by Luxury furniture manufacturer now produces 90% of its wood furniture mix, compared to the 90% it imported more than five years ago
MORGANTON, N.C. – In a recent EJ Victor catalog, one of the things company President and CEO David Bennett likes to point out is the number of U.S. flags next to each wood product.
They have U.S. flags because most of the wood items — around 90 percent by company estimates — are made in the U.S.
It wasn’t that way just over five years ago. Then the luxury furniture manufacturer was importing as much as 90% of its wood mix from Asia. But Bennett realized that things needed to change. That’s been a good thing for its customers, upper end retailers and designers alike, as the company has been able to avoid delays in receiving product of late from places like Vietnam which until recently faced major Covid-related shutdowns over the summer months. The company also has avoided high container costs from Asia, which many importers are having to now pass along to their customers in the form of surcharges.
Still, the Covid disruption and related cost spikes weren’t the driving factors behind EJ Victor’s decision to move the wood mix back to the United States. They were clearly a benefit, but there were much deeper, longer standing issues behind the shift.
For one, EJ Victor was not always the most important customer in larger factories. That meant it had to buy in larger quantities to get a place in line, which, in turn, meant having to tie up a lot of cash in inventory in its U.S. warehouse.
Given that some of these factories also produced a mix of lower and middle priced goods, the company also experienced problems with product quality, meaning it had to redo product to its standards — in its U.S. factory in Morganton, N.C.
“We had a rising cost center here domestically, where given our level of expectations of quality, every single piece we had to rebuild or refinish in some manner,” Bennett told Home News Now. “We had an entire department whose job it was to unbox…and usually, at the least, would have to fix or refinish and then rebox the product. At that point, you realize exactly what is the point if you are going to have to put all this labor into it?”
Also, the length of time it took to build product and ship it back to the U.S. also was not in line with the needs of designers, who often buy based on fashion trends that come and go. Thus by the time a product hit U.S. shores, a particular trend may have begun to wane.
Today with the shift, things have changed and for the better, officials note, adding that 95% of the overall mix, wood and upholstery combined, is made domestically.
“Our inventory of unassigned finished goods obviously is way down, our return rates are lower and our costs throughout as far as obsolescence are next to nil where it used to be very high,” Bennett said noting that lead times are 12-16 weeks on custom made-from- scratch case goods, compared to 8-16 weeks for custom upholstery. “It is just such a high-fashion, fast-moving industry, and developing furniture takes such a long time…When your client base is in such a high-fashion, high-trend sector of the marketplace, by the time you develop that piece and get it to the market, you may have missed it already.”
The company shifted to imports a little later than most. When it formed around 1990, the company had a domestic model that manufactured all of its upholstery and wood furniture. That was until around 2008, when it shifted to the Philippines, and then Vietnam, eventually sourcing up to 90% of the mix.
As it has reversed the import/export mix, EJ Victor remains an anomaly, particularly on the wood side of the business.
According to estimates from Richmond, Va.-based Mann, Armistead & Epperson, some 88% of all wood furniture sold in the U.S. was imported in 2020 based on dollar value. That’s a slight drop from 90 percent two years ago.
“With the Covid scare in each of these countries and the manufacturers they deal with, it is beyond their control,” said Jerry Epperson, a managing partner in the firm of the challenges in Asia, adding that the problems at the ports only have complicated things further. “They are all looking at coming back to the states, but the problem is getting labor.”
For EJ Victor the solution was simple as the company has some 200,000 square feet of dedicated production space at its Morganton campus. Plus, at the time of the shift it had 115 production workers, which has now grown to 150.
John Jokinen, a company co-founder, who is now board chairman and chief creative officer, also reflected on the company’s shift back to domestic wood production and what it means for its customers.
“Probably more so today than it was five years ago, the “made in America” mantra is so strong,” he said. “It’s probably the strongest it’s ever been for a lot of reasons. Number one is that people are not going to want to wait 32 weeks for a product and put money down and not know if they are going to get it. From that standpoint, David was prophetic in terms of making the decision, so it really has benefited the consumer…We also would not be able to raise our prices high enough if we were in the import model, and to cover those extraordinary costs these guys are having to deal with.”
The reference is to container costs from Asia that are now upwards of $25,000 to $30,000. Thus the company’s savings alone from not having to ship from overseas is substantial.
“Our model five years ago was bringing in containers and unloading those containers and putting the product into a warehouse,” Bennett said. “At that point, you are a warehouse and distribution facility.”
But Bennett also sees it from the standpoint of sustainability, or lack thereof.
“We are using raw sticks of lumber, and most of what we deal with is domestic hardwoods anyway,” he noted. “It is like you have one of those “aha” moments where you realize we are doing a suite of white oak case goods and…the wood is originating within 200 miles of here and you put it on a ship and you ship it through the Panama Canal, take it to a manufacturer, cut it, finish it and send it back here on a container ship. It doesn’t make sense to see how that is viable, just from the footprint you are creating to make that furniture — it is not sustainable.”
The shift back to domestic has not come without challenges. For one it has meant investing millions in new equipment, building improvements and employee training over the years, Bennett noted of the plant, which now employs about 150 compared to 170 at its peak in early 2000s, yet up from 115 five years ago.
“We have been very fortunate here, where over the last five years, our direct labor numbers have grown, which is great,” Bennett said. “We are very fortunate in having a fantastic team that works here like a family.”
Most of these workers are cross trained in different areas in order to help with the flow of both case goods and upholstery, including dining chairs and upholstered beds, much of which also has wood trim elements.
“There has always been a Hatfield and McCoy type of relationship between case goods and upholstery, and for whatever reason there has been a competitiveness between the two,” Bennett said. “Our view point is a little more progressive in that we view this as one company with one factory and we make products that happen to be both case goods and upholstery. For example, the wood component part of our business is almost treated like a factory within a factory, so that wood cell makes component parts that go into both upholstery and case goods.”
Bennett described the company’s investment in its workers and the plant as a constant evolution.
“We are always looking to evolve the manufacturing process for further efficiencies,” he said. “And that has meant bringing in new CNC equipment, training internally and also hiring from the outside people who have experience with that…The ability to do this goes back holistically for us to be very agile, but it is also tackling every problem as it comes up – so once you create a solution for something, that is always creating another problem somewhere else. So you are constantly working on those problems throughout the system…I guess a good analogy of that would be if you fix a problem at a headwater, it will create more problems down the line, but you are going one at a time to constantly improve the system.”
The strategy has paid dividends in key ways. In addition to getting closer to its peak employment, the company has been able to avoid logistical logjams – and costs – from overseas and get product more quickly to its customers. In addition, the business has grown nearly three times what it was in 2018, with some 35% of volume done in case goods and 65% in upholstery compared to 20% in case goods and 80% in upholstery several years ago.
“We have always been known as a strong upholstery company,” Jokinen said. “Now the wood volume has grown closer to upholstery.”
Today the 10% of wood furniture that is still imported includes what the company calls “legacy product” that perhaps is more traditional in nature, featuring more carved elements or fancy face veneers. The mix also includes pieces such as chairs with natural woven elements that the company simply can’t get in the U.S.
“At the time, and this is not just for EJ Victor, the way case goods was approached (previously) was way different, where the prevailing trends involved heavy carving and a lot of fancy face veneer and inlays,” Bennett said. “Those are very time intensive techniques. With the transition to more transitional looks and more pared down traditionalism, it makes a lot more sense for domestic production.”
Today, EJ Victor’s domestic wood furniture mix includes about six full collections featuring a combination of bedroom, dining room, occasional furniture, desks and entertainment consoles, for example. This includes some clean-lined transitional product found in popular licensed collections designed in partnership with Ellen DeGeneres and Alfredo Paredes.
Jokinen noted that the designers themselves, including Paredes, have requested that the product be made stateside, versus overseas.
“When we first started talking, he wanted everything to be built in America,” Jokinen said.
So does made in America mean more expensive? The “yes and no” answer perhaps requires a bit of explanation, Bennett said. While labor in the U.S. is certainly more expensive than labor in Asia, for example, the fact that the company doesn’t have to buy or build product in larger minimum order quantities helps avoid being left with a bunch product that doesn’t sell.
“That is very helpful,” he said, adding that the company essentially gets back what it puts into the investment in product as “99% of what we run here is made to order so there is no stagnant, unassigned finished goods inventory which you might find when you are bringing things in by container load.”
In addition, he said, the company avoids the risk of changes in the exchange rate like it would have had as an importer.
“There are a lot of variables there,” he said, of the challenges ranging from exchange rates and global pandemics to container shortages, geopolitical issues and poor forecasting. “Going down the path of imports, the idea is to simplify things where you are basically buying a widget in a box. And you buy it for x and sell it for y. Well, there is a lot in that process that can trip things up pretty fast.”
“So while our prices may be a little bit higher than on the same thing we imported, its not really in the grand scheme of things,” Bennett added. “For us, it ends up being better for the end consumer.”
“Given what’s happened in the last 18 months, it has made a lot of people really look at their vendor base and their supply chain because at the end of the day, if you can’t get the product, you can’t sell it to your consumer. What’s the point?”
Below are some more images from Home News Now’s recent visit to the EJ Victor plant in Morganton, N.C.
