Competitiveness of the U.S. furniture industry. Urs Buehlmann Virginia Tech Matt Bumgardner U.S. Forest Service Day of Wood II Sept.

Transcription

1 Competitiveness of the U.S. furniture industry Urs Buehlmann Virginia Tech Matt Bumgardner U.S. Forest Service Day of Wood II Sept. 13, 2018

2 Acknowledgements B. Luppold, U.S. Forest Service A. Schuler, U.S. Forest Service (retired) M. Snow, AHEC E. Haviarova, Purdue 09/13/2018 2

3 Agenda Statistics Consequences Success stories Success for WH furniture Innovation Industry 4.0 WH furniture industry Summary 10/17/17 3

4 Statistics 09/13/2018 4

5 Market share of imports Consumption = value of product shipments + imports exports / Import share = imports/consumption 09/13/2018 5

6 Major sources of imports WH furniture 09/13/2018 6

7 Billion US$ China HH furniture production and export Source: M. Snow, AHEC; China National Furniture Association /13/ Production Value 54.8 $69.40 $87.10 $100 $117 $137 $162 $ $ $ Export Value

8 Employment trends HH furniture vs. cabinets 09/13/2018 8

9 Average firm size HH furniture vs. cabinets 09/13/2018 9

10 Employment indexes for the last three economic expansion periods 09/13/

11 Housing market's importance to employment 09/13/

12 Proportion of production volume associated with the single family housing construction market 09/13/

13 Value of private U.S. construction, /13/

14 Consequences 09/13/

15 Hardwood lumber price index 09/13/

16 Eastern U.S. hardwood lumber production 09/13/

17 Where the hardwood lumber went... 09/13/

18 Success stories 09/13/

19 CABINETRY AND OFFICE Kitchen Cabinets source: Herman Miller Office Furniture source: Kitchen Craft 10/17/17 19

20 OFFICE FURNITURE EXAMPLE The story of a successful transformation Grand Rapids before WWII - the U.S. furniture capital! 10/17/17 source (both pictures): Carron

21 FURNITURE MOVES SOUTH the call of the South: - cheap lumber - cheap labor - new technology Markets relocate, too source (both pictures): Carron /17/17 21

22 THE ONES LEFT BEHIND ADAPT Grand Rapids is adapting - moving into contract and office furniture source (both pictures): Carron /17/17 22 Copyright 2018 Urs Buehlmann / Virginia Tech All Rights Reserved

23 INNOVATE innovations keep coming - color choices movable walls creating our beloved cubicles 10/17/17 source (both pictures): Carron

24 REINVEST PROFITS allowing industry to make profits and to keep plants and employees up-to date and competitive 10/17/17 24

25 AND INNOVATE AGAIN! going green before anybody else and shifting business to the next areas of growth early source: ojectid=27 10/17/17 source: 25

26 Success also possible for WH furniture 09/13/

27 Amish furniture manufacturing In Ohio 2005/2008: About 430 manufacturers; 2,700 employees About 43 MMBF of hardwood lumber use About $280 million in sales Updating the numbers now, but growth is likely to have occured 10/17/17 27

28 Holmes county a viable model? Customer driven Customers select style, stain, and species, making each order unique customization Similar to much of the U.S. cabinet industry Supply chain Specialization in production Many operations use the same set of stains Outsourcing components locally aggregate productivity 10/17/17 28

29 Top 10 WH furniture states /17/17 29 Source: Bamberger and Davidson The Closing. 1. Ohio - 4,306 employees (13.3% of U.S. total) 2. California 3. North Carolina 4. New York 5. Virginia 6. Indiana 1,547 employees (4.8% of U.S. total) 7. Texas 8. Illinois 9. Pennsylvania 10. Arizona Hickory/Lenoir, NC = 1,478 emp. Holmes/Wayne, OH = 1,288 emp. Source: Bureau of Labor Statistics (BLS)

30 WH furniture employment, selected states 09/13/

31 Innovation 09/13/

32 Did the WH furniture industry innovate? Furniture solutions Mass customization Connect with new retail partners Internet marketing and selling Services over the lifetime of the product? 10/17/17 32

33 Mass customization 09/13/

34 Services 09/13/

35 Online sales furniture 2018 (estimate) Source: M. Bradford, Woodworking Network /17/17 35

36 Is it safe to conclude that... The North American WH furniture industry has been whipped out Competition on price alone is not the way to go Strategic renewal needed new business models Mass customization the way to leverage our only sustainable competitive advantage: closeness to our customers! 10/17/17 36

37 Digitization of manufacturing

38 Percent of firms Recent woodworking industry survey Over the last 3 years, have you increased the use of computerization in: Collaborating with customers Design Manufacturing processes Accounting Inventory tracking Supply chain management 10/17/17 38 Source: Bumgardner et al. 2018

39 We are at the threshold of the 4 th industrial revolution... First standardized processes in ship construction in Venice Steam engine (Watt) Assembly line (Ford) Toyota Production System (TPS) Programmable logic controller (PLC) (Morley) Large scale outsourcing Industry Mechanical loom (Jacquard) Standardization of work (Taylor) Scientific management (Taylor) Quality control (Radford) Deming's 14 points Buyer's market Lean Production 10/17/17 39

40 The vision Industry 4.0 will: bring change at a speed, scale, and force never seen before affect the very essence of our human experience allow system-wide, radical innovation create realities previously unthinkable "Industry 4.0 [...] will improve the state of the world [...]" (source: Video at: 10/17/17 40 source:

41 The pillars Big data and analytics Autonomous robots Simulation System integration The Internet of things The cloud Additive manufacturing Augmented reality The digitzation of everything 10/17/17 41 Source: m/uploads/attachment_data/file/255922/ future-manufacturing-project-report.pdf

42 One view Manufacturing of the future: Customer centric Unlimited personalization Optimum resource efficiency Connected production Global connectivity Simulation of everything Zero errors from first part "[...] No two cars will ever be alike again [...] (Bosch 2016)" Video at: 10/17/17 42 source: Bosch 2016

43 WH furniture industry

44 Processes - past Processes until the 1990s: Sequential process steps Large batches Work-in-process (WIP) inventory between process steps Long lead times Quality issues Inflexible system Mass production No customization 10/17/17 44

45 Processes - present Processes now: Still sequential process steps Reduced batch sizes Minimized work-in-process (WIP) inventory Shorter lead times Quality systems Customized mass production Selected customization 10/17/17 45

46 Processes - future Processes in the future: Administration, design, material management automated Batch size one Work-in-process (WIP) inventory non-existent Short lead times (hours not days) Quality part of the process Complete customization each piece is unique 10/17/17 46

47 Batch size one mass production Video at: 10/17/17 47 source: IMA 2018

48 Summary 09/13/

49 Summary 10/17/17 49 Almost 80% of WH furniture consumed in the U.S. are being imported The remaining U.S. WH furniture manufacturers are either protected or produce only selected products The digitization of manufacturing (Industry 4.0) offers opportunities to create new business models Remember our sustainable competitive advantage: closeness to our customers!

50 Thank you! 09/13/