Sunday, January 18, 2004

Go against grain, Ind. makers say

Office furniture industry readies for Chinese rivals

By Norm Heikens
Gannett News Service

JASPER, Ind. - Chad Giesler's veins are filled with sawdust and tradition.

Giesler is plant superintendent at Jasper Desk Co., which claims to be the oldest office furniture maker in the nation, in a community proudly billing itself as the nation's center for wood office furniture.

But Jasper residents and others in Indiana's hardwood industry fear that the aggressive, sophisticated Chinese manufacturers will soon turn their sights on office furniture and cabinetry, having already decimated residential furniture makers in North Carolina and other parts of the Southeast.

Longtime observers say that sleepy Hoosier companies must scramble to become more efficient while fighting what they say are unfair trading practices.

"We'll fight it every day," said Giesler, 33. "There's no way I'm going to have a part of not being here another 128 years."

Native wood among best

Indiana's oak, walnut, cherry and other hardwoods are considered some of the best in the world. Mostly concentrated in southern counties, the plentiful wood gave rise to an industry that employs 21,900 across the state at an average wage of $13.63 an hour.

But Chinese imports of furniture and parts exploded to $5 billion in 2001 from only $145 million in 1990, according to the U.S. Department of Commerce. That's gained China 27 percent of the global market.

Chinese factories use the latest American technology to churn out products comparable to the best produced in the United States.

China has minimal environmental and labor regulations, critics say. Few plants in China are held to the same standards for collecting dust, for example. Also, Chinese workers typically are paid only cents an hour.

Call for floating currency

Wood products companies have joined other manufacturers in calling for the United States to force China to float its currency, which they think would increase its value at least 20 percent.

"There's a lot of good things to be said about free trade," said Jasper furniture maker Bill Klem, but "there's an unlevel playing field. It puts tremendous pressure on the U.S. manufacturer."

The pain is becoming acute, a recent survey of members of the Wood Component Manufacturers Association shows.

Steve Lawser, executive director of the Marietta, Ga., trade group, said 72 percent laid off workers in 2002, a rate far greater than disclosed in 20 years of the surveys. Profit margins also were the smallest in the history of the survey.

Members complain they can't make products for the price at which Chinese rivals can buy American lumber, make a product and ship the product back to the United States.

Factions unite to meet threat

Alarmed at the surge of Chinese imports, Indiana wood products executives met in Jasper this summer in a rare, if not first ever, meeting across lines traditionally dividing loggers, sawmills and manufacturers.

Now Jasper-area economic development officials are forming a network of manufacturers involved in wood, metalworking and other products to improve their companies.

China is only part of the problem, said Purdue University wood products professor Rado Gazo.

"We need to go through some revolutionary change," Gazo said. Wood companies "do not adopt new technology very quickly."

Wood companies miss the point when complaining about China, said Milt Cole, who owns Cole Hardwood in Logansport, Ind.

While Chinese manufacturers certainly benefit from fewer regulations and lower labor costs, it spends as much for shipping as American companies spend complying with labor and environmental regulations, he said. Labor, which accounts for only about 13 percent of the cost of a finished product, is China's only real advantage.

Worker productivity must rise

Indiana's furniture industry must radically increase the amount of production it gets from each worker, Cole said.

Even Lawser agrees that American companies need to improve business practices.

"They tend to do things the way they've always done it," Lawser said.

Chiquita's timing is ripe
Look Who's Talking
Queen City Rewind
Project big for firm, Piketon
When you say Budejovicky, you're in court!
Tristate business notebook
Go against grain, Ind. makers say
Check out your firm's competitors
Couple finds brides are big business
Bunless burgers not likely to get big slice of market
Maglev train still too expensive
Business Agenda