People who flocked to furniture stores this weekend for Memorial Day sales may have been shocked to discover monthslong waits for items on the showroom floor.
This year has seen a number of major shortages and price increases for a variety of goods and commodities. For example, a scarcity of computer chips for cars has resulted in fewer new cars and has sent used car prices skyrocketing, gas prices shot up during last month’s Colonial Pipeline hack, and builders are scrambling to keep up with the red-hot housing market.
All the while, the furniture industry has also been feeling the brunt of excess demand. The shortages are occuring for a variety of reasons, beginning with the start of the COVID-19 pandemic last year. Since then, prices have soared and stockrooms have emptied as manufacturers struggle to keep up.
The furniture industry is reporting delays of four months or longer for some goods, and earlier this year, then-La-Z-Boy CEO Kurt Darrow said during an earnings call that customers were waiting an “unprecedented” five to nine months to get their orders.
Tom Conley, president and CEO of the High Point Market Authority, told the Washington Examiner on Tuesday that the shortages, delays, and price increases on furnished goods were the result of a lot of change in the industry. He said the backlogs first began because manufacturers and suppliers expected the industry to slow down (like others did), so employees began to be laid off.
But then, the furniture business did something unexpected — it “just exploded.”
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John Rosen, an adjunct economics professor at the University of New Haven, said that many furniture companies didn’t count on the fact that people working from home who had extra savings from forgoing vacations and outings would want to spend money on upgrading their new home office spaces. That pandemic-era demand, in part, is when the backlogs first began.
Consumers also have more cash to spend now that the pandemic is winding down because of boosted savings and extra money from the several rounds of stimulus checks this past year. But demand isn’t the only issue — supply-chain problems with furniture and raw goods have also been partly to blame for the shortages.
“Getting enough containers to ship the product over here was very, very difficult,” Conley said of the past year’s skyrocketing shipping costs. “When they could get the containers, the shipping cost went through the roof,” he said, noting that those who used to pay $1,300 or $1,400 for a container have found themselves shelling out $13,000 or $14,000 a container.
Conley said domestic manufacturers have also run into trouble finding workers to meet increased demand, a problem that is not just unique to the furniture industry. Some economists believe there is a labor shortage, especially for lower-wage industries.
“We’ve seen supply shortages, labor shortages, shipping container shortages, and that was just exacerbated by the fact that I think nobody saw this coming,” Conley said of the ravenous demand for furniture over the past months. “The amount of sales has been huge.”
Both Conley and Rosen said there has also been another factor at play that is somewhat unique to the furniture industry: foam shortages.
Foam is widely used in the manufacturing of furniture, but the chemical components that go into the foam are only produced at a finite number of facilities. Factories that already faced supply issues because of COVID-19 restrictions were then hit by a double whammy in February when Texas was affected by major winter storms that caused nearly $200 billion in damage —knocking out power for millions and causing pipes to burst.
Production of polyol, which is a chemical that is used to make foam for furniture, was severely obstructed by the winter storms as most of the facilities that handle the chemical are located in Texas and Louisiana and were devastated by the sudden power outages and infrastructure damage, according to Rosen.
“The thing that is different about furniture versus other shortages that people are dealing with right now is foam,” Rosen told the Washington Examiner. “Foam is particularly short. So even if the furniture factory had all of their people back on payroll … if they can’t get foam, they can’t build a bed or a chair or something.”
Conley said that the foam issue was a major deal for domestic producers. He said that because of the ice storms and resulting foam shortages, some manufacturers were only being given 5% to 10% of their normal foam allocations. “It’s just another freak of nature and really screwed up the supply chain.”
Joel Griffith, a research fellow at the conservative Heritage Foundation, placed blame for the shortages squarely at the feet of the government, which he said started the series of events that caused the current explosion in prices and product scarcity by attempting to regulate and place restrictions on businesses during the pandemic. He also pointed out the soaring lumber prices in recent months.
“With the supply-chain issues, we have had a lot of bottlenecks that have been produced by some of the actions that governments took,” he told the Washington Examiner, highlighting the furniture industry’s ties to the lumber industry. He said that a lot of sawmill operations were significantly ramped down or put on hold earlier on in the pandemic for fear that COVID-19 would spread among workers. “That’s been reflected, of course, with the lumber prices.”
Despite a recent pullback, random-length lumber futures are up a staggering 400% from April of last year.
Conley of the High Point Market Authority (which hosts massive home furnishing trade shows bringing tens of thousands to North Carolina twice per year) said that the combination of labor shortfalls at the start of the pandemic, issues with shipping, and foam shortages have all caused snarls for the furniture industry, especially because so many didn’t predict this amount of demand.
“If it wasn’t for bad luck, we wouldn’t have any luck at all,” Conley said, quoting a decades-old blues song, about the convergence of factors affecting customers. “It’s crazy.”
Conley said it isn’t clear when the delays, bottlenecks, and breakneck demand will end. He said he spoke with one domestic manufacturer who thinks increased demand will go until 2025 and has spoken to other manufacturers “who just don’t know” when it will begin to go back to normal.
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“It’s really all over the board, and I think the catching up is a function of what the demand is going to be, and so far, the demand has been unabated, and so the supply chain will continue to be stretched,” he said.
