Furniture Factory Closes, Jobs Go Abroad
Aug. 14, 2003 -- Workers fell silent as the last piece of furniture rolled off the assembly line at the Hooker Furniture factory in Kernersville, N.C. They had already prepared for the pulling of the plug.
The Hooker plant shut down last month, and, like the family of a dying senior, its staff had acquiesced to the end, as if jobs and factories — even whole industries — like men and women, were born to die.
"I can't imagine that it would feel any worse than it does today to come into this factory and see 250 dedicated employee-owners that have done everything we've asked them to do," Hooker CEO Paul Toms said at the time.
"Every time we've asked them to step up, they've done it. And we're still closing it. I feel like we've let these folks down, and I don't know what we'd do different."
Giant Sucking Sound?
Profits at the Hooker Furniture company have, in fact, continued to grow in recent years, though largely by outsourcing to cheaper manufacturers abroad — who this year accounted for about one-third of Hooker products. American jobs may go overseas, but there they fetch greater corporate profit for American companies at home.
According to Toms, the surge in foreign competition from low-wage nations like China — coupled with a wider downturn in the national economy — threatens to pull the whole American furniture industry into a fight for survival.
"It's unlike anything I've seen in my 21 years in the industry," Toms said. "A lot of plants have closed, people have been sent home, and it really has come quicker than anybody expected. I think it's hard to say, three, four, five years from now, what will this industry look like domestically."
The Kernersville plant, for example, reduced its materials costs 10 percent in the last two years, but "even with that, we don't seem to be competitive with these import products that are coming in for a fraction, 60 percent, of the cost we can produce them," Hooker President Doug Williams explained.
‘Pour-Down’ Economics
"If I don't work, I can't go out and spend money to shop or buy what I need, so that's going to put somebody else in jeopardy. And it's just going to be that trickle-down thing," said former Hooker employee Mildred Styles. "I think it's going to be more of a pour-down than a trickle-down, though, the way it's going right now. I think it's going to hurt everybody concerned."
But how much is that "Made in America" label actually worth to native consumers — especially in times of economic crisis?
"If things were equal, I would of course buy something that was made in the U.S.," admitted Tom Crompton, shopping with his family this summer at a North Carolina furniture mall. "But if it was significantly more expensive, and there was a cheaper product that I thought was of similar quality that was made somewhere else, I would probably buy the cheaper product."
"We all like to buy things at the best possible price, but I think as a country, we've kind of sold domestic manufacturing out," Toms said.
Immeasurable Loss
On May 28, Hooker supervisors called a meeting in the middle of the workday to announce the plant's closing. By late July, the last paychecks and severance payments had been distributed to nearly 250 employees — many of whom, like Carl Hayth, had spent decades in the furniture industry and at Hooker, and never worked at anything else.
"It was unbelievable," said Styles. After more than 50 years, "I couldn't believe I was out of a job. I'd never had that problem before — never been out of a job, never been laid off or fired, never left a job that I couldn't go back to for work. So I was just devastated."
And, after decades working together at Hooker, many find they've lost more than a job. "That's probably going to be the hardest thing to walk away from, is the friendship and closeness we all had together," said former employee Terry Crotts.
Closing a Capital
Although Kernersville is the only one of 10 Hooker plants to be shut down, its North Carolina location makes its closing especially poignant. For more than a century, the state has been a furniture capital, thanks in large part to an abundance of Appalachian hardwood and relatively inexpensive labor.
Local saw millers first stopped sending their timber north in the late 1800s, and by 1929 had made their state sovereign in furniture making. Today, the town of High Point boasts a sprawling retail market, and twice a year hosts the nation's biggest wholesale furniture exposition, drawing buyers from the top retailers in the country. Yet if local furniture factories begin closing, the market could shift west, closer to the source at other plants.
Does history matter? If North Carolina no longer made furniture, would it change the state? If the United States let manufacturing jobs drift offshore, would it change the nation?
"In part, the answer to that question is, 'What sort of America do you see now?' " said local economic analyst Andrew Brod. "It's here already."
Reason, Risk and Remedy
Forced to close Kernersville in favor of cheaper Chinese labor, CEO Toms insists that the United States look in the mirror and draw a line. The Chinese, he said, "have millions of people that they're trying to have employed, so it's hard to fault them. But I think that at some point, this country has to think about what's best for us.
"You have industries and examples of predatory pricing," Toms warned. "That's a risk we run not just in furniture, but in any industry that we're letting leave this country."
But the American furniture industry has made matters worse. Unlike the Chinese, many American companies have failed to invest much in their own productive capital, ironically opting instead to funnel investments abroad, many to China itself, Brod says.
"Some have contracted with Chinese producers, but others have entered into joint ventures to establish new factories, to refurbish existing factories," he said.
Innovation Trumps Outsourcing
If the American furniture industry wants to survive in America, it will have to save itself, Brod says.
Comparing today's furniture industry to the automobile industry of the 1970s, Brod said that while Detroit then won trade restrictions on Japanese cars, "the only factor that pulled the American automobile industry out of the doldrums was not federal government action, but that Detroit really buckled down and improved quality and improved its production processes. It became more efficient, and may have gotten a little lucky — it found the minivan.
"The question for furniture is — what's our minivan going to be?"