Household Furniture, NEC

SIC 2519

Industry report:

This industry category includes establishments primarily engaged in manufacturing reed, rattan, and other wicker furniture; plastics and fiberglass household furniture and cabinets; and household furniture, not elsewhere classified.

Industry Snapshot

This industry, which focused primarily on specialized furniture production, was dominated in the late 2000 and early 2010s by small firms. It was distinguished from most manufacturing sectors in that it was characterized by a trend toward more companies with few employees, against overall industrial trends. Of the over 800 companies producing furniture in this industry, over 90 percent had fewer than 25 employees and over 70 percent had fewer than five employees. According to the U.S. Census Bureau, this industry shipped goods valued at $761.1 million in 2008, down from $812.6 million in 2007.

Along with increased international competition, domestic conditions affected the industry as well. During the late 2000s, an economic recession led to a sharp decline in demand. While some companies were able to weather the storm through the increasingly higher prices of raw materials and slow sales, others were forced to shut their doors.

Background and Development

Wicker, Rattan, and Reed Furniture.
Wicker furnishings have been used in American households since the seventeenth century. The first known craftsmen to advertise wicker furniture were early nineteenth century basket weavers. During that period, straw and willow were replaced by rattan, which was imported by the East India Company.

In the mid-nineteenth century, wicker furniture, customarily styled with closely woven cane seats and looped reed backs and arms, became increasingly popular. Furniture frames were constructed from hickory and oak pieces that were steamed and bent into shape, then wrapped with split cane. At that time, construction of wicker furniture evolved from a craft to an industry.

Between 1875 and 1910, wicker furniture reached the height of its popularity, in part because of its association with exotic foreign countries. In 1917, Marshall B. Lloyd invented a wicker-weaving machine that used fiber material--the Lloyd Loom. Concurrently, many wicker manufacturers began to experiment with such materials as prairie grass and fiber. Wire grass, converted into a pliable twine and woven into furniture, was obtained from the prairie marshes of the northwestern United States.

By the end of World War I, the skilled labor needed to weave wicker became scarce in the United States, and imports began replacing domestically manufactured goods. By the close of World War II, almost all wicker furniture sold in the United States was imported, a situation that continued in the early 2010s.

Plastics and Fiberglass Furniture.
Although plastics had been developed in the late nineteenth century, plastics did not begin to replace metal for body shells in industrial applications until 1909 when U.S. chemist Leo Baekeland developed Bakelite. Baekeland, along with two Westinghouse Corporation engineers, Harold Faber and Daniel O'Connor, developed a laminate originally intended for electrical insulation. The development of this formula in 1913, however, resulted in the establishment of the Formica Corporation. By the mid-1920s Formica's laminate was used to produce furniture.

With the aircraft industry's demands for lightweight seat furniture during World War II, the development of plastics for furniture construction increased. Two early pioneers of U.S. furniture design, Eero Saarinen and Charles Eames, began experimenting with molded polyester in 1941. Saarinen's "Womb" chair, the first fiberglass design to be mass-produced in the United States, was manufactured by Knoll Associates in 1946. The chair remained in continuous production for more than four decades. In 1950, New York's Museum of Modern Art held an exhibition entitled "Organic Design in Home Furnishings." The prize-winning fiberglass armchair, designed by Charles Eames, was manufactured by the Herman Miller Furniture Company. Eames' molded plastic chair series, which included a stacking chair, became one of the most basic and popular lines of U.S. seating furniture.

Due to the wave of consolidation among retail furniture outlets, furniture makers across all segments were forced to compete on the basis of access to distribution channels, with the large firms typically gaining greater leverage than the small firms. While some of the major manufacturers in the miscellaneous household furniture category were able to establish inroads in this domain, the bulk of the industry's firms had largely sidestepped the process because of their focus on niche products and small-scale production facilities. These companies benefited greatly from the surge in e-commerce at the turn of the twenty-first century, allowing them to market their specialized products directly to customers. Wholesale outlets, home-shopping television, and mail-order distribution were the other primary marketing targets for these firms.

Just as the booming U.S. economy in the late 1990s boosted discretionary consumer spending on such merchandise as furniture, the recession of the early 2000s undermined the performance of the furniture industry. After growing from $548 million in 1998 to $698.6 million in 1999 and to $737.8 million in 2000, shipments of household furniture, except wood and metal, declined to $724.7 million in 2001.

The surging number of home-office workers in the United States foreshadowed healthy sales in the early twenty-first century, as more and more individuals converted rooms in their homes to office space complete with all the features and amenities of their offices at work. Shipments of plastic shelves and cabinets were valued at $270 million in 2003, largely on the strength of the home office trend. Most of these products were shipped in ready to assemble pieces. Despite a weak U.S. economy, which forced manufacturers to keep shelving prices low, sales of plastic shelves and cabinets grew an estimated three to five percent per year in the early 2000s. The rapidly growing ready-to-assemble sector also constituted a competitive market for miscellaneous household furniture manufacturers.

The value of shipments had fluctuated in the mid-2000s, growing from $695 million in 2002 to $744 million in 2003 before falling to $705 million in 2004 and rebounding to $782 million in 2005. In 2007, an estimated 953 companies shipped $1 billion in products with industry-wide employment at 11,860 workers. States with the majority of output, as well as market share, were California and Florida.

In 2007, the household furniture, not elsewhere classified, segment accounted for 35.9 percent of market share for $45.2 million in products. Upholstered household furniture (except wood or metal) accounted for 19.6 percent of market share with a value of $173.1 million. Household furniture manufactured with glass, fiberglass, and plastic held 13.5 percent of the industry share and had $372.3 million in shipments. Lawn and garden furniture (except wood, metal, stone, or concrete) held 10.6 percent of market share with a total of $45.2 million in shipped products.

Current Conditions

Furniture manufacturing as a whole is closely tied to the overall economy, particularly the housing market. During 2005, new housing starts reached record heights of over two million. However, as the United States experienced a banking crisis in 2008 due to poor lending and faulty loans, the housing market came crashing down. By 2009, new housing starts were at a 50-year low of 566,000.

Discretionary spending--both personal and business related--on furniture ebbs and flows with the economy. The value of the office furniture market in 2007 was $11.42 billion, which declined slightly to $11.16 billion in 2008. The full impact of the recession was felt in 2009, when sales from office furniture fell by nearly 30 percent to $7.84 billion. Although the Business and Institutional Furniture Manufacturers Association (BIFMA) anticipated that 2010 would result in another decline in overall sales of office furniture to $7.8 billion, the association predicted that growth would begin to return the following year. BIFMA predicted office furniture sales to grow by 6.7 percent during 2011 to $8.33 billion--still below recent year totals, but moving upward nonetheless.

According to data provided by the U.S. Department of Commerce's International Trade Commission in 2010, this segment of the industry remained somewhat more fragmented than the overall furniture industry. The top four companies in this segment controlled 13.7 percent of the market share, and the top eight controlled 20.5 percent. The top 20 and the top 50 firms controlled 31.5 percent and 44.7 percent, respectively. In comparison, the top 20 and top 50 firms of the overall furniture industry controlled 26.8 percent and 39.6 percent of the market.

Industry Leaders

Two major firms in this industry exited the market during the 2000s. First, through the turn of the twenty-first century, Krause's Furniture, Inc. was a leading manufacturer of made-to-order furniture, with sales of $145 million and 1,100 employees. However, after two years of declining sales and mounting losses resulting primarily from the sluggish U.S. economy, Krause filed for Chapter 11 bankruptcy protection. Unable to recover, the firm began liquidating operations in 2002. Second, O'Sullivan Industries, which specialized in ready-to-assemble furniture, including plastic and fiberglass shelves, cabinets, and seating, employed 1,750 people in 2003, and reported $289 million in revenue. O'Sullivan Industries entered into Chapter 11 bankruptcy protection in 2005 and emerged in April 2006. However, unable to regain its footing, O'Sullivan sold most of its assets to rival Sauder Woodworking in 2007.

Sauder Woodworking Co., the leading manufacturer of ready-to-assemble furniture manufacturing, as well as a top manufacturer of church furniture and institutional seating, posted $700 million in sales with 3,400 employees in 2006. In 2008, Sauder reported $184 million in sales. That year, the company secured $120 million in new financing from Bank of America Business Capital to refinance existing debt and provide working capital. The company also cut approximately 75 positions and several hundred products from its product line.

Bush Industries of Jamestown, New York, sold its three brands--Bush Business Furniture, Bush Furniture, and R�hr--through thousands of retail outlets across the United States. It had successfully established itself as a significant presence in the ready-to-assembly market, although it trimmed spending and operations during the late 2000s in response to weak demand. Originally founded by the Bush family in the 1950s, the company was later run by an investment group.

America and the World

In 2009, the value of exports for furniture (except wood and metal) totaled $214.0 million. More than one half of all exports were shipped to Canada ($125.8 million). Other top export destinations included Mexico ($35.5 million), Costa Rica ($4.7 million), United Kingdom ($3.7 million), and China ($3.1 million). In 2009, the value of imports for furniture (except wood and metal) totaled $919.6 million. Roughly two-thirds of this total came from China ($607.9 million). Other top import countries included Canada ($92.9 million), Italy ($36.9 million), Taiwan ($35.4 million), and Indonesia ($26.2 million).

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News and information about Household Furniture, NEC

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