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Industry & Trends

After Klaussner Closing, Are More Furniture Manufacturer Shutdowns Coming?

The sudden closing of Klaussner, a $500 million furniture vendor only a few years ago, might signal a weakness in the category that could impact wood suppliers.

Klaussner, which had been family owned since its founding in 1963 before it was sold to private equity owners in 2017, abruptly announced it was closing in early August and would be shutting down its five North Carolina factories centered around Asheboro, laying off its nearly 900-person workforce. In its statement announcing the closing, it blamed its lenders for not continuing to extend its credit during difficult business conditions in the furniture and home furnishings business.

On its website, the company said it made about 70% of its products in its own factories, and if it’s generally believed it was still doing between $200 million and $250 million in annual revenue in its last year of operation. That represents about $140 million to $175 million worth of furniture at cost. Most of that, in case goods and upholstery frames, would use a significant amount of wood.

Klaussner is the second major U.S. furniture manufacturer to shut down in the past nine months. Last November, United Furniture Industries, which had plants in both North Carolina and Mississippi and sold many of its products under its Lane brand name, also suddenly shut down. It also blamed its inability to get additional financing during the furniture downturn. While its annual volume could not be obtained, United Furniture too made a large proportion of its products domestically, employing 2,700 workers.

While the vast majority of furniture sold in the United States is made in Asia – specifically China, Vietnam, Indonesia, and the Philippines – it is estimated that about a quarter of all upholstered furniture and about 10% of all case goods are still made domestically. Suppliers of raw materials – specifically wood and wood components – to those factories are now keeping a close eye on whether there are more companies like Klaussner and United still out there, even as it appears the furniture industry has perhaps bottomed out and business is slowly on the rebound.

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