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Fuse Media


Furniture Manufacturers’ Secrets for Growth

And other wisdom from the most surprising hotspots in the middle market.

Optimism. It’s running high among midmarket executives this year as many industries are posting revenue increases, investing in development of new products, and adding staff.

In the manufacturing sector, things are also looking up. Surveying 1,147 participants, the latest McGladrey Manufacturing & Distribution Monitor report indicates that the number of thriving companies rose to 36 percent, while 60 percent are “holding steady.”

This is important because manufacturing has a big impact on the U.S. economy. At 12.5 percent of GDP, manufacturers contributed $2.08 trillion to the economy last year, up from $2.03 trillion in 2012. For every $1.00 spent in manufacturing, another $1.32 is added to the economy, the highest multiplier effect of any economic sector, according to the Bureau of Economic Analysis. It’s also a big source of jobs. More than 12 million Americans (or 9 percent of the workforce) are employed directly in manufacturing, according to the Bureau of Labor Statistics. Two thirds of respondents (67 percent) said they expect to hire more employees in the U.S. over the next year, up from 62 percent in 2013.

Make it Easier for Customers To Spend

Thanks in part to consumer confidence, furniture, fixture, and building materials manufacturers have shown some of the biggest increases, growing from 27 percent in 2013 to 33 percent. One firm, a carpet manufacturer based in North Carolina, found that consumer demand for floor covering is driving its growth.

The Monitor report did find that some of that growth has come at the hands of significant investments in operations practices and capabilities, customer service, and product and marketing strategies. Something as simple as a spend on software, for example, helped one Seattle-based company launch a new web-based application that improved its customer experience by facilitating price quotes and order submissions.

Made in the U.S.A.

Domestic sales increased for nearly three-fourths (70 percent) of the furniture and fixture sector by a median of 6 percent. Mid-market firms are beginning to notice that customers will pay a bit more for quality as well as goods made domestically.

According to the Monitor report, 86 percent of this sector said that it is important to their brands to indicate that their products are made in America. One building materials maker noted that a “Made in the U.S.A” label has become a global symbol for quality which can translate to higher margins on goods sold.

Domestic manufacturing also reduces the cost of shipping and the risks inherent in off-shoring. Mid-market manufacturers of furnishings and building materials can have tight control over their supply chains, as well as intellectual property and regulatory compliance.

Still Some Challenges

All is not rosy in this sector of manufacturing. As many as 72 percent of respondents were concerned about taxation as a barrier to growth. Seventy four percent said regulations were a greater threat to growth than competition (60 percent).

One threat to growth many aren’t realizing is a data security breach. As we’ve reported, the midmarket is a prime target for cybercrime, yet a majority of executives surveyed in the Monitor report weren’t lying awake at night thinking their data was vulnerable to attack. Only 41 percent of those surveyed said they regularly monitor and test for unauthorized access to their systems.

Though not as headline-grabbing as a celebrity’s semi-clad selfie or a potential stash of thousands of consumer credit card numbers, B2B systems can be similarly hacked via a company’s VoIP phone system which would expose a company’s and its customers’ private data. The Ponemon Institute found that the average cost of a cybercrime rose 26 percent in 2013 to $11.6 million — a serious blow to the bottom line.

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