March 3, 2015 —
Seeing a Made in America label on the dining table you just bought may elicit warm fuzzy feelings for many of you, but does it mean that much to today’s consumer? Does it matter to your bottom line? Some in the industry say yes and yes.
Brian Garrison, owner of Garrison’s Home Furnishings in Medford, Ore., consciously shops for American-made product. In fact, nearly 85 percent of his inventory is domestic. When Garrison transitioned to mid- and high-end product a few years ago, his customers predominately wanted American-made, better built goods.
“All around our store you’ll see Made in America tags,” he said. “We occasionally run events and offer discounts only on the American made products. It’s absolutely a selling point for us. Our salespeople are more proud and excited to sell American made product and that enthusiasm often transfers to the customer.”
Tim Koerner owns Koerner Furniture in Coeur d’ Alene, Idaho, along with his brother Mark. While he doesn’t specifically shop for domestic product, he looks for the best value for his customers; sometimes that’s domestic and sometimes it’s imported. Koerner highlights domestic product by putting American flags throughout the showroom. One observation he’s gleaned from his customers? Men care more about where something is made and women tend to care more about the “best bang for the buck.”
He says country of origin isn’t always a selling point, nor is it necessarily an indicator of quality—price point is. It’s harder to find domestic product at lower price points, but Koerner’s discovered there are consumers who will pay for quality.
“The 55+ age group has money and they are willing to pay for nicer goods,” he said. “They don’t want to overpay, but if you can show them some of the reasons the goods are worth the money, the older generation will pay for it. One of the nice things about the American-made goods is that you can special order it. The customization side of American-made goods is where we have seen lots of success. I have always believed that American manufacturing would come back when the consumer was willing to pay for what they want. Importing special order is near impossible for me.”
Garrison thinks his customers do care where their product is sourced from, especially when it comes to better goods. “This is true up to a point though,” he added. “As much as a customer thinks they care, if the price is significantly more for an American-made product than an imported one (without a huge quality difference) most customers will still side with saving money. However if salespeople can sell the “story” of the product and/or the company making the product, that story will build value in the product, and people will spend more.”
Both retailers say they’ve seen an increase in demand for American product in recent years, though maybe not for reasons you’d think.
“When customers say they want American-made, they usually mean not made in China,” Garrison said. “Customers tend to be more accepting of imported product if it’s from anywhere but China. That being said, we are starting to see another shift towards American made.”
Koerner says he’s not sure if the increased demand is because of a push from consumers seeking the product or more retailers advertising the product—either way he’s seen a resurgence.
“I do believe in American-made goods, but not to the point I will put American on the floor just because it is American made,” Koerner said. “The American-made goods have to be worth the price.”
Jody Oettel, vice president of sales for Interiors in Lancaster, Pa., says her store supports buying locally to help the region’s economy and businesses, and she sees that in the same vein as consciously buying products made in America.
“There are customers who do ask about items that are are made in America and we are happy to show them many upholstery lines that are manufactured in the USA,” Oettel said. “Case goods are a bit more difficult, but there are choices available. We are proud to tell them the Stickley story about American-made wood pieces.”
Oettel says many consumers have no idea where furniture is made and are surprised to learn it’s imported. They’re even more surprised when they find out how that affects the product’s price. “They often want made in America, but with pricing that is not found on that type of product,” she said.
Lancaster is known for its Amish communities and Amish handmade furniture. “I believe our area is more aware of furniture made locally and in the USA by craftsmen because of that,” she said.
Furniture manufacturing moved off shore because it made more economic sense at one time. But as labor costs are rising around the world manufacturing in Asia isn’t automatically the most cost-effective option for U.S. furniture manufacturers. According to a manufacturing survey by The Boston Consulting Group, U.S. manufacturers (not just of furniture) are reconsidering domestic production because of labor costs, proximity to customers and product quality along with access to skilled labor, transportation costs, supply-chain lead time and ease of business. The study says furniture manufacturers could be overestimating their savings from off-shoring by up to 30 percent.
There are still some furniture manufacturers left who make their product domestically, but Koerner brings up some interesting points about made in America.
There are some manufacturers who make parts of their product in the U.S. or import components and manufacture them here. The federal regulation regarding Made-in-American labeling is administered by the Federal Trade Commission. It states that for a company to label its product “Made in America” the product must be “all or virtually all” made in the U.S., which includes the 50 states, the District of Columbia and the U.S. territories and possessions. “All or virtually all” means all significant parts and processing must be of U.S. origin. The product’s final assembly or processing must take place in the United States.
California’s requirements are more stringent. California prohibits the use of “Made in USA” labels or claims “when the merchandise or any article, unit, or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States.”
Some furniture manufacturers who label their product “Made in America” have gone so far as to make specifications such as “using domestic and globally sourced components” or listing the specific components that are made in the U.S.
“That’s why it is getting hard to be 100 percent made in the USA,” Koerner said. He points out that companies such as La-Z-Boy, for example, employ lots of people in the U.S. but they can’t (and don’t) claim to be made here. “On the case goods side, there is a lot of lumber imported from Canada, the environmentalists have made it to where we can’t cut our trees, we have to cut Canada’s trees,” Koerner said. “The world is truly turning into a world community. NAFTA is part of the success of made in America. I am trying not to import as much furniture, but I have no control over where manufactures source their materials. Part of me is not concerned with where the materials come from, as long as the USA continues to create new goods; there will be manufacturing of goods here in the USA, we just might be importing the raw materials.”
Koerner said about 20 percent of his product mix is made in the U.S.
One manufacturer that can make the unequivocal claim that their product is made in America is Gat Creek, based in Berkeley Springs, W.Va. Owner Gat Caperton says made in America has become its own category. Gat Creek products are 100 percent American made and it sources more than 95 percent of its raw materials from within a 350-mile radius of its factory.
Caperton began designing furniture in 1996 after buying a small manufacturing company that had built antique reproductions for more than 40 years. Gat Creek’s employees hand craft each piece of furniture from Appalachian cherry and each piece is signed by the person who builds it. Caperton said, “Made in America is a critical part of our story and marketing. It’s also a good selling point.”
He does see demand increasing, but only slightly, while the attitude toward the category has changed dramatically. “Five to 10 years ago, people looked at me with pity when I told them I manufactured domestically,” he said. “It looks cool today.”
Last year the company was recognized by the U.S. Department of Commerce for its export growth over the past year. The company exports to 28 countries.
Caperton sees many benefits to domestic production. “It allows me and our employees to live in the U.S.” he said. “Our folks really are a cornerstone to this community. Our workforce includes volunteer fire fighters, EMTs, and Sunday school teachers. We pay the taxes that fund local schools and our far-flung military. On the consumer side, all these things are nice and I like to call it sustainability. Buying U.S. sustains. It sustains our forests (more trees and tree mass in the Appalachian forests today than 30, 60 and 100 years ago), our environment (lower energy use = less carbon and other pollutants in our atmosphere), our communities and the American way of life.”
The downside is the “unfair” competition from Asia—government subsidized dumping of products into our markets.
For Caperton, the biggest reason Gat Creek is American made is the sense of responsibility he feels to the people who build the furniture, some of whom have been doing so for more than 40 years. “We have a great factory, truly world class in almost any measure, and talented people who care. I never wanted to become a marketing company like Thomasville and many of the other old-timers in the industry. I’ve always wanted to be a manufacturer.”
Randy Gleckman, national sales manager for Omnia Leather tells a similar story from the west coast. Chino, Calif.-based Omnia is a second-generation, family-owned business founded in 1989.
“Omnia has always been made in southern California,” he said. “Everything is designed and manufactured right here. There are a lot of companies that make leather in the U.S. and have a subdivision outside the U.S. for lower price points, but we don’t.”
Gleckman says many middle to better quality retailers do seek out American made product, when it’s not a price sensitive situation; and in fact when you say import “there’s a stigma of being inferior.”
Being domestically made is part of Omnia’s marketing story and it’s a selling point. Gleckman says though there are many advantages to being American made, one of the biggest is Omnia’s ability to offer the number of SKUs it does. “We sell a wide assortment of options, leathers, colors; we’re versatile,” he said. “When you go to imports it’s different. With us you can have it any way you want; with imports you can have it any way you want as long as that’s how it’s coming out of the container. We have a very loyal following that understands and appreciates what we do.”
Omnia also prides itself in its service and being able to react quickly, something the company couldn’t do if it was in the import business. “We’re more flexible,” Gleckman said. “We aren’t jamming retailers up with having to buy containers. We’re geared toward special orders. Whatever configuration, whatever color, we can do it.”
That flexibility does have a flip side though because it means having to carry more inventory so the customer doesn’t have to. Omnia manages to do this with about 200 employees and two buildings.
He agrees with Caperton and others that the appreciation for American-made product is growing.
“A lot of first-time buyers go for lower price point, the disposable furniture; but when they have to replace that they realize they should get something that lasts three times as long,” Gleckman said. “You get what you pay for. There is a pendulum swing coming back to U.S.-made products. People take pride in buying it now.”