Furniture Makers Nail Down Niche : L.A. Area Firms Earn No. 2 Ranking in U.S. Despite Problems

From his corner office perched high above the factory floor, furniture maker Gary K. Robin gazed upon the $600,000 worth of new machinery that will automate his company’s assembly line and help reduce costs.

“It’s the biggest investment we ever made,” said Robin, owner of Commercial Chair Co., the 20-year-old firm that specializes in making office chairs. Automation is the latest approach he has taken to keep his City of Industry firm competitive with larger domestic and lower-cost foreign furniture makers.

Robin concedes that his business is losing money. But, “when you build something,” he said, “you want to see it keep growing. It’s like a child.”

Growth is on the minds of many Los Angeles area furniture makers. While store sales of furniture have increased about 10% annually, the region’s furniture manufacturers say such growth has eluded them--fierce competition has limited prices and sales increases.

The Los Angeles area--well-known as the capital of the movie business and as a major financial center--is also the unlikely home of the nation’s second-largest furniture manufacturing industry, which in turn has spawned what is known as the casual “California Look” in furniture design. A healthy economy, a growing reputation as a design center and a 3,000-mile distance from its biggest competitors have all supported the existence of such a regional furniture industry.

Account for 10%

According to the Greater Los Angeles Area Chamber of Commerce, the five-county Los Angeles area--which includes Los Angeles, Orange, Riverside, San Bernardino and Ventura counties--boasted 1,189 furniture-making firms in 1982--the last year for which figures are available. (That number has not grown appreciably, industry experts estimate.) The nation’s largest furniture-producing region straddles western North Carolina and Virginia.

The American Furniture Manufacturers Assn. estimates that California furniture makers--located principally in the Los Angeles area--accounted for a little more than 10% of the nation’s $13 billion worth of household furniture production.

Despite its size, the area’s furniture industry faces numerous problems. The area’s small firms face the possibility of labor shortages over the next few years and are losing out to imports or being acquired by the furniture-making giants of the East Coast.

Unlike the large furniture makers back East, the furniture-making industry in the Los Angeles area is composed mostly of small firms, many owned and operated by sole proprietors and families. A firm in Los Angeles that rings up $35 million in sales may be considered huge but is tiny when compared to Eastern competitors. North Carolina-based Broyhill Furniture Industries, for instance, boasts annual sales of nearly $300 million and has more than 7,000 employees.

In Los Angeles area firms, spouses often double as secretaries and bookkeepers. The sounds of the factory--whirring of buzz saws and banging of pneumatic staple guns and hammers--filter through the walls of front offices and showrooms.

Little Niches

Owners often have a lifelong interest in their companies, and many times family life and business are inseparable. “I’m going to die with a table in my hands,” said Irving Goodman, 68, who founded Mission Furniture Manufacturing, a Los Angeles table maker, nearly four decades ago. Goodman’s father ran a furniture-making outfit and his son, Gary, 33, now works at his side.

The Los Angeles furniture business isn’t known for its chumminess. “It just seems everybody is in their little niche,” said Linda Coll, vice president of marketing at TrendWest, an 11-year-old water bed and conventional bedroom furniture manufacturer. “We are all doing our own little thing.”

The industry also has not been particularly fast growing. The size of the state’s furniture industry work force--a gauge used to determine how well a manufacturing industry is doing--peaked in 1984 at 59,200, according to economist David Hensley, a member of UCLA’s Business Forecasting Project. Employment declined to 58,000 last year, and is expected to rebound slightly this year. However, employment is expected to remain relatively stable through the year 2000.

But even though growth has not been significant, the Los Angeles furniture industry’s influence and reputation has increased. The Pacific Design Center--a 3-million-square-foot building housing home furnishing show rooms--plans to increase its showroom space by nearly one-third.

“The industry is . . . at a peak at the moment,” said Pacific Design Center Vice President James Goodwin of the area’s furniture makers. “We don’t know where we will go from here.”

Land Costs a Factor

The Los Angeles area is a peculiar spot for the furniture industry to take such strong root.

In North Carolina and Virginia, huge 200,000-square-foot furniture factories--employing more than 500 workers--ramble over vast stretches of the rural landscape. Land is cheap, wages are low and plentiful supplies of hardwood are nearby.

By contrast, in Los Angeles “wages are higher and land costs are higher and rentals are higher,” said Martin J. Reddan, market research director for the furniture association. The prohibitively high land costs to a large degree dictate the small size of the area’s manufacturers.

Moreover, the supplies of hardwood used in furniture making--such as oak, ash and walnut--must be shipped in from the East and Northwest.

Despite these obstacles, “Los Angeles is the only major metropolitan area with a significant furniture-manufacturing industry,” said Reddan.

Firms thrive in the area for two major reasons. First, California is the nation’s largest marketplace for furniture--the state accounted for about one-eighth of the approximately $26 billion worth of household furniture sold last year in the United States, according to industry figures.

And, historically, transportation costs have made it prohibitive for East Coast furniture makers to ship products to West Coast markets, leaving Los Angeles area manufacturers to fill the gap. “As the population grew,” said Goodman, “the number of factories grew.”

But the costs of transportation cut both ways. “We’re pretty well locked west of the Rocky Mountains,” said Robin. In fact, most furniture made in California is sold within the state.

The region’s firms face other problems as well:

- Larger East Coast and Midwestern manufacturers have bought local outfits and are setting up satellite plants in the area. La-Z-Boy Chair Co. of Michigan and Schnadig Corp. of Illinois have opened up substantial plants in the area.

- From the Far East, low-cost imports have given domestic manufacturers a run for their money. Many domestic manufacturers now assemble furniture parts made overseas. “The furniture industry in America and in Los Angeles is growing,” said Goodman of Mission Furniture. “But how much furniture is made locally or brought in from overseas, I don’t know.”

- Small- and medium-sized furniture retailers--major customers for small furniture makers--have lost ground to larger national chains, such as Levitz, which rely on larger manufacturers to fill orders. “It just makes it more important to sell to the big ones,” said Goodman. “There are not enough independents (retailers) to keep busy.”

- The new immigration law may pose serious problems for furniture manufacturers, say economists. In 1979, nearly 35% of the employees working in furniture factories were Mexican immigrants, according to U.S. Census figures. If the law leads to a reduction in the number of immigrant workers, furniture makers could be vulnerable to labor shortages, and, as a result, higher labor costs, economists warn.

“It’s a highly labor-intensive business,” said Robin of Commercial Chair. “The immigration law is going to raise the price of labor, which will in turn raise the price of the product,” he predicted.

‘California Look’

To compete against much larger rivals, Los Angeles area manufacturers have survived by sticking to particular products. Commercial Chair made a name for itself in wooden office chairs. Pastel Manufacturing Co. of Vernon concentrates on expensive glass, iron and imitation stone dining room sets. Lee Honigseld, 31, co-founder of Pastel, said the chances of failure increase “if you come out with a line that looks like everybody else’s.”

Los Angeles area furniture makers have banked on what is tenuously called the “California Look.” The look includes oiled oak, light-colored and earth-toned fabrics and a casual appearance. “We have a tendency to make things a little more opulent, a little bit more overstuffed,” said Goodman.

Goodman’s company is an example of how some domestic manufacturers have adapted to foreign imports. The name of his Mission Furniture Manufacturing Co. is a misnomer--the company has not made furniture since it closed down its East Los Angeles plant two years ago and laid off hundreds of workers.

Instead, the company now distributes imported, ready-to-assemble products from Taiwan. It also imports pricey marble tables from Italy. As a result, Mission’s sales and profit have increased, says Goodman.

“I would say it was a rather traumatic experience,” Goodman said of his company’s transformation. “But it made good business sense.”

Furniture makers have also managed to trim transportation costs and expand eastward. Coll of TrendWest says East and West Coast manufacturers often split the costs of cross-country hauls. For example, a truck that delivers coffins from a North Carolina casket maker may return to the East with a load of water beds.

The general outlook for the furniture industry as a whole is rather bright. “The baby boomers are at the right age (between 25 and 44) for buying furniture right now,” said Reddan. Locally, a healthy business climate ensures a steady supply for office furniture and enough jobs to keep consumers buying sofas, tables and beds.

And there is a push in the industry to get people to buy furniture more often. “We have to make it more of a fashion industry,” said Coll. Instead of waiting for the springs of the living room sofa to poke through, consumers might be more willing to buy into the latest trend.

That could lead to a near-perfect world for furniture makers, says Coll. “People might start buying new furniture every year.”

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