competitiveness of the u.s. furniture industry · 2018-09-17 · many operations use the same set...

Competitiveness of the U.S. furniture industry

Urs Buehlmann – Virginia Tech

Matt Bumgardner – U.S. Forest Service

Day of Wood II – Sept. 13, 2018

Copyright 2018 • Urs Buehlmann / Virginia Tech • All Rights Reserved

Acknowledgements

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B. Luppold, U.S. Forest Service

A. Schuler, U.S. Forest Service (retired)

M. Snow, AHEC

E. Haviarova, Purdue


Agenda

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Statistics

Consequences

Success stories

Success for WH furniture

Innovation

Industry 4.0

WH furniture industry

Summary


Statistics

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Market share of imports

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Consumption = value of product shipments + imports – exports / Import share = imports/consumption


Major sources of imports WH furniture

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Production Value 54.8 $69.40 $87.10 $100 $117 $137 $162 $171.40 $177.40 $193.50

Export Value 13.767 17.465 22.617 27.583 25.958 33.723 38.882 49.96 53.1 53.416

0

50

100

150

200

250

China HH furniture production and export

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Source: M. Snow, AHEC; China National Furniture Association

Bill

ion

US$


Employment trends – HH furniture vs. cabinets

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Average firm size – HH furniture vs. cabinets

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Employment indexes for the last three economic expansion periods

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Housing market's importance to employment

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Proportion of production volume associated with the single family housing construction market

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Value of private U.S. construction, 2002-2017

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Consequences

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Hardwood lumber price index

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Eastern U.S. hardwood lumber production

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Where the hardwood lumber went...

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Success stories

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19 Copyright 2018 • Urs Buehlmann / Virginia Tech • All Rights Reserved

CABINETRY AND OFFICE

Kitchen Cabinets source: Herman Miller

source: Kitchen Craft

Office Furniture

OFFICE FURNITURE EXAMPLE

The story of a successful transformation

Grand Rapids before WWII - the U.S. furniture capital!

source (both pictures): Carron 1998

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FURNITURE MOVES SOUTH

the call of the South: - cheap lumber - cheap labor - new technology

… Markets relocate, too…


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THE ONES LEFT BEHIND ADAPT

Grand Rapids is adapting - moving into contract…

and office furniture…


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INNOVATE

innovations keep coming - color choices…

movable walls creating our beloved cubicles…


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REINVEST PROFITS

allowing industry to make profits…

and to keep plants and employees up-to date and competitive…

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source: http://www.buildinggreen.com/hpb/overview.cfm?projectid=27

… AND INNOVATE AGAIN!

going green before anybody else…

…and shifting business to the next areas of growth early…

source: http://www.hermanmiller.com/Healthcare


Success also possible for WH furniture

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Amish furniture manufacturing

In Ohio 2005/2008:

About 430 manufacturers; 2,700 employees

About 43 MMBF of hardwood lumber use

About $280 million in sales

Updating the numbers now, but growth is likely to have occured

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Holmes county – a viable model?

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Customer driven

Customers select style, stain, and species, making each order unique customization

Similar to much of the U.S. cabinet industry

Supply chain

Specialization in production

Many operations use the same set of stains

Outsourcing components locally – aggregate productivity


Top 10 WH furniture states 2017

1. Ohio - 4,306 employees (13.3% of U.S. total)

2. California

3. North Carolina

4. New York

5. Virginia

6. Indiana – 1,547 employees (4.8% of U.S. total)

7. Texas

8. Illinois

9. Pennsylvania

10. Arizona 10/17/17

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Source: Bureau of Labor Statistics (BLS)

Hickory/Lenoir, NC = 1,478 emp. Holmes/Wayne, OH = 1,288 emp.

Source: Bamberger and Davidson. 1998. The Closing.


WH furniture employment, selected states

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Innovation

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Did the WH furniture industry innovate?

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Furniture solutions

Mass customization

Connect with new retail partners

Internet marketing and selling

Services over the lifetime of the product?


Mass customization

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Services

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Online sales furniture 2018 (estimate)

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Source: M. Bradford, Woodworking Network. 2018


Is it safe to conclude that...

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The North American WH furniture industry has been whipped out

Competition on price alone is not the way to go

Strategic renewal needed – new business models

Mass customization – the way to leverage our only sustainable competitive advantage:

closeness to our customers!

Digitization of manufacturing


Recent woodworking industry survey

Over the last 3 years, have you increased the use of computerization in:

Collaborating with customers

Design

Manufacturing processes

Accounting

Inventory tracking

Supply chain management

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64

59

54 50

30 28

0

10

20

30

40

50

60

70

Pe

rce

nt

of

firm

s

Source: Bumgardner et al. 2018


We are at the threshold of the 4th industrial revolution...

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1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Deming's 14 points

Lean Production

1900

Scientific management (Taylor)

Buyer's market

First standardized

processes in

ship construction in Venice

Assembly line (Ford)

Quality control (Radford)

Standardization of work (Taylor)

1770 1450

Mechanical loom (Jacquard)

Toyota Production System (TPS)

Steam engine (Watt)

Programmable logic controller (PLC)

(Morley)

2010

Industry 4.0

Large scale outsourcing


The vision

Industry 4.0 will:

bring change at a speed, scale, and force never seen before

affect the very essence of our human experience

allow system-wide, radical innovation

create realities previously unthinkable

"Industry 4.0 [...] will improve the state of the world [...]" (source: www.wef.ch/4ir)

Video at: https://www.youtube.com/watch?v=SCGV1tNBoeU

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source: http://www.nydailynews.com/news/world/watch-japanese-store-robot-greet-customers-article-1.2192946

http://www.wef.ch/4ir

https://www.youtube.com/watch?v=SCGV1tNBoeU







The pillars

Big data and analytics

Autonomous robots

Simulation

System integration

The Internet of things

The cloud

Additive manufacturing

Augmented reality

The digitzation of everything

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Source: https://www.gov.uk/government/uploads/syste m/uploads/attach-ment_data/file/255922/13-809-future-manufacturing-project-report.pdf


One view

Manufacturing of the future:

Customer centric

Unlimited personalization

Optimum resource efficiency

Connected production

Global connectivity

Simulation of everything

Zero errors from first part

"[...] No two cars will ever be alike again [...] (Bosch 2016)"

Video at: https://www.youtube.com/watch?v=ISk64bJ35yM

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source: Bosch 2016

https://www.youtube.com/watch?v=ISk64bJ35yM






WH furniture industry


Processes - past

Processes until the 1990s:

Sequential process steps

Large batches

Work-in-process (WIP) inventory between process steps

Long lead times

Quality issues

Inflexible system

Mass production

No customization

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Processes - present

Processes now:

Still sequential process steps

Reduced batch sizes

Minimized work-in-process (WIP) inventory

Shorter lead times

Quality systems

Customized mass production

Selected customization

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Processes - future

Processes in the future:

Administration, design, material management automated

Batch size one

Work-in-process (WIP) inventory non-existent

Short lead times (hours not days)

Quality part of the process

Complete customization – each piece is unique

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Batch size one – mass production

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source: IMA 2018

Video at:

https://www.youtube.com/watch?v=5tsCYOqxRWs







Summary

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Summary

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Almost 80% of WH furniture consumed in the U.S. are being imported

The remaining U.S. WH furniture manufacturers are either protected or produce only selected products

The digitization of manufacturing (Industry 4.0) offers opportunities to create new business models

Remember our sustainable competitive advantage:

closeness to our customers!


Thank you!

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competitiveness of the u.s. furniture industry · 2018-09-17 · many operations use the same set...

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