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The value of furniture and home furnishing store retail sales in the United States is continuously growing, exceeding $100 billion (all amounts in this article are U.S. dollars) in 2003 (U.S. Census Bureau 2005). However, the value of domestically produced furniture has declined steadily between 2000 and 2003, by more than $5 billion (Fig. 1). The gap between domestic consumption and production has been filled by an increasing share of furniture imports (Fig. 2). The main reason for the growing market share of imported furniture lies in the increased competitiveness of foreign furniture manufacturers (ITA 1999). With more countries willing to trade, and being able to trade, the competition has increased worldwide and each country has developed its own way to help its local industries to compete for market share.
In wood furniture manufacturing, labor accounts for up to 40 percent of total manufacturing costs (Whelan and Maklari 2002). In past U.S. history, increasing manufacturing costs drove furniture manufacturing from New England to Michigan, and then to Indiana, North Carolina, and Mississippi; the same forces work internationally (Raymond 2004). Canada was replaced by China as the number one furniture exporter to the United States. Mexico's labor also became more expensive than that of China. The quest for low-cost labor moved from Taiwan to Malaysia, then to Indonesia, and most recently to Vietnam.
In 2001, imports represented 43 percent of the wood household furniture sold in the United States and the share of imports has increased at twice the rate of domestic sales for the last 10 years (Evans 2002). These foreign companies combine cheap labor, worldclass machinery, and efficient material-handling equipment to gain competitive advantages. Raymond (2002) indicates that for the American wood furniture industry, the only options available to stay competitive are to use both semi-customized and fast order fulfillment strategies. In this article, we explore various competitive strategies of furniture manufacturers and their home countries. Unless otherwise specified, when we refer to furniture, we are referring to household furniture (SIC 251), office furniture (SIC 252), and fixtures (SIC 2542). Customer satisfaction, price, innovation, and shareholder satisfaction are the main critical success factors identified by publicly held U.S. furniture manufacturers. A mix of cheap labor, modern technology, access to raw materials, knowhow, and favorable...