For years and years, 8 – 10 week lead times were the industry standard. Anytime you heard of a plant exceeding 10 weeks you automatically thought the worst. At least until the Pandemic of 2020 hit, 8 weeks was the standard amount of time it took to produce and ship most items in the home furnishings industry. These days 16 weeks is considered “speedy” with some lead times exceeding 32 – 40 weeks! But how did we get here? What caused these incredibly long and painful lead times? I can’t speak for everyone – but following is an overview of our world and, from what I hear, it’s pretty typical across the home furnishings industry.
Starting out 2020
Believe it not, 2020 kicked off as pretty normal year. Our sales volume was pretty average, maybe up a few points. Election years can be wonky so we settled back a bit expecting a fairly normal year.
When the virus was first reported overseas we didn’t see much reaction – sales were normal, supply chains were normal. Until the term PPE (personal protective equipment) joined our daily lexicon. Apparently some of the supplies and materials used in upholstery were being used to produce masks and other items causing a few stirrings in the supply chain. Foam was the first to be hit – but it was a little hit, we were still good.
As the virus spread and the term “shut down” began to be whispered, sales slowed.. a lot! I wouldn’t say they came to a screeching halt but there were a lot of crickets singing in the customer service department. Then we got hit with the state mandate – all non essential businesses had to shutter. We complied with the orders and shut down for a few days until we learned that we were considered an essential business and could continue to operate – with restrictions. We pulled our team together and made them a deal (we had worked years to build this team of experts and were not going to lose them without a fight!). If they would continue to work 3 days a week – any hours they wanted, we would pay them for a full week. We didn’t have many orders so the reduced hours actually helped spread out the work – we were terrified of running out of work! Our plant is big enough with tons of air flow that we felt confident everyone could work safely so back to work we went. Unfortunately there were no orders coming in so we did what we had to do – we pulled money from personal savings, we offered furniture on consignment to some of our larger customers and we kept working. At least the wheels kept turning.
Supply Chain 2020
Through out the rest of 2020 things stabilized a bit. A few of the big plants in town shuttered for weeks if not months which pushed a little business our way. We were fortunate that all of our cleaning and distancing programs worked – everyone stayed healthy until the holidays when one worker passed Covid to four others (that all lunched together). Fortunately they all recovered with full health. The illness hit over the holiday shut down so even that did not put too much a dent in the world. We were shipping faster than 8 weeks, in fact we were holding a few orders back just to ensure everyone would have work to do every day.
First quarter 2021 definitely started differently than the year before. We started to hear about major disruptions to the supply chain. Containers from Asia were far and few between and those that were getting to the US were not able to get on to the dock (one competitor shared with me they had containers bobbing on the Pacific for 6 weeks waiting for a dock appointment!). While we try to source as many materials domestically as possible, many of those products are made with materials from overseas. We saw a shortage of springs (made with imported steal) and feathers. Nails and screws became scarce. Some woven fabrics like muslin that are all imported were a little harder to come by and prices were starting to creep up – but just a tiny bit. Then the storm hit. The Texas storm. The winter storm that shut down the entire electric grid and most of the state of Texas. Want to guess what is made in Texas? – The chemicals used to make foam. When the big storm hit and the electrical grid collapsed, the factory that produces that rare component used to make those chemicals got damaged and was shuttered for weeks! In fact it took months for production to return to normal. Foam was already running a little shy (see PPE above) but it wasn’t horrible until that storm hit. Before then we might have had to wait a few days for a delivery but we were still fully stocked. After the storm hit – there was no foam, anywhere.
During that time we did all we could to keep moving. We kept building frames until we had no where else to put them. We continued to cut and sew fabric – we tried our best to get ahead of the curve. We even got creative with sourcing – buying foam at retail (double the price) along with a few other creative remedies. And to be honest – being a smaller plant helped for a change since the amount of foam that we needed was a fraction of the big guys’ so we were able to get foam when many of them were not. Every vendor went into lock down mode – they had so little product that they would only sell to their existing customers. Loyalty to one vendor worked in our favor, at first, but once that vendor was out of stock we had no where to turn – no other vendor would speak to us as they were focusing on their own customers. This same thing happened to every factory – if your top supplier was out of stock, you were out of luck. There was no where to turn.
Many plants shut down for 1 – 2 months. Once a frame is built there is little you can do until you have foam as it goes inside the upholstery on the body of the piece as well as inside of all cushions. So most of the big guys just locked the doors and went home to wait the return of the foam-supply chain.
As a result of the shortages foam prices went up 45% in one day! Prices on anything metal (springs, nails, screws, tack strips) rose 3 – 6% WEEKLY! We would call each supplier weekly and see what they had received – we took delivery of anything we could in any amount to help build up the stores (typically in our industry we can get deliveries for most supplies within 48 hours – now we are keeping a month supply on hand of all materials! Not cheap.)
Production Flow vs Space Available
I’m sure you’ve heard about and probably know a thing or two about “lean manufacturing” or one of the other production systems that aims to minimize the amount of time it takes to produce a product. In a perfect world, a frame would leave the frame shop and immediately land in front of a spring up technician the moment they set the previous piece off their work station. Then the sprung frame moves immediately to an upholsterer and so on. In a perfect world that frame should really never tough the ground – it should always be on someone’s “bucks” – what we call a work station. Furniture is heavy and big. Many times it takes 2 people to move and it occupies a lot of real estate when not being worked. So you can imagine how the supply and worker shortages affected us. We would work on a piece in one department, big smiles on our faces believing this would be the piece that sails all the way through production without a hiccup – and then at the next station we hit a bump. Either the worker isn’t available, supplies can’t sourced, you get the idea. So that piece gets set off into storage and the next piece is brought in, again full of hopes and dreams for completion.
Sometimes you can predict those supply shortages – many times you can’t especially in a bespoke/custom shop like ours. Most of our supplies aren’t cut, sewn, produced until they are needed so they can be tailor fit to the piece. So many times you don’t know you’re short, until you’re short. The same thing has occurred this year with equipment. We used to be able to find replacement parts for equipment and return a piece of equipment to service within hours if not a couple days. This summer we had one key piece of equipment go down that took us 6 weeks to get operational. For six weeks every piece of furniture that required that one specialized tool had to sit and wait. Now that it is up and running, all the items we had hoped to begin building are on hold as we go back to that big stack of pieces that were awaiting that one machine. Can you believe what a trickle down affect this whole manufacturing thing can be?
Family Drama in the Frame Shop
The first thing you need to know is that the folks that build furniture frames, especially those (like our employees that specialize in custom) that can look at a picture and build a frame to support the design are unicorns. They are chocolate dipped with sprinkles on top that can survive a zombie apocalypse unicorns. When you find one, you bake them cakes, buy them presents, basically give them anything they want because if they leave.. you get the picture. And that’s exactly what happened to us late Spring 2021. One of our 2 frame guys had a family issue and had to leave, in the middle of the night (literally.). He left work one day, happy, eager to be back the next day – when we came in the next morning all of his tools were gone and we’ve never heard from him since! We have spent literally thousands of dollars advertising in every medium, using every type of ad and “hook” to recruit a new unicorn. Would you care to guess how many applications we received? It’s a number lower than 1 if that helps at all. Lead times started to take a hit.
As Spring sprung in 2021 all these folks that had been sitting at home for a year, staring at their old, tired furniture had finally had enough. They hadn’t bought new clothes, gas or vacations for a year. They were bored and had money to spend – and boy did they spend! Within 3 months order volume TRIPLED! Our frame shop was down to one guy. We were playing spin the dial every week trying to find supplies and we were finally lucky enough to land some new business! When the new volume hit we were ill prepared – who expects a 300% increase in business in less than 90 days? We were still tracking 8 – 10 weeks until we weren’t.
Domestic v International
And where did all of that volume come from? A lot of it came from the opening our new showroom – purely organic growth from existing and new designers that visited our showroom. But an equal amount came from designers that had tried to get furniture from other vendors, most of whom import much of their product, and couldn’t. Those with the longest lead times are many times the ones that have the highest import percentage. Many domestic production plants completely shut down during the foam crisis. For them, like it was for us, order volume was increasing but with their plants being shuttered, nothing was being produced which created the tremendous back log that is today.
To make matters worse, containers (those big metal boxes that you see on the back of tractor trailers and stacked on cargo ships) typically rent for about $3000 from Asia to the West Coast – those prices have skyrocketed to $18-20K! Each! Producers are having to make hard decisions about what to import and what to put on hold – there’s only so much space inside one of those containers and spreading an additional $15K in costs becomes a monumental task! Even at those prices, the time it takes to get a container state side, on to the dock and trucked across the country has grown exponentially due to a shortage of dock workers and truckers.
In the “old days” when business picked up you hired more employees. You opened the plant for a 2nd shift, worked nights and weekends. You could find a bunch of folks that wanted to make some extra cash by working a few hours after their 1st shift job. You could beg, plead and “encourage” existing workers to work overtime. However during this time, during this pandemic – it is virtually impossible to fill a 1st shift much less a 2nd shift. Employees are keenly aware there are multiple job openings, push them too hard and they go to the next plant – usually for more money, sign on bonuses, etc. With job openings posted, we used to get a handful of applications every week. Since the pandemic, we have gone weeks and even months without a single application. Anyone that isn’t working isn’t going to work – at least not right now. And those that are still employed are, many times, working fewer hours due to caring for children and family members, lack of day care, lack of transportation.
So there you have it. The long lead times can be attributed mainly to supply chain issues and worker availability. The supply chain appears to be stabilizing, we are seeing fewer and fewer stock outages. While prices have not receded we are not receiving as many price increase notifications each week. But the workers are still not coming back.
As they often say, this too shall pass. We will hit a day when folks need and want money again and agree to work longer or extra hours. Once the supply chain is hiccup free-ish again our flow through rate will return to normal since folks won’t be waiting for supplies to finish a job. But when those magical days will occur is anyone’s guess. In the meantime, long lead times are here to stay. At least for the time being.
I know this has been a very long read but hopefully it has shed a little light on what’s happening behind the factory door. On behalf of all us in the home furnishings industry we thank you. Not only for your business and your patience but also for your understanding. We know that over the past year, every time you have called to check on order status we have given you a different “excuse.” Trust me – we aren’t making those up as we go along – things are changing that rapidly and that vastly. We’re out of foam today and have no workers tomorrow. As soon as we recover from one comes another hit. We know we sound loony. It sounds that way to us too – but sometimes the truth is just that – loony!