by Ken Bassman
I am confident that this question is something that many of your customers and their clients are asking daily and I am hoping that this is not something that is keeping you up at night. I have been immersed in our industry since 1984 and have had the pleasure of working in many various aspects of our business which has given me a well-rounded perspective. What is currently going on in the home business reminds me of my Econ 101 class in 1982 at UC Santa Barbara. We have a big disconnect between Supply and Demand.
Amidst so much economic hardship for so many industries, as we all know, Covid has provided a tailwind to the home industry.
- As people were cancelling events and travel, and spending so much more time at home, energy, money, and time were all being spent on improving their homes and in many cases buying new ones.
- Americans bought a lot more goods when Covid prevented them from buying services.
The reality of our situation is that with unprecedented demand, supply has just not been able to keep pace. The owner of a Top 100 Retail chain was recently quoted: “We sell thousands of pieces of furniture every year,” he said, adding that orders are typically delivered in a two to 10-week time frame. Now 75% of our orders are taking six to eight months. “It’s kind of nutty right now. Every single day we’re hearing more bad news.”
I would like to provide a high-level recap of “Why” we (the home furnishings industry) are in this conundrum and experiencing so many delays:
- Covid outbreaks domestically, health and safety protocols such as physical (social) distancing has reduced the number of people in factories (both stateside as well as overseas) resulting in tremendous labor shortages
- There have been many factory and port closures as well as complete shutdowns in China, India, Indonesia, and Viet Nam (the four biggest furniture producing countries)
As overseas orders are finished, there are problems with getting the product to the ports and when the merchandise does ship and then arrives in the US, there is significant congestion and even more delays:
- Too many containers on container ships that are stacked up way off the coast
- Not enough (foreign) labor on the ships
- Due to covid health and safety protocols, these workers are not being allowed to disembark, therefore less people want these jobs
- Not enough (domestic) labor to unload ships
Once these containers get cleared and are in the ports, there becomes a new set of issues to deal with:
- A significant shortage of truck chassis (what the trailers/containers hook onto)
- A significant shortage of truckers to haul the product
- The reality is that many of the truck drivers have collected more on unemployment than what their wages are and just don’t want to go back to work
When the containers get delivered to the US based Vendors (over 99% of the vendors that most of you are getting product from are based in the US), in many cases, we have been back to square one with closures, Covid outbreaks, labor shortages, and health and safety protocols such as physical (social) distancing reducing the number of people to get orders shipped.
In too many cases, getting product out of factories can take weeks as opposed to just a few days. Goods are being sent to staging areas and can take up to several weeks for trucking companies to pick them up. Pre-covid, cross country shipping used to take about seven days and now because of consolidation at several warehouses along a trucking route, coupled with shortages of containers, truck chassis and drivers, we have seen shipments from North Carolina take as long as eight weeks to get to California. Even domestic (made in the USA) Vendors usually rely on parts/components from overseas in their manufacturing processes as it truly is a global supply chain.
For many of you who have recently ordered upholstery, we are dealing with everything that I have mentioned and adding a global foam shortage. I have detailed some of the overseas issues which is where so much of the foam that is used in sofas, chairs, mattresses, etc. comes from.
The domestic foam supply chain is still catching up from February, when Winter Storm Uri hit the Southwest; this took several of the main plants that make the chemical ingredients for foam offline. This was at a time when demand was peaking and production needed to go up, but unfortunately, went down instead. We are now seeing many of the top upholstery vendors playing catch up and quoting lead times of 24 weeks.
Not only is all the above factoring into what we are all dealing with daily, but prices are going up as well. As demand has steadily gone up and supply has been choked (globally), back to Econ 101, prices everywhere have increased and are continuing to. Just some of the factors:
- More expense in raw materials
- Less available labor resulting in increased wages
- Less available containers forcing higher costs
- Less available labor to off load containers
- A shortage of available chassis (trucks), drivers, and factory workers
I have often said that patience is a virtue, and something that I am always working on. However, there are just so many factors out of our control, and we are all caught in this together. “It is what it is” comes to mind, and hopefully, once educated, your customers and clients will understand. We are in the perfect storm and like everything, this too shall pass. For anyone that has recently tried to buy a new car or new appliances, those industries are experiencing even more delays than ours.
If this has shed even a little light on the “Why” question, then I have succeeded in my intention and I thank you for your time.
After graduating from UC Santa Barbara in 1984, Ken Bassman began his career in wholesale home furnishings. A 35+ year industry veteran, Ken has experience in every aspect/facet of the industry. Ken enjoys leadership, continuing education, personal growth and development, mentoring others and new challenges. Ken has completed the Toastmasters International public speaking program, holds a 2nd degree black belt, is a past CA State Bench Press champion, a private pilot and has run a marathon. He is involved in the community and has sat on several non profit Boards. Ken lives in Newport Beach with his wife, Teri and their three daughters, Allie, Anna and Lauren. He enjoys family, friends, staying active, sports, reading, games and travel.