by In a letter to HNN’s editor-in-chief, the president of Vaughan-Bassett says the industry’s whipsaw from no business during a lockdown to boom times and then slow business this year may have led to some poor short-term decision making. Have we reached the bottom?
Thank you for your thoughtful column last week, which did a great job of asking and then answering our industry’s most interesting questions, which are:
1. What’s really going on now, and
2. What is most likely to happen right around the corner?
For what it’s worth, we believe the following:
A. We hope and think that most of us within the furniture industry understood that the last two years represented a “sugar high” that was bound to wear off at some point. My brother Wyatt describes it well – that most of us did three year’s worth of business in two years.
B. The whipsaw from no business in April of 2020 to booming business from June of 2020 to January of 2022 to unusually slow business since February of this year has created a trap that might have caused some businesses to make poor short-term decisions.
C. For example, once business boomed in June of 2020, some folks cut off all their smaller accounts and gave all their volume to their largest dealers. We thought it was smarter to treat all accounts equally, and instead, we had a moratorium on opening new accounts and dramatically shortened our line-up. This helped us service all accounts more quickly while reducing incoming orders in the short term. The only thing harder than opening up a new account is re-opening a guy that you cut off.
D. The disruption caused by the broken supply chain to Asia cannot be overstated. It’s led to a boom for U.S., Mexican and Canadian-based manufacturers. Even with business softening, we hear lots of complaints about continuing supply chain issues and delays.
E. You guys have done a great job covering the pinch felt by dealers who did not squirrel away the deposits made by customers that ended up waiting 9-12 months for their goods.
F. Many container companies flooded our dealers with 3-5 months of orders all at one time in March and April, right at the beginning of the slowdown in business. We hear from most dealers that they will have corrected the overflowing warehouse problem by the 4th Quarter.
G. A good hunk of the inflation problem is done. Lumber prices and some other component prices have stopped going up and some prices have started going back down. This is offset by other costs that continue to rise, including health care, energy and labor costs.
H. We hope we are at the bottom and see slight signs that business improving in July and early August….
Keep up the good work. We love hearing from our peers trying to steer their companies through these very interesting times.
Doug Bassett
President of Vaughan-Bassett Furniture Company
