Vietnam manufacturers face challenges, opportunities in today’s economy

Furniture producers adapt to business conditions in the US market

HO CHI MINH CITY, Vietnam — Furniture producers here are adapting to new levels of demand following the breakneck pace of orders during the height of the pandemic and beyond as retailers struggled to get anything they could to combat supply chain disruptions.

Now that many retailers are still selling through that inventory, the impact is being felt by manufacturers with plenty of available capacity both in production and container availability. In addition, some are also facing pressure to reduce prices because of lower container rates.

This is putting some producers in a vulnerable position, especially since some — though not all — material prices remain elevated even in an environment of slower demand.

“The current condition with many factories remains difficult,” said Brian Beane, director of business and product development at Vietnamese case goods manufacturer Thinh Viet, noting that he has heard some factories’ business is down about 60%-70% year to date. “We are down 25%-30%, which is very good in comparison.”

He said, however, that orders have been consistent of late across many different categories, due to its diversified customer base.

“We are thankful and grateful for the great customers that we have,” he said.

Case goods and upholstery manufacturer Koda Ltd. said business has been slow and that the plant is running a single shift with no overtime.

As a result of the no-overtime policy, it has lost some workers to other job opportunities, said Ernie Koh, a company director. Spring production, he said, has remained slow as most of its customers are facing still-high inventory levels, a situation he doesn’t expect to improve until the fall.

“Trading conditions are still challenging,” Koh told Home News Now, adding that he doesn’t anticipate it getting any better until the end of the year. “Customers also are demanding a price reduction from Covid prices. However, the factory is running at a loss due to the lack of demand and will have a greater loss if discounts were extended to our customers.”

He added that as shipping costs have lowered significantly in recent months, customers should be able to reduce prices — both wholesale and retail — rather than ask for price reductions from the factories, many of which are said to be struggling.

“My belief is that some factories will permanently be closed if trading conditions do not improve by the end of the year,” Koh said.

To fill its available capacity, he said that Koda is “actively looking for new customers around the world. However, it is a global issue, where furniture is down and stock is high.” Fortunately, he noted, Koda has been able to secure business on the hospitality side, which includes hotels and restaurants — thus helping boost production and sales when residential orders are down.

Case goods manufacturer Maxwood said earlier this spring that it was running on budget as business held fairly steady since the start of the year.

“We planned for some softness, but have expanded into new lines so that has buffered us a little,” said Stephen Jensen, Maxwood president, of the company’s new master bedroom and dining room furniture lines. He added that the company has been staffed to the capacity it is booking but said it could add more if needed.

Thomas Luk, president of Starwood Furniture, said that it is fully staffed, although orders have been soft with some retail business off as much as 40%. While it has been running its lines at full production capacity, it has been providing less overtime to its workers.

“We are fortunate and are quite full through the rest of this year,” he said, noting that the company does not need to fill any extra capacity at this time.

Mohamad Amini, president of Lacquer Craft Manufacturing, the manufacturing arm of Samson Holding, said that some furniture factories in Vietnam are closing for an extended period of time, while others are working fewer days.

“We think that business won’t come back until the fourth quarter based on incoming orders,” he said. “But then again, who knows?”

Earlier this spring, he said, Lacquer Craft’s production was running at about 70% capacity, which was enough to keep the facility busy. At the same time, he said, the company has been trying to fill the extra capacity “as I am sure almost all the factories are.”

He added that overall, the labor situation at the plant also has been stable. So have material prices at least for the time being. 

“Since business is slow, the supply chain is more stable,” Amini said.

Beane, of Thinh Viet, also said that its labor situation was stable, noting that it was fully staffed before the April High Point Market and that its number of workers was higher than before Tet, the Vietnamese New Year.

He added that pricing for the most part has been stable with no new increases, although it was still dealing with the impact of double-digit price increases from a major finishing supplier that never came down despite the price of oil decreasing drastically. As a result, he said, the company was not able to reduce pricing.

“Once they do this, our customers will be in a more favorable position,” he said.

He added that the factory, like others in Vietnam, also continues to look to fill added capacity.

Harvey Dondero, chairman of case goods manufacturer H. Nicolas & Co., said earlier this spring that incoming orders were about normal, representing an “average intake for us.” He also noted that the additional capacity it created with an expansion at the end of last year was “mostly spoken for.”

But he noted that labor has been an issue.

“It seems labor, due to the sluggishness of the market, chose to remain in their hometowns (following Tet) — where the cost of living is much lower — until the manufacturing sector comes back,” Dondero said. “We have struggled to find as many workers as we need.”

As manufacturers deal with these and other challenges, many will continue to keep an eye on retail sales activity in the U.S., which still represents a major part of their business. As these sources have indicated, how quickly the market emerges from its current doldrums will determine the success of many furniture producers.

And while some producers have other business segments and global markets to fall back on, it appears that the U.S. market for residential furniture will continue to be a pillar for the industry moving forward.

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at tom@homenewsnow.com and at 336-508-4616.

View all posts by Thomas Russell →

2 thoughts on “Vietnam manufacturers face challenges, opportunities in today’s economy

  1. Hello,
    Hope You are doing well.
    This is Syed Hussain Uddin From Future Mobility. Which is Located in Canada.
    I am looking for the Best Price and Quality Products Of Best manufacturing companies of SPRING, EXT .355 OD X 1.10 LG .04 WIRE for Wheelchairs

    Now I am in Canada consequently Email is the best way to reach me at Hussain@futuremobility.ca or you can reach me on WhatsApp : +1 705-955-3639.

    Here is the current company’s website https://www.futuremobility.ca/

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our Newsletter for breaking news, special features and early access to all the industry stories that matter!


Sponsored By: