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The furniture hub in North Carolina is booming. What’s next?

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HICKORY, NC — Six months after the coronavirus pandemic, as millions of workers lost their jobs and businesses worried about their economic future, something unexpected happened at Hancock & Moore, a supplier of custom-upholstered leather sofas and chairs in this small town in North Carolina.

The orders started pouring in.

Families stuck at home had decided to upgrade their sectionals. Singles who are tired of looking at their sad futons wanted new and nicer living room furniture. And they were willing to pay — which turned out to be a good thing, because the cost of every part of producing furniture, from fabric to wood to shipping, began to rise rapidly.

More than a year later, the furniture companies in Hickory, NC, in the foothills of the Blue Ridge Mountains, had an unforeseen opportunity: The pandemic and ensuing supply chain disruptions have left factories in China and Southeast Asia that disrupt U.S. manufacturing in decimated the 1980s and 1990s with cheaper imports. At the same time, the demand for furniture is very high.

In theory, that means they have a chance to rebuild some of the business they lost to globalization. Local furniture companies had cut jobs and reinvented themselves in the wake of offshoring, shifting to custom upholstery and handcrafted wood furniture to survive. Now companies like Hancock & Moore have an order backlog. The company is busy hiring staff.

“Not to sound corny, but it’s unprecedented,” said Amy Guyer, vice president of human resources and benefits for the parent company that includes Rock House Farm furniture brands such as Hancock & Moore and Century Furniture.

But the same forces that make it difficult for overseas manufacturers to sell their goods in the United States — and give American workers a chance to command higher wages — are also raising obstacles.

Many of the companies depend on parts from abroad, which were more difficult – and more expensive – to obtain. Too few skilled workers are seeking industrial jobs to fill vacancies, and companies don’t know how long demand will last, leaving some hesitant to invest in new factories or expand into cities with larger potential workforces.

“We’d love to expand capacity,” said Ms. Guyer, “but we’re the furniture mecca of North Carolina — every other furniture company is in the same boat as us.”

Even if there were enough employees, said Alex Shuford, the CEO of the company that owns the Rock House Farm furniture brands, “the increase won’t last as long as it takes to get to a fully trained workforce and put them on the market.” speed.”

The present moment, he added, “is abnormal in every way and in no way sustainable.”

For now, businesses in Hickory are seeing a huge upswing due to strong demand and limited supply. Prices for sofas, beds, kitchen tables and bedding have skyrocketed this year, climbing beyond 12 percent nationwide through October. Furniture and bedding make up a small portion of the basket of goods and services tracking inflation — about 1 percent — so that increase wasn’t enough to push overall prices to uneasy levels on its own. But the rise has been accompanied by increases in car, fuel, food and rental costs that have pushed inflation to 6.2 percent, its highest level in 31 years.

The question for both policymakers and consumers is how long the surge in demand and the constraints in supply will last. An important part of the answer lies in how quickly the shipping lanes can clear up and whether producers like the artisans at Hickory can ramp up production to meet the booming demand. But at least in our own country, that turns out to be a bigger challenge than you might think.

On a wet morning in late October, the sound of power sanders buzzing and the constant thump of a craftsman scraping a chair leg echoed through one of Century Furniture’s cavernous warehouses. The factory once housed 600 workers who cared for the assembly line. About 250 are now busy building tables, chairs and desks.

The factory normally has 2,000 orders in the pipeline, but today it has more than 4,000, says Brandon Mallard, its manager. In the past, deliveries of ordered furniture were made within six to eight weeks; now they can last six months.

The same supply chain issues that affect almost every industry also affect Century. Dresser drawer handles are stuck on container ships somewhere between Vietnam and North Carolina. For some products, imported wood has been delayed.

Component delivery dates “keep moving,” said Mr. Mallard.

Labor was also a challenge. Employees at Century have been working overtime to catch up, but employees are getting burned out and furniture margins are so thin that paying overtime can hurt profits. Several of Mr. Shuford’s brands have raised prices, but because pieces are ordered weeks or months in advance, sometimes they haven’t raised them fast enough to keep up.

The experience in Hickory is a microcosm of what is happening on a larger scale in the global economy.

Demand has recovered after an early slump in the pandemic, fueled by government stimulus and savings amassed during the pandemic. Spending has slipped from services to goods, and that mix is ​​only slowly normalizing.

The sudden change has shaken a well-balanced global supply chain: shipping containers struggle to get to the warehouses where they’re needed, container ships can’t clear ports fast enough, and when imported goods run aground, there aren’t enough trucks around to deliver everything. All that is exacerbated by the closure of foreign factories linked to the virus.

As foreign-made parts fail to reach domestic manufacturers and warehouses, prices for finished goods, parts and raw materials have risen. American factories and retailers are raising their own prices. And there is a labor shortage, prompting companies to raise wages and further fuel inflation while raising prices to cover those costs.

Chad Ballard, 31, jumped from $15 an hour building furniture in Hickory at the start of the pandemic to $20 as he moved into a more specialized role.

mr. Ballard said he came to town four years ago after working in construction and arboriculture in Florida. He needed something more stable and less weather sensitive, and he found it in making furniture. The job has given him stability and enough financial security to pay off his Jeep and make plans to buy a house with his wife, who also works in the industry.

But there is a downside to some of the factors that make workers like Mr. Help Ballard captivate: If inflation continues to rise in the demand economy, it will lead to rising costs for them and other consumers who eat from their paychecks and earn money. it more difficult to afford daily necessities such as food and shelter. The heating economy already means that Mr. Ballard to buy a house will be a little more difficult. The typical price for a home in Hickory is up 21 percent in the past year to $199,187, according to data from Zillow.

As price increases continue, economic policymakers worry that consumers and businesses will expect continued inflation and demand increasingly higher wages, resulting in a spiral in which wages and prices push each other up.

There is reason to believe that such a nasty outcome can be avoided. Many economists, including those of the Biden administration, believe that demand will eventually decline as life shifts back to more normal patterns and consumers return their savings, allowing supply to catch up — possibly by the end of next year.

“We have a tight job market,” said Jared Bernstein, White House economic adviser. Mr Bernstein said the government predicted solid wage growth would survive rapid inflation, improving workers’ leverage.

The White House has also pledged to promote more domestic production. This moment could help that agenda, as it exposes the vulnerability of remote supply networks.

But pandemic workforce shortages, occurring in the United States partly because many people have chosen to retire early, could also serve as a preview of the demographic shift that is coming as the nation’s workforce ages. The staff shortages are one of the reasons that ambitions to bring production and jobs back from abroad can be complicated.

Hickory’s furniture industry was already struggling to hire people before the coronavirus hit. It has a particularly old workforce because a generation of talent eschewed an industry plagued by layoffs related to offshoring. Now too few young people are coming in to replace those who are retiring.

Local businesses are automating — Hancock & Moore are using a new digital leather cutting machine to save labor — and they’ve been working to more proactively train employees.

Sponsor several of the larger companies the furniture academy of a local community school. On a recent Thursday night, employers set up stalls at a job fair there, formed a ring of hopes around the doorway of the school’s warehouse, and welcomed potential candidates with branded lanyards and informational materials. It was the first furniture-specific event of its kind.

But progress is slow as companies try a new — and smaller — generation of young people that the field is worth pursuing. Business representatives were much outnumbered than job seekers for most of the night.

“It’s such a tough market to find people,” said Bill McBrayer, human resources manager at Lexington Home Brands. Companies are turning to temporary workers, but even companies that specialize in temporary help cannot find people.

“I’ve been in this business for 35 years,” he said, “and it’s never been like this.”

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