How much furniture capacity is left south of the border?

HIGHLIGHT — Mexico’s historic rise in the world of furniture manufacturing is no longer a secret.

Here are some numbers to put the country’s rise into perspective. According to Furniture Today research, Mexico’s furniture exports to the United States grew 61% in 2021 compared to 2020, eclipsing $1.9 billion in market share. With the exception of India and Thailand, which recorded significant increases of 58% and 55% respectively, Mexico’s rise far exceeds all other countries, even surpassing leaders China and Vietnam. more than 35%.

Mexico is still far behind Vietnam and China, whose furniture exports reached $9.1 billion for the year. But his rapid rise to third place is certainly remarkable.

Many vendors have moved in recently, including A-America, Legends Furniture, New Classic Home, and American Woodcrafters, to name a few. Others, such as Marge Carson, Martin Furniture and Whom Home, have taken steps to increase production in the region.

But what capacity is there left in the country for the manufacture of furniture? And what other challenges are problematic for furniture manufacturers?

New Classic is a company new to Mexico, which launched its first products in the country earlier this year.

“Capacity is certainly a challenge for companies that want to come here and start new businesses, because there are very few companies with enough capacity to tackle bigger suppliers or customers,” said Scott Hill, President of Corporate Sales and Marketing. “So you have to position yourself with the right factories.”

Legends Furniture is even newer to the area, having unveiled its first bedroom collection out of the country at the recent High Point Market. The company operates a factory in Arizona and sources from Vietnam.

“Mexico is already at full capacity,” said Tim Donk, vice president of sales at Legends Furniture. “People talk about the ability to bring together secondary factories.

“We are lucky because we have been tinkering for 10 years. We expect a strong push into Mexico, but it’s going to be tough for new business. Frankly, we are already late for the game.

A-America presented its first Mexican collections in January at the Las Vegas market.

“We are already seeing capacity being reached,” said Christian Rohrbach, president of the company. “A lot of factories are completely full. With only 130 million people in the country, it doesn’t have the capacity to reach China’s levels. But having said that, the quality in Mexico is better than I think. thought.

In terms of capacity, the region also plays a role.

“There are a lot of inquiries along the border and inside Mexico, in areas like Monterey, Guadalajara and Mexico City,” said Gil Martin, founder of Martin Furniture.

Martin has been manufacturing furniture in Mexico for 20 years, when he moved his manufacturing facility from San Diego to Tijuana.

“There may be more opportunities inside Mexico than along the border, but the freight to get goods to the US border is high from the south,” he said. .

Jim LaBarge, CEO of high-end Marge Carson, is a veteran in Mexico, having manufactured in the Tijuana area for the past 25 years. LaBarge is less concerned about capacity, but he thinks newcomers will have a harder time than they would have in previous decades.

“I don’t think capacity is an issue in Tijuana,” LaBarge said. “But maybe it’s for companies that are moving in different directions.

“I will say, though, that in Tijuana the cost of construction is very high now,” LaBarge said. “Before, you could always negotiate rental rates. We have a long term lease so that’s fine. By the end of the year, we will probably have to look for a new installation.

LaBarge is far more optimistic about upholstery than cabinetry, as most factories, he says, lack the technical sophistication that Marge Carson required. His main goal now is to find factories that can produce crate items at a high enough standard.

“I have a solution that I’m not ready to announce,” he said. “But it’s still going to take more work.”

Freight problems increase

Freight prices are rising and transportation problems are becoming more frequent.

“Trucking is more difficult when you come from the South,” said Jonathan Bass, CEO of Whom Home and Innova. Bass has been producing furniture in Mexico since 2011.

“From Tijuana to our city, there are five checkpoints. Trucks can be stopped at any time and you must pay for unloading. They are looking for stolen trucks and drugs,” he said. “Guadalajara to Tijuana is $8,000 freight. It’s expensive. And the further you go from the border, the more complicated it is. Proximity to borders is essential. Guadalajara is better if you ship south,” he said.

Hill at New Classic cited rising fuel prices and a lack of drivers as reasons the situation appears to be worsening.

“Freight is increasingly becoming a challenge for people who don’t have their resources online,” he said.

Rohrbach also cited a lack of drivers and trucks.

“While the quality from Mexico is better than I expected, the trucking has been disappointing,” he said, saying that while transportation certainly beats China and other overseas countries, it don’t beat them much.

LaBarge agrees that transportation is difficult but with a different approach.

“It’s hard to get things done,” LaBarge said. “We had a situation where a truck was supposed to arrive but never showed up. Later they said they had a problem. Who knows what was the truth? Now, this could just be due to unreliable people. I am not sure.

“If California allowed Mexican trucking companies to operate more freely, that would help. They only allow one stop for maquiladoras,” LaBarge continued. A maquiladora is a company that transports raw materials from the United States to Mexico and whose Mexican workforce produces the added value. The finished product is then shipped back to the United States

Labor issues

Labor is also an issue in Mexico, mirroring in some ways those currently seen here in the United States.

“Retaining our workforce is a constant challenge,” said Martin. “As we are close to the border in Tijuana, there is so much competition for the available labor. The government also increased the minimum wage across Mexico by 21% on the first day of 2022. This increased our operating costs.

“Workers will go from another plant to a small pay raise,” said Pat Hayes, vice president of product development and design at Martin. “You really need to pay more than the going rate and provide better benefits to keep good workers; otherwise, it becomes a revolving door for training and finding new workers.

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