Companies used to sourcing exclusively in Asia begin importing some from Mexico

Resources say our southern neighbor presents many advantages, not the least of which is quicker delivery times to the U.S. market

HIGH POINT — Companies that once sourced exclusively out of Asia are now moving some production to the western hemisphere to be able to deliver certain products to retailers more quickly.

Mexico has been a major beneficiary of this shift, which is due to several factors, from high container costs to Covid-related shutdowns in Malaysia and Vietnam.

Over the years, A.R.T. Furniture has sourced from China and in more recent years, in Vietnam, due to production capabilities its parent Markor Furniture has in both countries.

But at Premarket in September, it showed its first Mexico-produced fabric upholstery. Part of its Profiles upholstery collection, it has 40 pieces, including stationary sofas, sectionals, accent seating and fully upholstered ottomans.

Featuring sofas that retail from $1,699 to $2,299, the pricing is comparable to what the company gets from Asia, particularly given the high freight rates, said Doug Rozenboom, president.

“Freight rates, we do not feel, will come down to pre-Covid levels for quite some time,” he told Home News Now.

He said a second major consideration regarding Mexico is that the company’s warehouse in Ontario, Calif. is only about four and a half hours away from the plant by car or truck.

“Which for us is a real advantage,” he said. “We have an ability to move the product to our warehouse the same day.”

He noted that the products coming out of Mexico are brand new items that have never been sourced in Asia, although the company still sources upholstery and wood furniture in Vietnam. It also has shifted some of its upholstery to China for its international customers, which don’t have to pay a tariff on Chinese-made goods.

Rozenboom said that customers have been pleased the company is offering some North American-made upholstery in its lineup given the challenges overseas.

“Actually, our customers have applauded us for making this move, so it has been a very positive discussion because they understand the benefits,” he noted, adding that one major benefit is lower freight costs to retailers who are used to importing upholstery.

“Our goal is to deliver A.R.T.-level quality, which would be in the better, best category. We have very high-quality frames, with construction techniques to our specifications,” he added. “And the tailoring is going to be very precise, so when you look at this product, the feeling you get is that this is better quality product. Our goal is not to go towards the more promotional end of construction techniques and tailoring.”

Also launching Mexico-made upholstery – plus some Mexico sourced bedding – this market is Standard Furniture, which has been sourcing some of its case goods from Mexico for about 18 months. It originally sourced its wood line from China primarily, then shifted mostly to Vietnam. The company decided to give Mexico a try due to its proximity to the U.S. market.

Little did the company know that sourcing there would be a major advantage a year later due to Covid-related disruptions in Vietnam.

“We kind of hit it at the right time,” said Jay Peters, vice president, merchandising at Standard. “We put our chips on Mexico about a year and a half ago and premiered it in October 2020.”

“We can get down there in a day and work there for a few days,” Peters added. “It is way different than having to fly to Vietnam.”

Bedrooms are also competitively priced with Vietnam, particularly as freight costs from Asia have risen dramatically. Bed, dresser, mirror and nightstand combinations out of Mexico currently retail from $999 to $1,699

In addition to bedroom, Standard sources home entertainment, home office and occasional furniture from Mexico, which collectively represents roughly 35% of its wood mix, Peters said. He said that Mexico product has had very healthy growth, experiencing double-digit increases each month over the last four months.

Mexico also has competitive lead times, averaging about seven weeks, which is comparable to some factories in Asia, which can produce in four to seven weeks, plus the time on the water. Yet it gets to the U.S. market a lot more quickly than Asian imports, given the delays getting product on a container, not to mention at least a few weeks on the water.

In addition, much product from Asia has been delayed getting unloaded at the ports once it arrives here in the U.S.

Vietnam still represents a value in some categories despite the shutdowns, high freight rates and shipping delays. For example, the KD nature of Standard’s dining sets out of Vietnam allow them to be shipped flat pack, thus fitting more boxes on a container as opposed to fully assembled chairs, which typically ship only two to a box.

Thus, Standard is expanding its casual dining assortment from Vietnam with 10 new sets being shown at market this week. It also is showing some new motion upholstery, also made in Vietnam.

However, Standard also is also expanding its bedroom and entertainment assortment from Mexico with at least four new bedrooms and three or four new entertainment centers.

Plus, it is showing its Mexico-sourced stationary upholstery and bedding, both new categories at Standard. The upholstery mix includes four groups, offering sofas targeted to retail from $599 to $899. It also is showing a couple of sectionals retailing from $899 to $999.

“It is just a small footprint,” Peters said, noting that lead times on upholstery also are about four weeks. “We have had some early interest in it and will see what interest we have coming out of market.”

Other companies that have recently begun sourcing out of Mexico having manufactured primarily in Asia before are Kuka, which is producing special order upholstery there for the U.S. market, and Lifestyle Enterprise.

Having sourced most of its case goods line out of Malaysia and Vietnam in recent years, Lifestyle is showing some new solid wood bedroom, dining room and occasional sourced in Mexico this week at market.

Made with pine solids and some solid reclaimed wood species, the materials story is another big change. In the past, its wood line was mainly comprised of veneers and some solids.

In addition to solid woods, which is one of Mexico’s strengths in the wood category, Mexico also is offering mixed media elements such as metal for its TV consoles and occasional line, noted Derrick Ng, president.

“With Vietnam, it is hard to get mixed media,” Ng said. “In Malaysia it is harder.”

While the company has certainly not abandoned Asia, the Mexico product provides goods its customers can receive fairly quickly, or at least much more quickly than Vietnam, which is still in recovery mode following a lockdown period that began this summer. Lead times are expected at roughly five to six weeks out of Mexico, with the new product shipping between December and January.

Freight costs also continue to remain a challenge out of Asia, Ng noted.

“Even if freight goes down, it won’t change much,” he said.

And while Standard also has no plans to abandon Asia, the company said that being able to develop and offer product from Mexico has been – and will continue to be – an advantage in these still uncertain times.

“It has paid off and has been a Godsend for us,” Peters said.

Yet others that have sourced there in the past offer a word of caution about Mexico. For one the factories are much smaller than most well-known sources in Asia. Thus, they note, those factories can potentially overpromise and underdeliver.

Hooker Furnishings has sourced in Mexico for about 10 years including some upholstery and accent furniture items. More recently the company has added some accent furniture pieces produced in Mexico to its new Commerce & Market line.

“We have sourced in Mexico for a long time and are always looking for more opportunities,” said Jeremy Hoff, CEO of Hooker Furnishings.

However, he said the company is only going to add pieces to its Mexican sourcing that make sense, including those that benefit from materials only available in Mexico.

“We still think it is going to be very difficult to bring the value that Asia brings,” Hoff told Home News Now. “It doesn’t mean we shouldn’t diversify, but I don’t think it’s going to be easy…There certainly are products that you do well with, and I don’t think that you just take something that is doing well from Vietnam and move it to Mexico and it will solve your problems.”