U.S. Furniture Manufacturing: Overview and Prospects

U.S. Furniture Manufacturing:
Overview and Prospects
May 14, 2007
Stephen Cooney
Industry Specialist
Resources, Science, and Industry Division

U.S. Furniture Manufacturing: Overview and Prospects
In terms of output and sales, the domestic U.S. furniture manufacturing industry
has been a large and growing industry since 1990. The gross output of furniture and
related products grew steadily from about $40 billion to $74 billion in the ten years
between 1991 and 2001. Output fell with the recession in 2001, but buoyed by the
boom in residential housing, furniture output growth soon resumed. By 2005, total
furniture output had reached more than $85 billion. Household furnishings
accounted for $48 billion, and office furniture and fittings another $26 billion.
However, the furniture industry is highly segmented, and patterns of growth
have not been experienced equally by all sectors of the industry since 2000. Also, in
most product classes, manufacturing employment has fallen, and has not recovered
to the peak years around 2000. Domestic manufacturing employment has been most
severely affected in the wood household furniture product class (case goods), where
total manufacturing employment has fallen by almost half, from 130,000 to 70,000,
since 2000. Large consolidators acquired many traditional manufacturers, closed and
rationalized domestic plants, and shifted the focus to distribution and retail activities.
This product class has been severely affected by imports, which now account for
more than 50% of U.S. consumption. By contrast, employment in upholstered
furniture has not declined nearly as much, about 20% or 20,000 jobs, in part because
imported products have been much less of a factor. In the third major product
category under household furnishings, wood kitchen cabinets and countertops, there
has been a boom in both output and employment.
Hardest hit by job losses in residential furniture manufacturing has been the
largest producing state, North Carolina, which lost about 19,000 jobs between 2000
and 2005, about 28% of total employment in the industry. Other states, especially
California, the number two producer, have also suffered high job losses. On the
other hand, Mississippi, a major center of upholstered furniture production and the
third-biggest producing state, has seen more modest job losses.
China has become the major import supplier of furniture products during the last
decade, and more than a third of total imports from this source are wood household
furniture products. An antidumping order was imposed on wooden bedroom
furniture from China, and many U.S. manufacturers are receiving disbursements of
the collected duties under the terms of the “Byrd Amendment” (Continued Dumping
and Subsidy Offset Act, 19USC §1675C). After being found to contravene the rules
of the World Trade Organization, the law was repealed by Congress, effective
October 1, 2007. Future trade remedy cases may be less likely, as many wood
furniture manufacturers are also heavily involved in importing.
U.S. office furniture manufacturing has been less affected by import
competition, but was seriously affected by the “dot.com” bust in the recession of
2001. Job losses were particularly severe in Michigan, the center of the industry and
in California, the number two state. Overall, the prospects of the office furniture
industry going forward appear more attractive than in household furnishings.

Introduction: A Segmented Industry...................................1
Household Furnishings.............................................4
Output and Employment Trends..................................4
Competition from Imports.......................................6
Employment Impact by State.....................................7
Office Furniture..................................................10
Output and Employment Trends.................................10
Competition from Imports......................................11
Employment Impact by State....................................12
Prospects and Outlook.............................................14
List of Figures
Figure 1. U.S. Furniture Manufacturing Output..........................2
Figure 2. U.S. Employment in Furniture Manufacturing...................2
Figure 3. U.S. Furniture Imports......................................3
Figure 4. Household Furniture: Value of Product Shipments...............5
Figure 5. Household Furniture: Manufacturing Employment................5
Figure 6. Office Furniture: Value of Product Shipments..................10
Figure 7. Office Furniture: Manufacturing Employment..................11
List of Tables
Table 1. Leading States in Household Furniture Manufacturing..............8
Table 2. Leading States in Office Furniture Manufacturing................13

U.S. Furniture Manufacturing: Overview and
Introduction: A Segmented Industry
Domestic furniture manufacturing is really a collection of different industries,
centered in different locales round the country. The largest group of products is
“household and institutional furniture.” The leading state in terms of production
within this category is North Carolina, with $6.1 billion out of total shipments of
$48.5 billion in 2005, according to the latest available data in the Census Bureau’s
Annual Survey of Manufactures. California ranked second in shipments at $4.8
billion, while Mississippi was third at $3.7 billion. But, whereas North Carolina
predominantly supplies wooden “case goods,” such as dining room suites and
bedroom furniture, Mississippi specializes more in upholstered furniture. As will be
shown below, North Carolina has been far more heavily affected by job losses and
plant closings than Mississippi in recent years.
The predominant state in manufacturing office furniture, the second major
product group, is Michigan. It shipped $6.3 billion out of a U.S. total of $26.3
billion in 2005. Here, also, the number two state is California at $2.3 billion; no
other state shipped significantly more than $1 billion. Both of these states have
experienced heavy job losses in office furniture manufacturing between 2000 and

2005, as will be shown below – Michigan down 31%, California down 27%

(California also sustained major job losses in residential furniture manufacturing).
Unlike the residential furniture market, the office furniture market was much slower
to recover from the recession of 2001, in which the “dot.com bust” had a major
impact on office furniture sales.
In terms of output and sales, U.S. furniture manufacturing as a whole has been1
a large and growing industry since 1990. After the recession of 1991, the gross
output of furniture and related products grew steadily from about $40 billion to $74
billion over the next ten years. Output fell with the recession in 2001, but buoyed by
the boom in residential housing, total furniture output growth quickly resumed. By

2005, the latest year for which gross domestic product industry data are available,

total furniture output had reached more than $85 billion (Figure 1). The output
index, corrected for inflation, also started growing again after 2001, and by 2004 had
topped the previous peak of 2000.

1 North American Industry Classification System (NAICS) 337, “Furniture and Related

Figure 1. U.S. Furniture Manufacturing Output
90. 0 120.0
80. 0
70. 0
60. 0llar 80.0
50.0f do
40.0ns o
30. 0illio 40.0
20. 0
10. 0
0. 0 0.0
1990 1991 1992 1993 1 994 1 995 1 996 1 997 1 998 1 999 2 000 2 001 200 2 200 3 200 4 200 5
Gross Output, $billions (left scale)
Output Index (right scale)
Sources: Gross output, U.S. Department of Commerce, Bureau of Economic Analysis, Gross Product-
by-Industry series; Output index, U.S. Department of Labor, Bureau of Labor Statistics (NAICS 337).
Figure 2. U.S. Employment in Furniture Manufacturing

80 0
70 0
60 0)
500 (0
40 0oyees
30 0mp
200All E
10 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: U.S. Department of Labor, Bureau of Labor Statistics.
Note: Furniture and related products manufacturing (NAICS 337).
The same pattern – sustained growth, resuming after a brief hiccup occasioned
by the 2001 recession – cannot be seen with respect to employment. Employment
in furniture manufacturing, defined in its broadest terms, grew from 601,000 to

680,000 between 1990 and 2000, a rate of growth of nearly 1.25% per year.

Employment fell by almost 40,000 in the recession year of 2001, and the decline has

continued since then. By 2006, employment in the industry was 556,000, a decline
of almost 125,000 jobs from the peak just six years earlier, at an annual rate of
decline of 3.3% (Figure 2). As will be shown later, the employment decline affected
virtually all major product areas, including wooden household furniture, which has
been heavily impacted by imports, and office furniture, where imports are not such
a major factor. The only product segment within NAICS 337 to exhibit employment
growth since 2000 has been wood kitchen cabinets and countertops.
With respect to competition from abroad, the key development over the past
decade has been the emergence of China as the dominant supplier. By 1997, China
was already number two to Canada as the leading exporter of furniture of all types
to the U.S. market. By 2006, Chinese exports of $14.4 billion to the United States
were more than three times the value of imports of $4 billion from Canada, now in
second place. Mexico, at $1.5 billion, was the only other import source greater than
$1 billion. Italy, the traditional European leader in furniture exporting, ranked next
at $892 million. China is the leading import supplier in most major product
categories, but its role in wooden residential furniture is particularly notable. More
than a third of the imports from China – $5.1 billion in 2006 – apparently were in this
category. The only residential product in which China was not the leading import
source was wooden kitchen cabinets and countertops, a relatively minor trade
category, in which China ranked a distant second to Canada. The growth of China
as the dominant source of U.S. furniture imports is shown in Figure 3.
Figure 3. U.S. Furniture Imports

15 of
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
To t a l Ch i n a Canada Mexico It a l y
Source: U.S. International Trade Commission Trade Dataweb, using U.S. Department of Commerce
Note: Import data NAICS 337.

Household Furnishings
Output and Employment Trends
Household furnishings are the largest product grouping in both U.S. furniture
manufacturing output and consumption. In 2005, the latest data year in the Annual
Survey of Manufactures, household furnishings (including institutional products)
accounted for $48.5 billion of the $84.3 billion in shipments reported for NAICS 337
(57.5%). Within household furnishings (NAICS 3371), three product classes have
accounted for the bulk of product output and shipments. They are: wood kitchen
cabinets and countertops (NAICS 337110); upholstered household furniture (NAICS
337121); and nonupholstered wood household furniture (NAICS 337122), sometimes
also referred to as “case goods.” The last category would include, for example,
dining room chair sets, even though the backs and seats may contain some
While these are the three largest classes of products within the category of
household furnishings, their recent histories with respect to U.S. production and
manufacturing employment have been radically different, as illustrated in Figures 4
and 5.
!The domestic manufacture of wood kitchen cabinets and countertops
has benefitted from the recent boom in residential construction and
remodeling. Along with that, “custom kitchens” are frequently
“made to measure,” discouraging production, shipping and delivery
from overseas sources, so most of the market has been captured by
domestic producers. Also, this product class was relatively little
affected by the recession of 2001. Product shipments increased from
$8.5 billion in 1997, to more than $11 billion in both 2000 and 2001,
and to $18.3 billion by 2005. Employment was 124,000 in 1997. It
stalled around 149,000 in the first three years of the new century, but
then grew again to 177,000 by 2005.
!Domestic shipments of nonupholstered wood household furniture
were more than $10 billion in 1997, almost $2 billion higher than
cabinets and countertops in that year. But they fell more than $1
billion in 2001, and have not substantially recovered since. In 2005,
shipments of these products ($9.2 billion) were barely half the level
of cabinets and countertops. Employment has fallen from a peak
level of about 130,000 in 2000 to 70,000 in 2006, a loss of nearly
half of all jobs. The key development in this part of the industry, as
will be discussed more below, has been the closing of many
production facilities, and transition to more of a retail and
distribution mode, based on a high rate of imported products.
!Manufacturers of upholstered furniture, which includes sofas and
living room suites, have not enjoyed the extended boom of the
cabinet industry, but have seen shipments stabilize around $10
billion per year after moderate growth in 1998-2002. Employment

has also fallen, but not as precipitously as in wood furniture
manufacturing. About 20,000 jobs have been lost since 2000, a
decline of about 20%. As one source explains it, bulky upholstered
furniture costs more to ship long distances than wood furniture.
This may absorb most of the labor cost differential with China for
ready-made lower-cost products. For higher end products,
customers appear to prefer to choose and customize covering fabrics,
which places a premium on domestic manufacturing.2
Figure 4. Household Furniture: Value of Product Shipments
5ns o
1997 1998 1999 2000 2001 2002 2003 2004 2005
Wood Kitchen Cabinets and Countertops (NAICS 337110)
Upholstered Furniture (NAICS 337121)
Wooden Chairs and Furniture (NAICS 337122)
Source: U.S. Department of Commerce. U.S. Census Bureau. Annual Survey of Manufactures.
Figure 5. Household Furniture: Manufacturing Employment

20 0
15 0
100, 000
0 em
199 7 1 998 19 99 200 0 2 001 20 02 200 3 2 004 200 5 2 006All
Wood Kitchen Cabinets and Countertops (NAICS 337110)
Upholstered Furniture (NAICS 337121)
Wooden Chairs and Furniture (NAICS 337122)
Source: U.S. Department of Labor, Bureau of Labor Statistics.
2 CRS interview with Wallace W. Epperson of Mann, Armistead and Epperson, April 16,


Competition from Imports
The worst loss of employment in U.S. household furniture manufacturing has
been in wood furniture and case goods, and it is this product class that has been
especially affected by imports. Such products can be shipped partially assembled and
stacked flat in containers. According to one estimate, “by 2004, at least 54% of the
wood household furniture consumed in the United States was imported.”3 In the last
decade, the predominant business model in the industry has been characterized by
industry consolidators who have bought up domestic brands, rationalized U.S.
production facilities, and focused instead on the retail and distribution end of the
business. They have used traditional brand names to target particular price levels and
market segments in large single-brand stores. The largest of these consolidators has
been Furniture Brands International, which has acquired such old-line furniture
manufacturing brands as Lane, Broyhill, Thomasville, Henredon, Drexel-Heritage,
and others.4 As a result of such changes, for example, the “American Furniture
Manufacturers Association” changed its name to the “American Home Furnishings
Alliance,” thus reflecting the shift in focus of many members from the manufacturing
to the distribution end of the business.5
China has been the principal source of imports in this product class, as has been
noted earlier. One independent industry analyst, using data from the Commerce
Department, reported imports of wood household furniture from China at $5.2 billion
for 2006. That was 35% of total imports of $14.4 billion from China in NAICS
category 337 reported by the U.S. International Trade Commission Trade Dataweb.
By comparison, the industry analyst reports imports of upholstered furniture from
China at $1.6 billion for the same year.6
One antidumping case has been brought against wooden bedroom furniture
imported from China. On January 4, 2005, the Commerce Department announced
a final determination in the case of dumping margins of 6.65% against most Chinese
producers for the U.S. market that it investigated. For two other companies the rate
was somewhat higher.7 The levels of anti-dumping margins is under review in 2007.
With the new industry business model focused on distribution and retail trade, and
with much product sourced from abroad, there may be less likelihood of trade remedy

3 Shawn T. Grushecky, et al. “Decline in the U.S. Furniture Industry: A Case Study of the
Impacts to the Hardwood Lumber Supply Chain,” Wood and Fiber Science, XXXVIII:2
(April 2006), p. 366, citing the Hardwood Market Report.
4 Tables U, V, and W in Mann, Armistead and Epperson’s Furniture Digest (February 2006)
list some of the major consolidators, the brands that they own, and the price/quality level
at which each brand is aimed.
5 See AHFA website at [http://www.ahfa.us].
6 Data on Chinese imports of wood and upholstered residential furniture from Mann,
Armistead and Epperson, Furnishings Digest Newsletter (March 2007).
7 Federal Register, vol. 70, no. 2 (January 4, 2005), pp. 329-333. The “all others” rate for
companies from the People’s Republic of China not investigated by Commerce was nearly
200%, based on surrogate third-country costs of production, since China was defined as a
nonmarket economy.

cases in the future. Under the U.S. “Byrd Amendment” law, $32 million in 2006
penalty duties from this case will be distributed to U.S. furniture manufacturers. This
source of income will disappear, however. After an adverse ruling from the World
Trade Organization, Congress repealed the law and no further distributions will be
made from duties collected after October 1, 2007.8
Another issue that has arisen in China’s furniture and wood products trade is the
source of wood for Chinese products. According to an expose in the Washington
Post, official Chinese concerns about the impact of deforestation led to much tighter
restrictions on timber cutting and a major replanting effort in 2000-2005. As a
consequence, imports of logs to support Chinese wood products industries have risen
to more than $5 billion annually. The Post reports that much of this wood comes
from Burma and Russia, where, in both cases, it may be harvested illegally. The
private sector Forest Stewardship Council operates a program to certify that wood
used in furniture and other products is legally harvested. Some leading U.S. retailers
of wood products (such as the furniture seller Ikea) participate in this program, but
others do not. In any case, the amount of wood certified by the program appears to
be only a fraction of that used by major retailers (4% in the case of Ikea) – and other
companies do not participate in the program at all.9
Employment Impact by State
The impact of these trends in the household furniture industry have been
particularly significant for North Carolina and, to a lesser degree, the neighboring
states of Virginia and Tennessee. According to an analysis of furniture industry plant
closings published by two academic authors in the Forest Products Journal, North
Carolina had by far the most plant closings in the furniture industry between 2000
and 2003, according to data derived from non-official sources. That state saw a total
of 73 plant closings during the period. Virginia was second with 15 closings, and
Tennessee reported 10. California, which was noted above as the second-leading
state in household furniture production, had nine plant closings.10
These plant closings include all types of furniture production, but it should be
noted that the three leading companies in terms of plant closures were also reported
in Furnishings Digest as among the leading residential furniture industry
consolidators. They were: Furniture Brands International (19 closures); La-Z-Boy (13
closures), and LifeStyles Furnishings (12 closures). Klaussner Furniture, tied for

8 The “Byrd Amendment” is formally the Continued Dumping and Subsidy Offset Act (19
USC §1675c). See discussion in CRS Report RL32014, WTO Dispute Settlement: Status of
U.S. Compliance in Pending Cases, by Jeanne Grimmett. Data on wooden bedroom
furniture disbursements from U.S. Customs and Border Protection. FY 2006 CDSOA Annual
Disbursement Report, pp. 143-144.
9 Peter S. Goodman and Peter Finn, “Corruption Stains Timber Trade,” Washington Post
(April 1, 2007), p. A1.
10 Henry J. Quesada and Rado Gazo, “Mass Layoffs and Plant Closures in the U.S. Wood
Products and Furniture Manufacturing Industries,” Forest Products Journal, LVI:10
(October 2006), p. 105 and fig. 6.

sixth with five closures, was also on the Furnishings Digest consolidators’ list.11
Professors Quesada and Gazo in the Forest Products Journal article state:
Companies such as FBI and La-Z-Boy had reported in their annual stockholder
reports that closing of plants resulting from consolidating or reorganizing and
offshore outsourcing were sometimes their only viable options to remain
competitive. Much of the production of companies such as FBI has shifted to
offshore locations ... due to the leverage of manufacturing costs and the search12
for competitive advantage such as outsourcing.
The following table summarizes the changes in level of employment and
production in household furniture manufacturing in the leading producer states. It
shows all the states with employment of more than 10,000 persons in household
furniture manufacturing, as of 2005.
Table 1. Leading States in Household Furniture Manufacturing
(NAICS 3371)
20002005Job Gain/Loss
StateEmploy.ProductEmploy.ProductTotal% Chg.
Shi pm ent s Shi pm e nt s
($ bils.) ($ bils.)
NC 66,572 6.6 47,771 6.1 -18,801 -28
CA 48,737 4.5 39,792 4.8 -8,945 -18
MS 26,682 3.0 24,434 3.7 -2,248 -8
VA 18,305 2.0 17,389 2.7 -916 -5
TX 17,272 1.8 17,341 2.2 69 0
OH17,0962.6 15,7063.2-1,390-8
PA 17,809 2.0 15,059 2.1 -2,750 -15
TN 20,114 2.0 14,564 1.7 -5,550 -28
IN 15,301 2.0 14,448 2.7 -853 -6
NY 11,997 1.2 12,383 1.4 386 3
U.S. 416,134 43.3 354,613 48.5 -61,521 -17
Source: U.S. Dept. of Commerce. U.S. Census Bureau. Annual Survey of Manufactures.

11 Ibid., tab. 7; Furnishings Digest (February 2006), tab. U.
12 Quesada and Gazo, “Mass Layoffs,” p. 105.

The table highlights the impact especially on North Carolina from the decline
in wood furniture manufacturing. While it is the largest state in terms of production
and employment, the state lost nearly 19,000 jobs in the industry in just a five-year
period, a 28% employment decline. A North Carolina state commission lists
furniture and related products as one of four industries that together accounted for
56,000 of the 72,000 manufacturing jobs lost in the state between 2002 and 2005 (the
biggest loser was textiles, and the other two product areas were apparel and, perhaps
surprisingly, computer and electronics manufacturing).13 California, with a much
larger employment base than North Carolina, lost 18% of its household furniture
manufacturing jobs, but at about 9,000, the total of such jobs lost was less than half
that in North Carolina.
Two other states had comparable percentage losses. Tennessee lost 5,550 jobs
in household furniture manufacturing, like North Carolina 28% of its workforce in
the industry. While being fourth among states in such jobs in 2000, with
employment more than 20,000, by 2005 it had fallen to eighth. Wisconsin, not
shown in the table, lost 37% of its household furniture manufacturing jobs, as
employment fell from nearly 11,000 in 2000 to less than 7,000 by 2005.
Few states showed any increase of jobs in this category. Among the leading
states shown in the table, New York and Texas gained relatively small numbers of
jobs. Two states employing in the 5,000-10,000 job range in this industry, Florida
and Iowa, also reported modest employment gains of 5% or less.
Also interesting were states which did not report large job losses. Virginia was
listed earlier as the number two state in unofficially counted plant closures in 2003,
but the net job loss reported for the state by the Bureau of Labor Statistics was less
than 1,000, or about 5%, in 2000-2005. And although Mississippi, the third-ranking
producer of residential furniture in the nation did report a loss of 2,200 jobs (8%),
that was much lower than the other leading states. As was mentioned earlier, this
may be due to Mississippi’s greater specialization in upholstered furniture.

13 North Carolina Commission on Workforce Development. State of the North Carolina
Workforce: An Assessment of the State’s Labor Force Demand and Supply, 2007-2017
(January 2007), fig. 9.

Office Furniture
Output and Employment Trends
The other major category of products under the general heading of furniture and
related products is office furniture, including fixtures, NAICS 3372. Shipments from
this product group in 2005 were $26.3 billion. NAICS 3372 includes office furniture
made of wood and other materials, including panels and modular systems. It also
includes a diverse group of products used in commercial, office and industrial
locations, such as showcases, shelving, partitions, and lockers. The category also
includes custom architectural millwork. From the point of view of the Business and
Institutional Furniture Manufacturers Association (BIFMA), however, the industry
is essentially defined by NAICS 337211, wood office furniture, and NAICS 337214,
office furniture made of material other than wood.14
Figure 6. Office Furniture: Value of Product Shipments

f d
10s o
1997 1998 1999 2000 2001 2002 2003 2004 200 5 2006
Total Office Furniture (NAICS 3372)
Wood Office Furniture (NAICS 337211)
Non-Wood Office Furniture (NAICS 337214)
Source: U.S. Dept. of Commerce. U.S. Census Bureau. Annual Survey of Manufacturers. Imports
from USITC Trade Dataweb.
14 CRS interview with Mike Reagan, BIFMA, April 10, 2007.

Figure 7. Office Furniture: Manufacturing Employment

, 000
ll em
1997 199 8 1999 2000 2001 2002 2003 2004 200 5 2006
Total Office Furniture (NAICS 3372)
Wood Office Furniture (NAICS 337211)
Non-Wood Office Furniture (NAICS 337214)
Source: U.S. Department of Labor, Bureau of Labor Statistics
Figure 6 tracks the total value of shipments of NAICS 3372 over the past
decade. It grew from $21.5 billion to $24.4 billion, or about $3 billion, between 1997
and 2000. NAICS 3372 shipments then dropped more than $2 billion in 2001, before
recovering by 2004-5. About half of the shipments were office furnishings made of
wood and other materials, about $4 billion is from the millwork category, and most
of the rest consists of showcase, locker, partition, and shelving products.
Looking more closely at the key office furniture products, one sees that
shipments of wood office furniture peaked at $4.4 billion in 2000, fell to less than $3
billion in 2002, and have since recovered to about $3.5 billion, almost $1 billion less
than the high point of 2000. Non-wood furniture exhibited a similar pattern, falling
$1.3 billion from the peak reached in the years 1998-2000, down to about $7 billion
in 2001. However, shipments then enjoyed a somewhat more robust recovery than
shipments of wood products, attaining a new peak of $8.5 billion in 2005. Using its
own adjusted data, BIFMA calculates that after three negative growth years in 2001-

2003, U.S. production of office furniture, under their definition, grew at 5% in 2004,

12.7% in 2005 and a further 7.1% in 2006. The industry association projects both
domestic production and consumption to increase in the 7-8% range in 2007-2008.15
Competition from Imports
Added to Figure 6 is a line representing the level of imports, which reached
more than $5 billion in 2005 and 2006, or the equivalent of about 20% of U.S.
15 BIFMA. “Value of U.S. Office Furniture Market” and “Current U.S. Office Furniture
Market Forecast,” at [http://www.bifma.org/statistics].

domestic product shipments under the broadest definition (NAICS 3372). As with
residential furniture, China has also become the leading source in this category of
goods. Imports of about $2.5 billion from China in 2006 accounted for 43% of the
Though the rise of imports has been significant, it has not been as serious a
cause of industry concern as in the case of household furniture. In the office furniture
markets measured by BIFMA, U.S. production in 2006, net of exports of less than
$500 million, was equal to more than 80% of apparent domestic consumption. While
China is the overall leading foreign supplier for NAICS 3372 as a whole, within the
wood and non-wood office furniture market, “the chief ... trading partner with the
U.S. is Canada ... currently providing about 45% of all office furniture brought into
the United States,” according to BIFMA. The organization further notes that
Canada’s share has declined from closer to 60% of imports in the late 1990s, and that
China, particularly, has increased its share of the import market.16 But, overall, the
BIFMA board does not see trade as a major issue, and believes that imports will
“level off.”17
Employment Impact by State
While industry prospects may have recovered, or are recovering following the
down years after 2000, Figure 7 shows that employment has not followed suit. The
entire NAICS 3372 product sector has lost about 50,000 manufacturing jobs since
2000, from a peak of more than 180,000 to 132,000 in 2006. But over the last three
years, the employment decline has virtually stopped. In fact, in wood office furniture
there has been a small reversal in the downward trend. Employment fell from a peak
of 48,700 in 2000 to less than 40,000 by 2003, but increased back to 43,400
nationwide by 2006. In non-wood office furniture, the downward trend has also
almost halted, falling from 43,700 at the 2000 peak to something over 27,000
annually in 2004-2006.
Seven major companies control about 60-65% of industry output of wood and
non-wood office furniture. The three largest are all headquartered in western
Michigan, the center of the industry: Steelcase, Herman Miller and Haworth. Three
others are located in the Midwest: HNI (Iowa), Kimball (Indiana) and KI18
(Wisconsin). The seventh, Knoll, is headquartered in Pennsylvania. With the
“dot.com” crash and the recession of 2001, the industry experienced a sharp shakeout
out of employment and a new push to leaner productivity.
The case of Herman Miller Inc. provides a good example. Their CEO is quoted
as saying, “We had a two- or three-year period where business dropped 45%; that
was like an industry heart attack ... In 1995 when I took over, sales were under $1
billion. By 2000, they were $2.2 billion. By 2003, they were down to $1.3 billion.”

16 BIFMA. “Imports/Exports” at [http://www.bifma.org/statistics].
17 Reagan interview. For example, the BIFMA website does not list concern regarding trade
or imports as a “Government Issue.”
18 CRS interview with Mike Reagan, BIFMA, May 8, 2007.

To return the company to profitability, he was forced to lay off 38% of the company’s
workforce (4,500 workers), sell more than one million square feet of real estate,
including a signature Frank Gehry-designed building, and close or sell several
business divisions.19 Herman Miller is included in the list of top 10 furniture plant
closures of all types, compiled from non-official sources by Quesada and Gazo; it is
listed tenth, with four closures. Also on the list representing the office furniture
industry are: Kimball (number four, nine closures); and Haworth and Steelcase, tied
for sixth with five closures each.20
Table 2. Leading States in Office Furniture Manufacturing
(NAICS 3372)
20002005Job Gain/Loss
StateEmploy.ProductEmploy.ProductTotal% Chg.
Shi pm ent s Shi pm e nt s
($ bils.) ($ bils.)
MI 24,434 5.0 17,127 6.3 -7,709 -31
CA 18,152 2.6 13,298 2.3 -4,854 -27
IN 9,111 1.3 9,302 1.4 191 2
IL 11,489 1.5 7,976 1.3 -3,513 -31
NC 11,277 1.2 7,956 1.1 -3,321 -29
NY8,0320.9 7,9211.1-111-1
PA 7,3771.36,1861.0-1,191-16
OH 6,852 0.8 5,135 0.7 -1,717 -25
U.S. 177,914 24.6 137,709 26.3 -40,025 -23
Source: U.S. Dept. of Commerce. U.S. Census Bureau. Annual Survey of Manufactures.
Table 2 illustrates the overall profile of the entire office furniture and
furnishings sector, showing all states with more than 5,000 employed in the industry
as of 2005. As noted earlier, the industry is dominated by Michigan, which alone
accounted for $6.3 billion in shipments, or about a quarter of the U.S. total. But
Michigan has also suffered the largest job loss in the sector, nearly 8,000 jobs or 31%
of its office furniture sector total. California, the number two state was also hard hit,
losing nearly 5,000 jobs or 27% of its total employment. Illinois and North Carolina
were the other two relative big losers. Illinois, formerly number three in employment

19 Linda Tischler, “Herman Miller’s Leap of Faith,” Fast Company (June 2006), p. 52.
20 Quesada and Gazo, “Mass Layoffs,” tab. 7.

lost 3,500 jobs (31%) and North Carolina, formerly fourth, lost 3,300 jobs (29%).
Indiana actually gained a few jobs and moved into third place, with more than 9,000
employed in the industry. New York suffered minimal job declines in the industry
while Pennsylvania and Ohio were proportionally much larger job losers.
On the whole, office furniture is much more centered on the Midwest-Northeast
manufacturing belt than household furniture, although California and North Carolina
are two major outliers. The recovery of output in the sector overall from the
recession of 2001 has not yet seen a significant increase in employment, although the
two key product classes, wood and non-wood office furniture, have at least showed
an end to declines in employment.
Prospects and Outlook
As stated in the introduction, the U.S. furniture industry is highly segmented,
not only between office and residential products, but also among different classes of
products within each of these sectors. In general, industry analysts appear to be
somewhat pessimistic with respect to the prospects of residential furniture
manufacturing in the United States, but more positive with respect to office furniture
Wood household furniture manufacturing is not only under serious pressure
from import competition, especially from China, but also is in transition as the
owners of major domestic brands have transformed their business models in response
to perceived globalization of the industry. In the early 2000s, some industry
observers suggested that these challenges could be met by a strategy of “mass
customization,” wherein domestic manufacturers could take advantage of closer
location to the customer to bundle orders in specialized products that still catered to
individual tastes and measurements (somewhat similar to the strategy that has worked
well with respect to kitchen cabinets and countertops). Such a strategy might have
offset U.S. competitive disadvantages, such as higher labor costs and more restrictive
– therefore higher cost – forest management practices.21 Whatever the merits of such
alternative strategies, in terms of revealed competitiveness they do not appear to have
reduced the effective threat of foreign competition or saved domestic jobs.
A more pessimistic assessment of the current situation views that the worst –
in terms of plant closures and job losses – may be yet to come. A number of
manufacturing plants may currently be continuing to operate with skeleton crews
only so that the owners – who may include the large consolidators discussed above
– can continue to collect customs disbursements under the Byrd Amendment. Once
the benefits of that program are terminated, plant operators may move to complete

21 U.S. Dept. of Agriculture. Forest Service Northeastern Research Station. Albert Schuler
and Urs Buehlmann, “Identifying Future Competitive Business Strategies for the U.S.
Residential Wood Furniture Industry: Benchmarking and Paradigm Shifts,”General
Technical Rept. NE-304 (March 2003). Rado Gazo and Henry J. Quesada, “A Review of
Competitive Strategies of Furniture Manufacturers,” Forest Products Journal, LXV:10
(October 2005), pp. 4-12.

closure. The same source also foresees increasing pressure from Chinese competitors
in upholstered furniture, as they develop strategies to gain larger shares of the U.S.
market in that product class as well.22
Gazo and Quesada in their article reviewing manufacturers’ strategies conclude
that, “It appears that companies in the kitchen cabinet and office furniture sectors are
far less prone to be outperformed by Asian manufacturers. The possible critical
success factors for these sectors is service.”23 But even cabinet manufacturers,
insulated from foreign competition because “cabinet products come with a design
service to integrate the cabinets in the total kitchen design,”24 may see a fall in growth
prospects owing to recent declines in home sales and the general cooling off of the
residential real estate market.
Gazo and Quesada contrast the experience of the office and residential furniture
The office furniture industry often provides whole-office organization systems.
Increasingly, office furniture customers require solutions that are ready to use,
including design, planning, production, delivery, and installation. On the other25
hand, the household furniture industry tends to focus on the product itself.
Evidence for this assertion can be found on the BIFMA website, where a
statistical table lists office furniture production by product categories: seating, desks,
storage, files, tables, systems, and a small residual “other” category. The share of
annual production for each category has been relatively stable for the entire period
1990-2005.26 While office furniture manufacturing also saw an employment decline
following the recession of 2001, there is evidence that industry employment has
stabilized. This prospect may be enhanced by the continuing strong growth in non-
residential construction, the relatively low share of imports in the product sector, and
the industry’s own forecast of solid consumption growth in 2007-08.

22 CRS interviews with Wallace W. Epperson, April 16 and May 2, 2007.
23 Gazo and Quesada, “Review of Competitive Strategies,” p. 11.
24 Ibid.
25 Ibid.
26 See “Annual U.S. Production by Product Category,” at [http://www.bifma.org/statistics].