Why that sofa you ordered isn’t showing up soon
In the latest sign of the U.S. economy’s post-pandemic disarray, even companies that have built domestic supply chains are running up against extreme shortages of goods and labor.
Furniture chain Room & Board Inc. procures more than 90% of its products inside the U.S., with its closest supplier some 4 miles from its Minneapolis headquarters—a contrast to many of its competitors, whose supply chains stretch back to factories in China.
But amid sky-high consumer demand and shortages of labor and many materials, some Room & Board customers are waiting months for sofas and dressers. About half the items it sells are in stock right now, down from 90% normally. The company emailed a pre-emptive apology to customers earlier this year, noting many purchases would likely face delays .
PRESIDENT BIDEN'S MOST SECRETIVE TAX IS HIDING IN PLAIN SIGHT: INFLATION
"We are falling short of where we want to ultimately be," said Room & Board President Bruce Champeau.
Robert Arbaugh bought a kitchen table, four chairs, and a couch from Room & Board last year after moving into a condominium in Philadelphia. His furniture was supposed to arrive in a month. Instead, it took six, spread out over five deliveries.
"I didn’t have anything to sit on," said Mr. Arbaugh, who works for a pharmaceutical company. He said that he considered canceling the order but that other retailers were reporting similar delays. The last piece, a brown leather accent chair, arrived last month.
It is a tough time to buy a sofa. Manufacturing and shipping delays have pushed back delivery times across the industry by months. That has put a limit on the ability of many manufacturers to capitalize on demand. IKEA is short of some furniture at certain U.S. stores, and a Design Within Reach promotion offers discounts on purchases of items in stock. Some furniture buyers have vented their frustration with long waits online.
Like many companies, Room & Board and its suppliers largely shut down last March as the pandemic arrived in the U.S. The retailer was soon inundated with orders as people stuck at home upgraded living rooms and bought new outdoor dining sets.
Demand hasn’t let up. Consumer spending on furniture and appliances in the first quarter of this year remains nearly 30% above that time frame in 2019, before the pandemic began, according to federal data.
Room & Board expects sales of $650 million this year across its 19 stores, up from around $500 million in 2020. The company estimates revenue would have reached $700 million this year if its supply chain wasn’t such a mess.
A nearby supplier, Minneapolis-based Bell Manufacturing and Services Inc., has increased its workforce by about one-fifth to 135 but demand for its metal tables and bookshelves has more than doubled. Orders can take up to 20 weeks to ship, compared with five weeks before the pandemic.
"Our open orders are way beyond what we can actually produce right now," said Bell Vice President Judy Bell.
Another Room & Board supplier, Duluth, Minn.-based Loll Designs, is changing production schedules based on what colors of polyethylene it receives to make into Adirondack chairs. Winter storms in Texas earlier this year disrupted production of many such petroleum-derived products.
One supplier told Loll Designs in May that the resin it needed to make red polyethylene would arrive a day late. That quickly filtered through to production delays at Loll Designs and possible shipping delays for Room & Board customers. The retailer says it won’t ship a bright-blue Loll chair until November.
"It’s been hand-to-mouth pretty regularly," said Nate Heydt, who runs business development at Loll.
Room & Board has added new domestic manufacturers to its production network to ease backlogs and is looking for more. It has also urged suppliers to expand capacity, telling them it expects demand for home furniture to remain strong even as people return to offices, restaurants and hotels.
SPIKE IN CURRENT MORTGAGE RATES UNLIKELY TO DERAIL HOUSING MARKET
Gene Wilson, the company’s head of merchandising, flew to Grand Forks, N.D., in February to convince Wood-Products Inc., a maker of dressers, cabinets and other wood furniture, to add machinery and a second shift.
"They are at the point where they will hit a capacity ceiling shortly," Mr. Wilson said.
Wood-Products General Manager Mark Cutshaw decided to invest in higher production. The company added a second shift where workers apply stains to furniture. Wood-Products also hired its first human-resources director, added some benefits and boosted starting wages to around $15 an hour.
Food trucks were brought in on Thursdays to spice up lunch options for workers. One recent week, the Bratwurst Kings truck made potato bites topped with meat and cheese, a dish it calls "redneck nachos."
Wood-Products also got Room & Board to agree to raise the wholesale prices it pays for Wood-Products furniture, in part to account for record lumber prices . Room & Board said it wouldn’t change prices from those listed in its catalog.
Other retailers and manufacturers have brought supply chains back to the U.S. from overseas in recent years, aiming to simplify their operations and attract customers with pledges to support domestic jobs . More companies did so during the pandemic , as travel restrictions and export embargoes snarled global trade. Some barriers to international trade are rising as cases of Covid-19 climb in manufacturing powerhouses in Asia.
Despite recent challenges, Mr. Champeau of Room & Board said he believes sourcing all the company’s furniture in the U.S. is a better strategy over time.
CLICK HERE TO READ MORE ON FOX BUSINESS
"We can control the quality much more effectively," he said. "We can provide more choice and custom options."