Webinar #2-Casegoods Furniture as a Marketing Target

1. Thursday, February 23rd, 2012 Webinar #2-Casegoods Furniture as a Marketing Target Harry Watt North Carolina State University and US Forest Service’s Wood Education and Resource Center web www.cnr.ncsu.edu/usalocalwood

2. North Carolina State University Wood Products Extension Since 1950 has supported the wood products industry in North Carolina in the areas of wood education, training, troubleshooting problems, research and overall assistance in making a large variety of wood products. It is the policy of the State of North Carolina to provide equality of opportunity in education and employment for all students and employees. Educational and employment decisions should be based on factors that are germane to academic abilities or job performance.  Accordingly, the North Carolina State University (“NC State”) does not practice or condone unlawful discrimination in any form, as defined by this policy.

3. Wood Education and Resource Center • Is the focus of the US Forest Service effort of support of the hardwood forest  industry in the states east of the Great Plains • Located in Princeton, West Virginia, www.fs.fed.us/werc • Our WERC projects websites = www.cnr.ncsu.edu/woodworkshops and www.cnr.ncsu.edu/usalocalwood The work upon which this webinar is based was funded in whole or in part through a grant awarded by the Wood Education and Resource Center, Northeastern Area State and Private Forestry, U.S. Forest Service. In accordance with Federal law and U.S. Department of Agriculture policy, this institution is prohibited from discriminating on the basis of race, color, national origin, sex, age, or disability. To file a complaint of discrimination, write USDA Director, Office of Civil Rights, Room 326-W, Whitten Building, 1400 Independence Avenue, SW, Washington, DC 20250-9410 or call (202) 720-5964 (voice and TDD). USDA is an equal opportunity provider and employer.

4. WERC Grant Project for Local Wood • WERC funds grants to promote the improved utilization and marketing of hardwoods • Goal is to promote the growth of locally made wood products made with US woods in the USA • Want to recreate markets lost to imports to support growth of jobs and economic activity • Want to provide better markets for minor hardwood species

5. Other Supporters of WERC Grants to NC State Wood Products Extension • Independent Sawmill and Woodlot Magazine • WoodShop News Magazine • IWF 2012 in Atlanta-booth and lecture session • Shows-NC Home Builders Association, Kentucky Wood Expo, Paul Bunyan Show

6. Casegoods Furniture is the Big Targetif the Industry is to Recover

7. Casegoods Furniture Drove Hardwood Lumber Production • The drop in lumber consumption for furniture has been by casegoods as upholstery furniture has experienced only a small drop in production • The casegoods furniture industry used lots of minor species that now go into lower valued industrial products like pallets, crossties and landings • Casegoods furniture also consumed a large amount of upper grade logs for veneer products • Overall, the casegoods furniture industry was the most important customer of the hardwood industry

8. Casegoods Furniture Is a Wide Category • Residential furniture-bedroom, dining room, etc. • Institutional furniture-schools, hotels, libraries, hospitals • Adult living centers • Commercial businesses • Government offices Example of using new technologies to better present a project to a client-Hale Manufacturing

9. Better Future Prospects for Wood Products Furniture is the “Big Daddy” we need to regain. Furniture can use all grades and species. Cabinets and millwork are tied to construction and will remain flat until housing recovers-better now to concentrate on remodels and repairs Institutional and government office purchases are also targets-especially to replace metal and plastic furniture and furnishings. Can push school designers to include wood millwork in projects.

10. Successful Business Configurations Local ownership. Owners pull their weight. Not vertically integrated-do part but not all Focus on a niche you can own = be #1 Low inventory or make-to-order strategy Fast delivery, offer designs easy to modify, lots of finish options, etc. Empowered trained workforce, flat management structure, reduce indirect labor and staff support

11. Servicing Local Can Be Part of Servicing Other Markets Local-within a few hours Regional-within a day’s travel National-the USA International-the world

12. Why Look at Local Buyers and Markets? Lowest cost customers to pursue-backyard buyers Likely for producer to be more competitive Some buyers have a preference for local Easier to service in design and customer support Local markets can be mastered before going into regional and national markets

13. Battling Imports Strategy • Avoid commodity products unless you have an advantage • Match wood species to the competition-use minor hardwoods and softwoods on the low end • Focus on styles that limit labor requirements • Focus on fast deliveries and lots of options • Focus on the buyer-build a strong relationship • Imports have their problems too!

14. Understanding Designs-Cabinets,Furniture and Millwork • Style comes from the combination of elements • Look at edges, contours, depth features, legs, doors, drawers, scale, etc. • Casegoods are “boxes” with embellishments the basic box with a top, side moulding and a leg base can showcase the wood species with transparent finishes and market with a story about the wood

15. Financial Targets • In the old days, the best large furniture manufacturers earned over at 10% profit, the good ones near 10% and the lesser ones around 5% pretax profitability • Smaller companies could have larger margins • Success depended upon doing things right, being in control, a good relationship with dealers, good designs

16. Create an Advantage • Have a story to tell-wood species, designer, shop or factory, location, owners, style, selling process, etc. • Have multiple positive selling points to grab the retailer and/or customer • Study to see what the buyer and intermediaries value species like American cherry have no equal anywhere in the world

17. Recreating Markets for Hardwoods • Surviving wood businesses and startups can become more successful by attacking imports and developing new products/customers • The buyers are always looking for new styles, better value, new functions, etc. • Importers have their problems too • Casegoods furniture is the big target style is an important element needed to catch the attention of buyers

18. Grant Project Support-Local Wood Products • Website at www.cnr.ncsu.edu/usalocalwood • Newsletters, Articles, Webinars • Leadership Conference at WERC on Thursday, August 2nd, 2012, cost = $35 • IWF 2012 Atlanta lecture session • We can sometimes make visits to companies interested in local wood products marketing

19. Upcoming Webinar Dates-all on Thursday Note-these dates are the last Thursday of each month except for August that would fall while at the IWF show in Atlanta (we will be there-come by and visit) Let us know what topics you want to cover next time! Recordings at http://elluminate.wolfware.ncsu.edu/recordings.html

20. Upcoming Workshops at WERC-2012 • Thursday, June 7th-New Technologies for Value Added Wood Products = Cabinets, Furniture, Millwork-$35 • Equipment • Software • Tooling • Finishes • Thursday, June 14th-Small Sawmills-$35 • Ideas to grow profits and sales • Equipment • Lumber drying and reducing degrade • Demos on equipment-sawmill, edger, resaw