REMODELING IDEAS

In the furniture industry, it’s adapt or die for US manufacturers

Los Angeles Times

LOS ANGELES

The streets around John Sandberg’s furniture factory are dotted with the shuttered shells of manufacturers that have closed down or left town.

But the Sandberg family, woodworkers for four generations, has found ways to keep Vernon, Calif.-based Sandberg Furniture Co. going despite foreign competition, the nation’s stiffest environmental laws and the housing industry collapse.

For one of the state’s oldest furniture manufacturers, a maker of moderately-priced bedroom furniture, survival is a matter of adaptability, Chief Executive John Sandberg said.

“We’ve had to be very efficient. We’ve become highly automated. We’ve had to cross-train our workers, in the factory and in the office,” Sandberg, 46, said. “But we are very good at what we do, and that’s why we are still here.”

Employment at Sandberg Furniture has fallen to about 150 employees from about 450 several years ago.

The main threat to the recovery of the U.S. furniture manufacturing industry is foreign competition, particularly from China, according to many U.S. furniture businesses.

In October, Sandberg and other furniture makers went to Washington to argue against eliminating “anti-dumping fees” levied against importers of Chinese-manufactured goods sold in the U.S. for less than fair market value.

“Imports from China jumped 148 percent from 2001 to 2003,” said Joseph W. Dorn, a lawyer testifying on behalf of the furniture manufacturers. “The imports undersold domestic producers’ prices in each and every quarterly price comparison. The U.S. producers’ prices declined. So did their production and employment. The industry’s operating income fell by 57 percent. Sixty-five plants closed.”

U.S. importers have paid more than $500 million in retroactive anti-dumping duties since the system was implemented in 2005. Sandberg said that his share of the fees helped him stay in business.

“We made over $1.4 million in capital expenditures from fiscal 2004 to fiscal 2006, which is a considerable sum for a small company like us. Without the order, there is no question in my mind that Sandberg Furniture would already have been forced to close,” he said.

But Sandberg Furniture’s resilience has a long history.

The business was established in 1890 in Minnesota as Acme Furniture Manufacturing Co. by Sandberg’s great-grandfather Martin. In 1900, the family moved to California, and its main products were wooden crates and woven baskets to haul groceries and supplies at a time when there were no checkout lines or baggers.

The business boomed. “Then some guy invented the paper bag — oh, and the automobile, too,” Sandberg quipped.

In 1918, the family decided to focus on bedroom furniture on the simple logic that there was usually more of it than anything else in a typical family home.

“One dining room. One living room, but there’s often more than one bedroom,” Sandberg said, explaining the family’s reasoning.

The biggest challenge arrived in 2003, when the trickle of Chinese furniture imports became a deluge. Worse, no matter how Sandberg juggled the numbers on his analysis of the Chinese competitive landscape, the results were grim. The company was losing about 10 percent of its business annually.

“In investigating Chinese production of laminate bedroom furniture in 2003, I discovered that I could import completed and boxed product for less than our material cost. I knew we were in trouble,” Sandberg said.

It meant that Sandberg’s company had to become as efficient as possible and win its battle with better technologies and better quality.

“We make bedroom collections that use paper laminates instead of solid wood or wood veneers for the exposed surfaces,” Sandberg said. “Our company is a leader in the technology for making paper- laminate bedroom collections.”

Sandberg’s primary customers are low-income families and young adults just starting out. The company’s bedroom sets sell for $499 to $1,199, but the most popular sell for $899 to $999.

“That’s the sweet spot for us,” Sandberg said. Most of the company’s customers are in California, Texas, Florida and in the Chicago and New York areas.

Sandberg said the company keeps 7,000 bedroom sets in stock to respond quickly to inventory requests. He said it was another competitive advantage over the imports.

“We don’t have to wait weeks for it to arrive. We don’t have to wait for the boat to get here. We can supply our products quickly,” Sandberg said.

The most important edge might come from a proprietary finishing technology called Ultragloss that creates a finish that is almost an optical illusion, making a lightweight piece of laminated wood look like a heavy block of marble.

“No one else we know of has anything like Ultragloss,” Sandberg said. “It’s also extremely durable, scratch-resistant, dent-resistant and chemical-resistant. It’s one of our key strategic advantages.”

The privately-held company doesn’t reveal sales statistics, but for the first time in years, he’s thinking sales will improve this year.

“We’re going to be able to keep this thing going,” he said.