2-26-2021 – Furniture industry threats seen looming

Posted on: February 26th, 2021 by admin

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February 26, 2021

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By Guy Lucas guylucas@newstopicnews.com

 

Feb 25, 2021

 

 

Furniture manufacturers face a growing threat of dual problems from growing backlogs: dissatisfied customers and eroding profits.

 

That’s the verdict contained in the latest Furniture Insights report from Smith Leonard, an accounting and consulting firm based in High Point.

 

The report says that furniture orders in December were higher than expected — 27% above the level in December 2019, so the total order for all of 2020 finished 15% ahead of 2019.

 

Not all companies finished the year with orders up from 2019, but 78% of the companies surveyed by Smith Leonard said they did.

 

But, as has been the case for months, backlogs in shipping products to customers just keep growing and in December were 168% higher than in December 2019.

 

“In the old days, a big backlog was great, but then somebody realized that the end customers wanted it NOW, so the industry brought them down. Now customers are not happy with the wait and some are looking at other places to get product faster,” the report said. “We are hearing more and more about cancellations of orders.”

 

Clearing the backlogs will be difficult as long as it remains hard to find workers, the report said. The number of factory and warehouse employees in December was down 3% from December 2019, despite relatively high overall unemployment. The greatest number of the unemployed are from the hospitality industry, the report noted.

 

“It has really been difficult for domestic manufacturers to get people as so many of the unemployed folks in hospitality jobs such as hotels and travel-related jobs are not trained. It takes a lot of time to get people trained, and many are not looking to start new careers,” the report said.

 

Besides the threat of cancelled orders, companies now also face a growing trend of rising costs for raw materials, imported goods and freight.

 

“This is creating problems for orders that were priced weeks ago that will now cost more to produce or otherwise get to the customer,” the report said.

 

The report suggested, as last month’s also did, that companies need to raise prices.

 

“No one likes price increases, but there are times that they have to go up, and this seems to be one of those times,” the report said.

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