Korean Furniture Maker Bucks a Trend
At first glance, his move makes no sense. Even if his press agents do bill him as the Lee A. Iacocca of South Korea.
San-Sik Wee, an Inchon-based furniture manufacturer, is about to build an assembly plant in Southern California, just as other furniture builders are standing in line to get out.
A loud chorus of Southern California furniture manufacturers have decided that it’s crazy government nonsense for the South Coast Air Quality Management District to force them to use new, possibly blue-sky technology to conform to the tightening grip of its air pollution rules.
“I wouldn’t be surprised if 50% to 60% of the wood-products industry (of Southern California) is gone in the next few years,” says Gary L. Stafford, vice president of Terra Furniture Inc. of City of Industry and a spokesman for the manufacturers’ trade group.
“The guys who are doing it on a shoestring, the back-yard operations . . . they’re the ones who are going,” warns Joseph E. Haring, director of the Pasadena Research Institute, a small business-oriented consulting firm that has been working for the furniture makers. Of the 1,600 known, and perhaps 1,100 more “informal” manufacturers, says Haring, 80% are tiny operations with 20 employees or fewer.
In his critique of the AQMD plan, Haring has fired off such grape-shot as a projection that the state could lose 239,000 jobs from the ripple effect of controls on use of certain solvents, a process central to furniture-building. He can name at least 40 manufacturers that have already abandoned the South Coast air basin.
Into this storm has come San-Sik Wee, 59. Wee is founder and president of BIF Korea, known in that country as Borneo International Furniture, and he has what he calls a “different” plan.
“When I had the idea of having a factory in America, my first worry was the pollution problem,” says Wee.
But Wee now believes that it will take “only a very small amount of money” to install the technology to meet air-pollution standards. He’s already tested the necessary water-based coatings and special application processes. And he’s begun building his plant on a dusty Moreno Valley plain--in the heart of the South Coast Air Basin battleground.
Why haven’t California furniture makers reacted as calmly?
“I don’t know,” Wee says politely, before offering a stinging explanation, “but in America there’s a gap. They’re not up to date with these new technologies.”
The Germans, Wee says, make the best low-pollution furniture finishes; the Italians are most advanced at their application. “I travel a lot,” he notes.
Meanwhile, furniture makers here say it’s impossible to make a decent dollar under the new rules.
Their main competitive advantage over furniture from outside the area--most of it from Michigan and North Carolina--has been the cost of transportation. This small edge will disappear, they say, if they have to install new finishing technology.
This does not worry San-Sik Wee, whose business plan points up a competitive side of California that has lately received short shrift.
Wee, who has been in the furniture business 22 years, ticks off the big reasons for placing a manufacturing plant in Southern California, one of his expanding markets. He already has 12 retail outlets here.
Southern California industrial land costs only a fraction of what it does in South Korea. He paid $4 million here for a plot he says would have been $80 million to $90 million back home.
Financing is also attractive, Wee says. Interest rates here are about half those of Korean commercial banks.
And since he buys most of his wood from the U.S. Pacific Northwest, he also will save on transportation charges.
But at the core of his benign view of air-pollution control is his highly automated, robot-filled assembly line. In simple terms, Wee believes that he can put more money into state-of-the-art, low-pollution machinery and make up the difference with savings on labor.
Of course, this is the simplified view.
Established manufacturers face true financial obstacles adapting to new technology, particularly if they are small. And one company’s innovative business plan can be another’s formula to crash and burn. Wee’s Italian-design furniture lends itself to automated manufacture, for instance, and he is the first to say that traditional sofas and chairs would be a lot tougher.
Yet San-Sik Wee is not alone in finding a way to navigate through the coming decades of air pollution regulation.
Barry Sedlak, manager of customer planning services for Southern California Edison, recently ticked off a list of companies--from cement plants to cheese makers--that have come up with innovative investments to improve their facilities as they meet air pollution regulations.
“You can easily get lost and feel that California is trying to send a message that it’s hard to do business here,” Sedlak admits. “But you have to put a day-to-day perspective on the long-term opportunities.”
Still, many are hearing that dour message. When one developer tried to put together a new industrial park in Perris Valley, near Riverside, he thought he’d found a way for small furniture manufacturers to keep going. The park would offer centralized pollution-control machinery, to spread the cost of the equipment among tenants. Despite a lot of early interest, the idea died as manufacturers decided that they’d still be better off elsewhere.
Yet one fact remains: San-Sik Wee has found a way to bring his plant, and 150 new jobs, to California.
