"Made in America"-The Furniture Industry
Tuesday, June 24, 2008SUZANNE PRATT: Well did you know only about half of the furniture sold in the U.S. last year was made in the U.S.? Increasingly, furniture manufacturing is moving to China and Vietnam where labor and materials are cheaper. But Wisconsin-based PM Bedroom Gallery has been ringing up profits by making furniture in its own back yard. Tonight, Diane Eastabrook profiles the firm to kick off an ongoing series we call "Made in America," looking at companies that manufacture right here at home.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: In a cramped workshop near Milwaukee, Bill Ludwig creates a chest of drawers from northern Wisconsin hard maple. Ludwig family members are among more than a dozen Wisconsin craftsmen who make furniture by hand for PM Bedroom Gallery. The Milwaukee area firm is one of the nation's largest sellers of American made furniture with eight showrooms in the Midwest. Arvid and Ben Huth, the middle sons of a dairy farmer, started PM Bedroom Gallery 15 years ago with money they raised by selling seven cows and a snowmobile. Arvid, who worked for a furniture store during college, saw a market for a product that would last a lifetime.
ARVID HUTH, CO-FOUNDER, PM BEDROOM GALLERY: Most of the stuff we sell is furniture that your grandchildren's grandchildren will be arguing about at the estate, divvying up of the estate when someone passes on. This is the kind of stuff that will be on "Antiques Road Show" someday.
EASTABROOK: PM Bedroom Gallery prides itself in its craftsmanship and customers pay for it. Bedroom sets can cost anywhere from $2,000 to $50,000. But with that price you get drawers with dove tail joints, secret compartments to stash money or jewelry and the builder's signature on every piece. Ben Huth says attention to detail and using better quality wood from Wisconsin and Michigan make a much sturdier product as he showed us.
BEN HUTH, CO-FOUNDER, PM BEDROOM GALLERY: The lumber being grown in a northern climate is a lot denser than lumber that gets grown in a tropical rainforest or gets grown in the southern climates. So, you start out with a whole lot better product as far as the basis to begin with.
EASTABROOK: Increasingly these days less of the wood furniture sold in the U.S. is actually made in the U.S. More than 60 percent of it comes from Asia where labor and materials are cheaper. But Morningstar analyst John Gabriel says rising transportation costs and quality issues are starting offset some of the advantages of offshore production.
JOHN GABRIEL, FURNITURE ANALYST, MORNINGSTAR: It's the returns. Controlling the returns is huge because if you order a customized piece of furniture and it comes scratched or damaged you know you are going to return it and that eats into the margins of the company.
EASTABROOK: The Huths say safeguards PM Bedroom Gallery has in place with its craftsmen and delivery people help prevent damaged furniture and returns.
ARVID HUTH: When we receive our furniture from our builders it is completely unboxed, so if there is a problem they see the problem when they put it on a truck, we see the problem when it comes off a truck. There are so many more eyes on a piece of furniture.
EASTABROOK: Despite a sour economy, PM Bedroom Gallery thinks sales will top $20 million this year. That's about a 20 percent increase over last year. The Huth brothers hope that one day the name PM Bedroom Gallery becomes as well known as competitor Ethan Allen. But they say they will never sacrifice quality in an effort to grow their business. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Naperville Illinois.
