High Point, NC – Residential furniture orders rose 27% according to the latest monthly figures by industry financial advisers Smith Leonard. But a backlog in shipments is also growing, indicating manufacturers are encountering challenges in meeting demand.
The 27% order increase, reported by residential furniture manufacturers and distributors in December 2020 (versus December 2019) brought total orders for 2020 to an increase of 15% over 2019, despite several months of declines earlier in the year resulting from the COVID-19 pandemic.
With 84% of those surveyed reporting increases in sales, an accompanying backlog in shipments has also been on the rise, with the gap between shipments and orders growing. Shipments in December 2020 were up just 5% versus December 2019. And shipments actually decreased 6% in 2020 overall.
“The good news was that some 74% of the participants reported increased shipments,” says Ken Smith, CPA, a founding partner of Smith Leonard who authors its monthly ‘Furniture Insights’ reports. “It is just that the amount of the increased shipments was not up as much as needed. Approximately 78% of the participants reported declines in shipments for the year.”
Many U.S. factories and warehouses struggle to find workers, while delivery of some raw materials slows due to lack of availability or logistics issues. Upholstered furniture companies Bassett Furniture and Craftmaster Furniture told local media of a spot shortage of latex foam. a result of the recent winter storms in Texas. Craftmaster, which ordinarily makes 4,000 furniture pieces a week, cut hours for its hundreds of employees to just 3 days this week, even though orders have increased by 40%.
Smith, who also heads the Smith Leonard Furniture Practice, says a shortage of workers is an acute issue. “The number of factory and warehouse employees was down 3% in November as well as payrolls,” Smith says. “We understand domestic manufacturers are doing all they can to hire people, but even when they do, the cost of training is really hurting productivity and is costly.”
Shipment delays can result in order cancellations, among other negative consequences, Smith says, noting, “The cost of furniture is going up whether for imports or for domestic materials.”