Hard Times Hit Makers of Easy Chairs

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John Vuong has weathered the ups and downs at his North Hollywood furniture shop for 20 years, selling mid- to low-price furniture such as sofas that retail for less than $1,000.

He even made it through the last big downturn in the early 1990s. But this year’s slump in furniture sales is something new. Revenue is off by 25 percent.

“Business is really bad,” he said. “It’s dropping a lot, but we are still hanging on.”

At least Vuong has some company in his misery.

Levitz Furniture Corp. and Bombay Co. Inc., furniture retailers with significant Los Angeles County presences, both are going out of business and liquidating stock along with scores of other smaller retailers nationwide.

Indeed, the furniture industry on the manufacturing, import and retail ends is mirroring the collapse of the housing market. And it’s no coincidence.

The last decade had been boom time for the industry as first-time home and condo buyers outfitted new residences with living, dining and bedroom sets. Then there were the longtime homeowners who decided it was time to redecorate after refinancing mortgages.

But this past year, the region’s and nation’s housing markets have braked sharply, and the furniture industry has slowed with it. Los Angeles has been particularly hit given it’s one of the nation’s largest furniture markets, the leading port for companies bringing in cheap Asian-made furniture and one of the last remaining domestic manufacturing centers.

Moreover, the worst may be yet to come.

“The furniture industry follows the housing industry by about a year. When people buy homes, a year later they go and buy furniture,” said Kelly Ramirez, executive director of the California Furniture Manufacturers Association, which represents about 70 companies, with more than half in Los Angeles County.

With many companies having already resorted to layoffs and other cutbacks, Ramirez said the industry is getting hit as hard as he has seen in a number of years.


Layoffs, cutbacks

The most spectacular failures so far have come in retailing.

Levitz, a Woodbury, N.Y.-based national retail chain, declared bankruptcy in early November. The company is in the process of liquidating more than $165 million in furniture from all of its 76 stores, including eight in Los Angeles County.

Like Levitz, the Bombay Co., a Fort Worth, Texas-based furniture retailer founded in 1978, is liquidating all of its nearly 400 remaining stores across the country.

Los Angeles, which remains one of the nation’s largest furniture manufacturing centers along with North Carolina, also has seen job losses on the manufacturing side. As of December, the county had 22,300 workers in furniture manufacturing. That’s down about 800 jobs or 3.5 percent over the past year, according to the Los Angeles County Economic Development Corp.

Reductions could have been worse, but many plants had already closed in the 1990s, when cheap foreign-made furniture flooded the country as China supplanted Italy as the world’s largest furniture exporter. Tougher air-quality regulations on the use of paints and varnishes also drove up costs and sent many manufacturers to Mexico. All in all, L.A. furniture manufacturing jobs declined by almost half.

Ramirez said the companies that are most successfully weathering the current storm are those that do not overextend themselves and stick to their specialties, like handmade furniture or high-end goods.

“A lot of the manufacturers are going for what their niches are and concentrating on that specifically,” he said.

One such company is Cisco Brothers Corp., a Los Angeles furniture manufacturer founded in 1990. Cisco produces handmade upholstered furniture as well as sustainable, environmentally friendly products which can retail for several thousand dollars.

It supplies high-end designer furniture stores across the country, from Maison Luxe in Manhattan Beach to Nova Zembla in Brooklyn, and operates several retail locations around Los Angeles. The company’s furniture has even shown up on popular television series like “Friends.”

President Cisco Pinedo said that even the upper end of the market has been affected in this latest downturn, and the company has had to shrink its staff.

“The industry overall has taken a big hit,” he said. “We definitely have shrunk a little bit and we are not hiring people. That’s for sure.”

Times also are especially tough for Pinedo, because his company supplies furniture for a number of film and television productions. The Writers Guild of America strike that started in November has dried up movie and TV production, and is hurting the subsidiary businesses that support that activity.

“We produce a lot of goods for the studios for the sets. Our sales have dropped 40 percent in that sector,” he said. “Doing business here in L.A. is really becoming a challenge.”


Waiting it out

Los Angeles is also the gateway for much of the country’s furniture imports, which are lagging. Furniture is the top containerized import at the Los Angeles and Long Beach ports. The ports have not yet released import statistics for individual sectors, but total imports declined slightly in 2007.

Paul Bingham, an economist who tracks nationwide port activity for Waltham, Mass.-based Global Insight Inc., said furniture imports will likely see some of the biggest drops due to the correlation between the industry and the housing market.

“Because the housing market has led the economy downward, the demand for those imports to go into those homes is down more so than the overall demand across all sectors of the economy for imports,” he said. “The whole industry is struggling.”

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said it will be a few years before the industry has any realistic chance of recovery given the housing market.

“When does the housing market turn around? Some people say in 2008; I would be more inclined to push into 2009,” he said.

Meanwhile, Vuong is planning on hunkering down and waiting out the storm. With just eight employees, he can’t afford to cut back his staff. And sales, he said, just won’t bring in the customers.

“Right now all those sales and advertising aren’t doing anything,” he said. “You’re just wasting money.”

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