. furniture manufacturers, they will 

learn enough to go around them and sell direct to 

retailers, or through their own retail distribution 

outlets. This is already happening as most of the 

larger Chinese furniture manufacturers sell direct 

to retailers and some are offering retail franchises 

in the United States.

The United States is experiencing a serious 

trade deficit, especially with China. Our dilemma 

is that we are exporting more raw materials, but 

importing more finished goods. This benefits raw 

material producers, retailers and consumers, but 

hurts producers of finished goods and their suppliers. For example, the United States is a major 

exporter of hardwood logs and lumber, but we 

are also the major importer of finished hardwood 

products such as furniture, flooring and mouldings. This needs to change if our secondary wood 

processing industry is to survive. 

the Impacts of Globalization on 

the U.S. Wood Products Industry 

Globalization impacted trade in the furniture 

subsector has taken a distinct turn for the worse 

for U.S. manufacturers, with the kitchen cabi-

> By Al Schuler & Steve Lawser

This is the first installment 

in a two-part series

* U.S. Statistics for Furniture and Related Industries (NAICS 337) for 2005 and 1997. Source: U.S. Census; ASM; Statistics for Industry Groups and Industries (www.census.gov/mcd/asm-as1)

Figure 1. Furniture trade — Import market share for key furniture markets.

Trends in furniture and related markets

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20 ] WOOD DIGEST 6 . 20 07 w w w.wooddigest.com
net industry group more recently experiencing 

the beginning of a downturn in growth as well. 

Between 1992 and 2005, imports of all furniture 

products (including household, institutional and 

office furniture, but excluding kitchen cabinets) 

increased from $4.1 billion to $23.65 billion in 

2005, an increase of almost $20 billion or 477 

percent. During this period, imports from China 

increased from $208 million to $10.8 billion, 

an increase of almost $11 billion — a fifty-fold 

increase in 13 years. 

Import market share for selected furniture 

and kitchen cabinet markets is shown in Figure 

1. Imports now comprise 28 percent of all furniture consumption (excluding kitchen cabinets), 

up from 9 percent 13 years ago. In sectors where 

wood is the predominant material input, the loss 

of market share is equal, or in some cases, more 

substantial. Fifty-five percent of the wood household furniture, 11 percent of kitchen cabinets; 19 

percent of the upholstered market; and 21 percent 

of the wood office furniture market consumed in 

the United States in 2005 consisted of imports. 

Since the wood household furniture sector 

has been the most ravaged by imports, the major 

sources of imports in this sector are shown in 

Figure 2. China is the most important source. 

Chinese imports have increased 525 percent since 

1998 — that’s more than a six-fold increase in just 

eight years. A major reason for this rapid increase 

is that the Taiwanese furniture industry, with its 

management expertise, capital, knowledge of the 

U.S. market, and other pertinent expertise, relocated to mainland China beginning in the early 

1990s. 

Taiwan was a major manufacturer and exporter 

of wood furniture to the United States; however, as 

their standard of living increased, their furniture 

manufacturing costs, particularly the labor component, increased significantly and they were no 

longer as competitive as they once were. Thus, a 

“manufacturing capacity migration” is occurring 

in East and Southeast Asia from Taiwan (and to 

some extent mainland China) to Vietnam. 

Wood furniture exports to the United States 

from Vietnam have increased from $1 million to 

$753 million in just five years. In fact, Vietnam 

is now the third largest exporter of wood household furniture to the United States, behind China 

and Canada — predictions point to it surpassing 

Canada within five years.

Furniture isn’t the only wood product sector 

that is having problems dealing with globalization and imports. Almost 11 percent of wood 

kitchen cabinets consumed in the United States 

are imports, and there is a growing fear that cabinets may be the next “furniture” sector to see an 

onslaught from imports. 

For most of the past decade, the domestic 

kitchen cabinet industry has been able to remain 

globally competitive and maintain domestic market share of about 95 percent. This could be attributed to the fact that the cabinet industry was more 

vigilant and proactive regarding the threat from 

imports. They were probably the first of the “furniture sectors” to adopt “outsourcing” as a viable 

business model. 

Over two decades ago, the segment shifted to 

the use of standardized components, most often 

made by another company, in their manufacturing strategy and essentially became “assemblers of 

cabinets.” The traditional furniture manufacturing model is where the company “does it all” — 

buys lumber, manufactures the dimension lumber 

and other components, and then assembles these 

components into the finished furniture product. 

When the cabinet industry adopted the “outsourcing model,” this made it possible to manufacture customized cabinets at competitive prices. 

The customized cabinet product insulated them 

from cheaper standardized cabinets made offshore. The key here is attention to the customer 

— their market analysis told them the customer 

wanted customized cabinets for which they were 

willing to pay a bit more, but price still had to be 

“competitive” with standard cabinets. Outsourcing 

allowed them to customize, yet still provide good 

value to the customer.

Import Trends

As seen in Figure 3, the share of consumption provided by domestic sources is shrinking for most wood product sectors including 

pulp and paper, structural panels (plywood and 

OSB), hardwood lumber, hardwood flooring and 

moulding products. 

The common denominator for most of these 

industries is too much focus on production and 

not enough attention paid to the customer — i.e., 

a commodity mentality. Not a good strategy 

unless you are the “low cost producer” or have 

some other competitive advantages that serve to 

balance the scales for companies that have a higher cost structure. Some examples include: superior 

service; customization at competitive prices; faster 

delivery; better pricing terms; lean and flexible 

manufacturing; expert marketing and knowledge 

of your key customers; and superior quality.

Recommended strategic direction 

for the furniture industry

We will suggest three parts to a survival strategy. As furniture markets shrink or lose market 

share to imports, hardwood lumber consumption has been shifting from furniture markets to 

construction and remodeling end uses (Figure 4). 

This shift points to part of the answer to a future 

furniture industry “survival strategy.”

1. Find new and growing markets where 

you have a competitive advantage. 

While the largest market for hardwood lumber used to be furniture, today it is construction 

markets — residential and nonresidential, new 

construction and remodeling/renovation. In contrast to softwood products, such as framing lumber and structural panels, hardwoods are being 

used in nonstructural applications like moulding 

and millwork, flooring, interior trim, stair parts, 

and decorative and specialty products such as 

fireplace mantels. The residential markets in the 

United States, although currently experiencing a 

minor “correction,” have been on a tear for the 

past seven to eight years, and the demographic underpinnings for both new residential and 

remodeling markets are very positive for at least 

the next decade.

A big user of hardwood lumber is component 

manufacturers — they make mouldings, millwork, 

cabinet, furniture and stair parts, flooring blanks, 

and other products from hardwood lumber. They 

have made major shifts in their customer base in 

response to the demise of the furniture industry 

(Figure 5) — from supplying furniture customers 

to construction/remodeling customers and kitchen cabinets. They did this through better planning and marketing — understanding customer 

needs and finding their niche — and adapting 

to the furniture situation. Furthermore, think of 

China (and India and elsewhere) as an opportunity. As their standard of living increases and the 

Figure 2. Import sources for wood household furniture. 

Wood HH Furniture Imports (Billion US$)

Figure 3. Share of domestic markets sourced from domestic production is 

falling for most wood products.

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middle class grows, they will want the same things 

you and I want — comfort, a nice house, nice furniture, etc. If we’re competitive, we can sell into 

that market. Remember, China consumes over 75 

percent of the furniture they produce — only 25 

percent or less is exported. 

Another part of the survival strategy is:

2. Transitioning from commodity products and services to customized products 

and services.

The United States is a high wage country and 

simply cannot remain competitive in many commodity markets where the low-cost producer has a 

strong advantage. 

In the furniture industry, there has always been 

a disconnect between many furniture manufacturers and the final customer — too much emphasis 

was placed on the retailer to provide information 

on customer requirements and desires. Somehow, 

the furniture industry needs to figure out how to 

get closer to the “final customer” (you and me), 

and then determine how to supply the customer 

while remaining profitable. This will entail better 

marketing; better distribution systems; lean and 

flexible manufacturing; just-in-time supply chain 

operation; supply chain management; innovative 

thinking and leadership; and better training and 

education for their workforce — a new business 

model. It can be accomplished if the entire “supply 

chain” works together. The supply chain includes 

the integration of all key segments from the forest 

(or other input source) to manufacturing to distribution to marketing, culminating in a satisfied 

and happy customer. 

This is essentially the idea of “centers of excellence” or “competitive clusters” as championed 

by Michael Porter, the management guru and 

author of the books: The Competitive Advantage 

of Nations; Competitive Advantage: Creating and 

Sustaining Superior Competitive Performance; and 

Competitive Strategy. 

3. Develop relevant centers of excellence 

or competitive clusters.

As defined by Porter in his most recent book, 

On Competition, “a cluster is a geographically 

proximate group of interconnected companies 

and associated institutions in a particular field, 

linked by commonalities and complementarities.” High Point, N.C., is an example of this for 

wood household furniture. Prior to globalization, 

a strong and large company with lots of resources 

could conceivably compete and be profitable for a 

time, even decades; however, today that company 

is competing with clusters from other countries, 

not the “sawmill in the next valley.” 

In my opinion, some glaring omissions are 

effective market analysis; staying in touch with 

customers; developing a “flexible manufacturing 

strategy”; and keeping abreast of what goes on outside the United States — competitive intelligence. 

A flexible manufacturing strategy is one that 

adopts all the lean and efficiency techniques, but 

also has the capability to shift production quickly 

(within hours) if market conditions change. 

The U.S. furniture industry needs strong and 

relevant clusters or centers of excellence if they are 

to compete globally, and hopefully regain some 

of their lost market share in domestic markets. 

An example of a recent success story is Amish 

furniture manufacturing in Ohio, Pennsylvania 

and Indiana (Bumgardner et al. 2007). Some 

key aspects of Amish competitiveness are quality craftsmanship in solid wood construction; 

the Amish name serves as a brand name; and 

customized products are sold in dedicated Amish 

stores with a wide range of species, finish and 

hardware. The Amish cluster has a well developed 

supply chain, wide use of the latest processes/technologies and shared resources/cooperation — each 

cluster element reinforces the others.

Today, Amish furniture is a real success story, 

and this cluster has become a significant factor 

in the U.S. furniture industry. In Ohio, the cluster is consuming an estimated 44 million bd. ft. 

of hardwood lumber annually or 11 percent of 

Ohio’s total production (Bumgardner et al. 2007). 

Nationally, Amish furniture production might 

account for over 10 percent of the hardwood lumber used in U.S. furniture production. 

The key question is whether the Amish model 

for success can be replicated throughout the United 

States. It won’t be easy to replicate the cooperation aspects of this cluster. Likewise, Bumgardner 

states, to replicate the Amish commitment to 

producing a top-quality product will require a significant cultural shift for some producers. 

Strategies for Success in High-Wage 

Economies

There are a number of key strategies for achieving success in high-wage economies. The most 

important one is to produce innovative and customized products that are not being produced by 

low-wage competitors. This also means a greater 

focus on product design, finishing, marketing 

and distribution. There is still a good market for 

high-end customized products that consumers are 

willing to pay for. 

For manufacturing operations, you must automate your production facilities whenever possible 

to maximize efficiencies and improve labor productivity. You also need to adopt new technologies and lean manufacturing techniques to reduce 

costs. High-wage countries also need to invest 

more in worker education, training and product 

research and development. We need to develop 

special skills that allow us to create superior products for which we can charge more. If we continue 

to produce commodity-type products with commodity services, we will continue to lose markets 

to countries where the labor supply is abundant 

and cheap. 

In Part Two of the series, Schuler and 

Lawser will address a number of operating 

strategies that U.S. furniture manufacturers 

are using to remain competitive in a highwage economy. Some of these strategies 

are overlapping and many companies are 

using more than one. Look for it in July!

Ed. note: Al Schuler is a research economist with 

the USDA Forest Service, where he is responsible 

for assessing the demand/supply situation for solid 

wood products; the demand for engineered wood 

products; and the links between the softwood and 

hardwood forest products industry. 

Steve Lawser serves as the executive director of 

the WCMA.

Figure 4. Hardwood lumber consumption trends. Figure 5. Shifting component markets

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