Furniture Manufacturing
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Industry Overview
Furniture manufacture in the US generates about $65 billion in sales from 20,000 companies. Large companies include Steelcase, Herman Miller, La-Z-Boy, Sealy, and Furniture Brands International. The average company operates a single plant and produces less than $50 million in annual revenue. Some sectors, such as metal office furniture, are highly concentrated, but the industry as a whole is fragmented: the largest 50 companies hold less than 40 percent of the market. The industry is fairly labor-intensive: average annual revenue per worker is about $130,000.
Competitive Landscape
The volume of home furniture sold depends heavily on the level of home sales, while office furniture sales depend on the health of the US economy. The profitability of individual companies is closely linked to volume, since many costs are fixed. Small companies can compete effectively if they produce specialty items or high-quality workmanship that can sell for a premium price. Imports have become a major competitive factor.
Products, Operations & Technology
Manufacturers generally specialize in either household furniture ($40 billion market) or office furniture ($25 billion). Within the household segment, wood furniture accounts for about 60 percent of sales; upholstered furniture 30 percent; and mattresses, metal furniture, and other products 10 percent. Products include "case goods" (bedroom, living room, and dining room furniture); upholstered items like sofas and recliners, kitchen cabinets, mattresses and box springs; and other items such as occasional furniture, home entertainment centers, and grandfather clocks. Products may be factory-finished or ready-to-assemble (RTA). Within the office segment, metal furniture accounts for a third of sales, wood furniture a third, and partitions, showcases, and shelving the other third.
Manufacturing operations are generally in company-owned factories of 50,000 to 200,000 square feet; Steelcase operates some factories with more than 1 million square feet. Larger companies also operate distribution centers and warehouses. Raw materials are the biggest cost item, usually representing about 50 percent of the wholesale price, and include steel, hardwoods, plywood and chipwood, textiles, polyurethane foam, springs, and various glues, paints and finishes.
Because of the vast number of items, styles, coverings, and finishes, much furniture is made-to-order, with delivery times varying between two weeks and several months (for some high-cost items). Despite automation, the made-to-order nature of much of the business means that labor content is high. Even the most efficient household furniture companies produce only $100,000 of sales per employee (compared to $200,000 in steel office furniture manufacture).