Buy American

[drcollie]

It's been a hard summer on the industry. I call around to my various suppliers and its getting more and more difficult to get folks on the phone, or find product or raw materials that are in-stock. Manufacturers are being very quiet about it, but I've been doing this long enough that I know when CEO's are answering the switchboard, or customer service teams are all on voicemail, its a really bad sign. When pressed, the suppliers will tell you that they're REALLY cutting back now, and I hate to see this happening. Three day works weeks at some places, staff sent home at lunchtime...it makes me wonder if the American Furniture Industry is headed the way of American Textiles? I sure hope not, because the Chinese don't build it as good, nor the Vietnamese or the Malaysians. Most of what I see coming from the Pacific Rim is suitable as future landfill material and not much else.

I'm not a real big 'flag-waver' per se, but I see the US furniture industry is in trouble and drowning in a sea of cheap imports. The only ones who can toss the life ring is the American Consumer. Yes, its going to cost you a little more, but would you really expect your fellow Americans to work for $ .65 an hour like the Chinese? No - you don't want to see your fellow citizens living in poverty.

The USA furniture industry is worth saving. We do it well here, and the great irony is that over the usable lifespan of the piece, its actually less to own than the junk because its not falling apart in a few years. Its been tough since the Recession began on the suppliers, they've been holding on for so long, that I'm worried about them being able to keep their staff and associates. I actually had one customer service rep near tears on the phone with me today, her hours have been cut back to half of what they were and she can't manage the family bills, as her husbands hours (he's in the furniture biz as well in the production end of it) were cut in half as well.

So when you're thinking about that new leather sofa, try to see if you can swing it in your budget to buy American. You're getting a much better piece of furniture and helping save jobs in your country.

[aaron]

Do domestic furniture manufacturers have a trade organization? It seems like they could benefit from a website to promote themselves and their domestically manufactured products, as well as to explain why price point isn't everything.

I suspect that not all manufacturers would get on board. Some manufacture quite a bit of their furniture in Asia, others may plan to do so. As for furniture stores, there are a lot of them in which the salesperson wants to do nothing more than close a given sale, even if it means selling a load of junk that will deter the customer from ever coming back. By then they'll have a different job, anyway.

[organic_smallhome]

Hey, Duane. I just had an idea. You're an excellent writer, but you need a larger forum (in the larger sense) to get the word out. How about you write a piece for HuffingtonPost? You know, from the point of view of a threatened American worker? I read HuffPo every day and, honestly, I've yet to see an article of this kind. You can post the draft here and we can give our feedback. Such a point of view is desperately needed to make the situation "real" for a lot of folks. I'm serious, btw.

[JackOlso]

Unfortunately, the problem isn't as simple as "Buy American". Labor unions tried that campaign years ago, and it fell flat. I've spent 25 years keeping American manufacturing jobs here, so I get it.

The problems are complex. There is a high cost of doing business in America. It's not just the cost of labor. The government adds a tremendous cost burden to anything made in America. For every dollar we spent in labor, we spent another $0.50 to $1.00 paying taxes, providing government mandated benefits, providing training, paying for compliance issues and a dozen other things.

In addition, we've created a culture of entitlement among workers. Here's a simple example. Everyone that works in a factory knows who is productive and who isn't. They also know who is stealing, who is gaming the clock, who is causing 80% of the problems and more. If you ask the workers to evaluate those around them, they won't do it unless they have hard feelings regarding someone else. I spent many years realigning the culture in our factories so the employees would understand that what the people around them were doing was impacting them more than management or any other single issue. In addition, I had to get them to understand that if they made one widget per hour, we could afford to pay them say $10 per hour because that's all the market would allow. If they wanted to make $20 an hour then they would have to make two widgets per hour. There is no other way to pay them $20 per hour and survive in the market, if the market says that a widget is worth only so much money.

Here's the problem I posed for them. Let's say we're all in a boat, and there is a pot of gold on the dock waiting for us to pick it up and split it, but we have to arrive at the dock before 8:00 am. If we are one minute late, the pot of gold is gone and none of us gets anything. If there are people in the boat who aren't rowing or who are causing problems, we have two choices. Get them to pull their weight or get them off the boat. Everyone is equally as responsible for the performance of everyone else on the boat, and if the boat is late none of us get the gold.

The average American worker believes strongly that it's management's job to get those who aren't performing off the boat, and if the boat is late, those who rowed the boat should still get their share of the gold. In fact some workers believe that so strongly they join unions that make getting the none performers off the boat even harder.

However, the reality is that if we're late, we are ALL late. None of us get the gold. Management has no possible way of knowing who should pick up the pace, get out of the way or get off the boat. Only the people working next to them know.

It took me years to get employees to take responsibility for themselves and those around them. The results were amazing. We grew to largest and most profitable in our business and our employees were the highest paid in the industry. Yet every year I had to repeat the boat story over and over because they preferred to let someone else take the responsibility for the non-performers.

In our company everyone from the receptionist to the CEO was responsible for making sure the competition, which was all international, never took away any market share from us, never made better products for a better price. Never, because if they did we would all be late to the dock and there would be no jobs much less a pot of gold.

Most executives understand this story all too well. After fighting obstacles to improvement they finally give up and move production to places where the cost of production and the output match with what the market is willing to pay.

The reason America is losing manufacturing jobs is partly due to the fact that the American worker refused to solve the problems that priced them out of the game. There are all kinds of ways to do that, but first they have to believe it's there responsibility because only they have the answers. It takes a very tight coalition between management and employees to beat back those who want to take away there jobs. It rarely exists in this country.

So why isn't the solution that Americans just plain be willing to pay more for products made here? Well, it's simple supply and demand. When the price goes up, the demand goes down. So if Hancock and Moore furniture priced their furniture at double its current price, then they could afford to pay their workers more money and make everything here, right? Nope!

Very, very few people could afford H&M furniture if it were twice the price. Then the volume at the factory would be so low the fixed costs would become an even bigger percentage of the total. H&M would be buying lower amounts of materials and getting smaller discounts for their supplies. Higher costs, lower volume, means far fewer people would have jobs at the plant and eventually the factory would close.

The politicians, the workers, the unions, short term thinking stock owners, executives focused on the wrong things and the culture of entitlement have all worked together to drive manufacturing to other countries. Most of those jobs aren't coming back. Don't worry, more and more industries like the financial industry will be forced to move to other countries. There won't be any need to row the boat in order to get to the dock by 8:00 am because the gold won't be there anyway.

I often hear people blaming big companies and executives for the loss of manufacturing jobs. About 10% to 20% of CEO's focus totally on how much money they can squeeze out of the company as fast as possible because it raises their pay. No question there are some morons who run companies, but not as many as a lot of people tend to believe. Executives of public companies, which most large corporations are, are under constant pressure from their boards and shareholders to improve the short term performance of the company in any way possible. That's why companies report results quarterly. Quarterly results are meaningless, but investors demand them. Most CEO's on average leave the job in less than 6 years. About 32% of them are forced to leave. Another 30% to 40% resign because they know they can't get the results the board demands in the short term so they move on.

When the thinking on performance and growth is that short term, there is no time to change the culture and figure out ways to beat back the competition. Instead the focus becomes finding ways to cut costs on the current products and produce more new products that have higher margins and less competition. Often the focus is on buying other companies so the combination of the two companies allows for more cost cutting, ie fewer jobs.

Who is demanding the short term performance that has badly injured the American economy and destroyed jobs. You are! The majority of people in America are stock holders. Some directly, most indirectly through mutual funds and pension plans. How many times have members of a pension plan told the managers of the plan, they don't care about the performance of the pension plan, they simply want the plan to work to insure that the CEOs of the companies they have in their portfolio's focus on keeping jobs in America. In fact, that is so important, the members of the pension fund are willing to take lower pension payouts to meet that goal? It's not going to happen.

There is no fix on the horizon for these problems. Have the unions changed their strategy by insisting that rather than raise wages and benefits, the members, the union officials and management of the companies will work together to make those companies more competitive using American labor. Nope! Unions only care about dues and the huge pension plans they control. They pressed Congress not to do the things that would keep jobs here but rather to make it easier for them to organize workers at companies that can't leave the country like Walmart. That will increase the due's paying membership, raise the prices at Walmart and essentially do nothing for the economy.

Import duties and tariffs don't work. The only things that work are winning through competition. American's are sports crazy. The US has a sports culture of win anyway you can on the field, and they're willing to see athlete's make ridiculous salaries because they can shoot a ball or hit one a long way. But on Monday morning, they don't want some poor guy in Asia trying to support his family score any points and kick the Americans ass on the manufacturing playing field. No, they want to be protected against that kind of competition because it directly involves them winning and losing and not some team they watch on television. Well, it ain't going to happen! Everything is decided on the field, and right now the USA is losing the manufacturing game.

It pisses me off that American manufacturing is shrinking. I've worked in it all my life since my first job in a paper factory when I was 17. Those jobs can't be replaced with jobs at Barnes and Noble or StarBucks. Nope, we're all screwed by this, so get used to it. No more customer service, fewer and fewer quality products, and fewer middle class jobs. There's no one to blame but ourselves. We let it happen, and most of us are still sitting on our butts electing the same moron politicians, blaming management for everything, trying to bring down everyone who has more than us rather than trying to elevate ourselves, looking for shortcuts in school expecting the teacher to make it easy and give us or our children all A's, bitching about everything we're asked to do at work, and not taking responsibility for ourselves and our actions. We got ourselves into this and only we can get ourselves out, if we're willing to do what it takes and so far, that's not the case.

[organic_smallhome]

I just spent a long time replying to your post, but lost it all because I timed-out. I don't have the energy to rewrite it. But, with all due respect, I've never read a bigger load of hogwash in my life.

In sum: You blame the American worker, the American government, and the American consumer for the offshoring of American manufacturing and jobs. You resent unions, worker safety laws, environmental laws, etc. You think the American corporation and the market should be given free rein--to control the government, control the workers, exploit whomever and whatever they want at whatever salaries they wish to give, with little restraint whatsoever. You even go so far as to blame the American worker for trying to take food out of the mouth of a "poor Asian guy" simply because the American would like to keep his job--while implying that the corporation who abandoned the American worker is somehow a benevolent entity that is just trying to do good in other nations.

An axiom of economics--even classical economics--is that economies survive best when they remain local. In fact, it's the only way that small business can survive. Corporations and the rich had the biggest tax cut in history under Bush. Their response was to offshore American manufacturing and jobs, and increase their profits to an obscene level. In the process, they have destroyed American communities and the American economy, while enriching themselves and despotic nations elsewhere. And yet, somehow, this is all the fault of the lazy American worker, and the American consumer.

Pardon me while I bang my head against the wall.

[JackOlso]

Sorry you find it necessary to bang your head.

I'm not blaming anyone for the problems in manufacturing except us Americans. We're all responsible for the what has happened.

This country will never go back to being a "local" economy with protectionism. We live in a competitive world. If we can't compete, we will lose.

I've spent my entire career managing manufacturing companies. I've have fought very hard to never let any of those jobs leave this country, but the battle was won by all of the employees who learned to insist we stay competitive and were willing do what it took to make that happen. Manufacturing jobs are very important because they keep the middle class alive and well. Not everyone should, can or wants to go to college. If they choose to work instead of going to college, they need decent paying jobs that can support them through their efficient efforts to produce products people want and need.

You can put whatever lace you want on the situation and come up with all kinds of theories of how to keep jobs here, but in the end, if any manufacturing company fails to keep pace with the competition, they are going to go away over time.

I'm not much on opinions. The proof is in the doing. I've done it more than once, so I'm basing what I am saying on my experience, not on my opinions. I'm willing to look at any examples of unproductive, uncompetitive companies that are still hiring and rolling along without government aid. The only unproductive, uncompetitive business I know of that manages to survive and prosper without competing is the government. And that's only because Americans are willing to keep paying the "vig" without getting much in return.

When I was first starting out as a manager, I studied Lincoln Electric. They were very dominate in their markets 30 years ago and still are. They are 115 years old. They have a very specific employment culture that has kept them competitive. They taught me what I had to teach our employees to stay on the winning side of the manufacturing battle. Spark: How Old Fashioned Values Drive a Twenty-First Century Corporation is a new book that details a lot of what they do.

Every high school student should be required to take a class in understanding what Lincoln Electric has done to prosper over all 115 years and what those lessons mean to them and their future.

It's too bad that simple legislation, a few tariffs, a couple of unions, thrashing a few of the those evil wealthy people, electing a new "enlightened" president or tossing in a few opinions won't keep jobs in America. Only competing and winning will. At least, I'm unaware of anything else that will work, but I'm open minded. I just hope we get it figured out before it's too late.

[kls_spencer]

Hey, Duane. I just had an idea. You're an excellent writer, but you need a larger forum (in the larger sense) to get the word out. How about you write a piece for HuffingtonPost? You know, from the point of view of a threatened American worker? I read HuffPo every day and, honestly, I've yet to see an article of this kind. You can post the draft here and we can give our feedback. Such a point of view is desperately needed to make the situation "real" for a lot of folks. I'm serious, btw.

I COMPLETELY agree with organic's idea. And I am a real "flag-waver" type, by the way!

[organic_smallhome]

I thoroughly agree. I'm not a big flag-waver, either, but I am sick to death of watching cheap and selfish Americans toss American labor under the bus. Most of the people I know buying new furniture cry poor, but that's not really the case. They're just lazy and impatient. They simply don't want to have to wait to save the money. Like children, they want it NOW and they want it CHEAP. They don't give a crap about how it affects the economy, or that their purchases are supporting a communist economy at the expense of American workers and America's own economy. Frankly, it blows my mind. I can't even walk into a Wal-Mart, Target or Home Goods: the stench of the chemicals on everything is too much. And even the furniture stores. My cousin bought a $4,000 table and chairs from Ethan Allen. A total piece of crap (not that I said that, of course). It doesn't even look like real wood. The weird thing is that many American consumers don't seem to be able to discern quality any more. They've become like consumer bots: mindlessly drawn to whatever the latest thing is, regardless of the quality. And they are often the first ones to decry the loss of American manufacturing. Makes me ill.

Was just forced to buy a new washing machine. Made in the USA.

[organic_smallhome]

P.S. This conversation has gotten too political and really doesn't belong, I don't believe, in this section, but rather in "Community Chat" (if at all). Duane's going to come in and kick some a**, I think.

[drcollie]

>laughing< Oh no, I'm not going to moderate this thread! Everyone is welcome to put in their .02 worth and threads sometime take off in a different direction than the original poster intended. That's the nature of internet forums. The key to exploring topics is keeping a civil tone with one another, and the only time I will ever step in and shut down a thread is if it gets too personal (name-calling and the like). As long as that is maintained, then have fun....and discuss. There is always something to be learned from reading another viewpoint, even if its only bits and pieces of that opinion.

Aaron asks if there is a trade association, yes there is, and its called NHFA (National Home Furnishings Association) and I have been a member of it on and off for many years. Mostly all they do is offer a reduced credit card processing fee and their lobbyist arm fights against a national sales tax and that's about it. They're not going to push for tariffs or against Chinese furniture because most their members either partner with the Chinese production facilities or sell it in their stores. I'm way at the end of the bell curve with my USA-only approach and no doubt I miss a lot of sales in the less expensive category for my stubbornness to not have those products in my store. But I do so for a number of reasons:

1) Political: I don't believe the Chinese are our allies and supporting their economy makes them stronger. This may not affect my generation, but I bet it will my children's and in a negative manner.

2) Quality: It's not in the product. Plain and simple. Short usable life spans.

3) Serviceability: Try to get parts for something 100 % made in China in the furniture industry. You can't.

4) Customer Satisfaction: If I sell you junk, how likely are you to return? I keep most my customers a long time and it makes for a good, relaxed working environment when everyone is happy. There are stores that could care less if you return or not*, if they are able to get one high gross sale from a customer, that's all they care about and then they're find a new customer for the next one. Most that Chinese furniture is ridiculously cheap for the store to purchase, and they can put high mark-ups on it. American made pieces don't carry same percentage markup (lower margin sale) because as Jack says 'The customer will determine a widget is worth only so much'. That's true. So by selling better made product, the dealer has to make less profit, but you wind up with happier customers!

5) American Jobs: It absolutely makes a difference to our national welfare and economy. We make the best furniture in the world in this country. If it was junk it would be a different story, but its not. If we don't have Americans working, then how can they buy that house that's up for sale, or that new car? Its in all our best interests to keep the money at home and consumers are the ones that will make that decision. Business follows the demands of its customers.

I remember back in the early 90's when the Hooker Furniture Reps were in the store and so proud of the fact they were shutting down all USA production facilities and going to be the first USA furniture company to be 100% off-shore (Read: China) production. All they wanted to do was show me how much profit I could make if I carried their line. I could make 30% more on the widgets because the wholesale cost was so cheap. But unlike most furniture store owners who never leave their offices, I've made hundreds of trips to small furniture operations and know how hard these people work, and how much pride they have in what they make. Though I've never been to China, I seriously doubt that same work ethic is in place. I decided a long time ago I'd close the store and find another business to get into rather than be an outlet store for the Chinese, or the short-sighted, profit-oriented businesses that move their production out of country. So far, my business model continues to work for me. I'm still here, have weathered the Recession, and customers are finally figuring out that over the long run it cost them less to pay a little more on the front end by buying American made products.

At the end of the day, like in most things, you generally get what you pay for.

____________________

* A true anecdote:

Reny Barnes used to own a chain of stores in the Wash DC area, 5 retail outlets and a warehouse facility. The store name was C.L. Barnes (his father started it). They sold low to middle end goods and their flagship store was 2 miles from my store. One day he comes into my store and looks around for twenty minutes, introduces himself and give me his unsolicited opinion on my operation. "You have a nice store but your business model is all wrong" he says.

Bristling, I ask "How so?"

Reny continues with: "You have really nice product that you sell too cheaply. You're leaving money on the table with your pricing."

I reply; "I make enough to stay in business and pay my house mortgage, and save for the kid's college. Why raise my prices and take a chance on cutting my volume?"

Reny says: "What you need to do is bring in cheaper product and begin substituting it for your good lines, and keep the prices the same. You'll make more money that way."

Puzzled, I ask him: "If you do that, you run the risk of losing your reputation and losing customer loyalty, and if you charge a lot of money for poor furniture, the complaints will increase dramatically as well."

He told me: "Customer loyalty is not important. We have our businesses in Washington DC, its a highly transient region. All you have to do is get them once, and then move on to the next one. There's always a new customer base arriving."

Finally I get his drift: "I'm not interested in money at the expense of integrity, sorry".

And Reny left. His entire chain went bankrupt and closed in 2006. Even though they're gone, you can spend hours reading all the complaints filed by consumers about their operation on the 'net. So much for that theory.