CEO Gil Martin shares insights on why the move makes sense for the company and its customers
TIJUANA, Mexico — Martin Furniture’s shifting of its Mexico-produced home office and home entertainment furniture to Asia effectively ends a 20-year run of manufacturing in that country.
It also ends a major chapter in the company’s roots as a manufacturer starting when company founder Gil Martin produced wood office and entertainment furniture out of his garage in Southern California.
After expanding his domestic operation, he moved production to Mexico about 20 years ago, operating initially out of three facilities in and around Tijuana and then consolidating into one facility back around 2007. It was there that the company produced mostly home office but also some home entertainment consoles.
“Up until last week, we were a manufacturer of furniture,” Martin told Home News Now, noting that about 30% of the mix was produced in Mexico from a sales standpoint. “Now that’s ended. Our focus is on Asia. That’s been the hard part for me.”
But Martin also acknowledged that the shift represents an opportunity for the company to achieve a level of quality and consistency in the line that closely aligns with the quality and construction story of its new dining line — featuring 16 sets launched at the October High Point Market — and new fireplace consoles also produced in Asia.
While not all of these are produced as collections, having them produced in the same factories — with veneered product made in Vietnam and laminates made in Malaysia — helps streamline the manufacturing process, which will be overseen by Martin’s own team of QC, engineering and development professionals based in Vietnam.
Previously the company outsourced this work with a third-party resource called WorldLink. Moving forward, it will rely on its own team to manage the process.
This team is led by Gustavo Velez, who joined the company earlier this year as vice president of imports. He has more than 30 years of furniture industry manufacturing experience that started with him owning his own case goods plant in Tijuana. Before joining Martin earlier this year, he was with L&F Products and Whalen Furniture as executive vice president of sales.
“We have a new marketing team over there,” Martin said. “That is a huge part of it, not just the sourcing at the factories, but having our own engineering, quality control and administration. All that will 100% be under Gustavo and it will be our own people, our own employees. Already it’s a big improvement.”
And now with 100% of the mix coming out of Asia, Martin believes the team will benefit customers by ensuring that quality and finishing standards are in line with their expectations, whether pieces are all part of a coordinated collection or not.
“We are very careful because some designs don’t carry over from one category to another,” he said, adding that some do, affording the opportunity for a factory in Vietnam to produce the office or dining that crosses over from the original design. “Let’s say we have one of our collections in one specific factory in Vietnam that makes the office. We will give them the entertainment and the dining to make as well because we want to make sure that the finish that has been corrected and established is right so we can manufacture all the different details that go into that collection.”
The product also has been segmented into specific countries based on their respective manufacturing capabilities. For example, laminates, which represent between 30% and 40% of the office line, are being made in Malaysia, which in recent years has shifted to that type of construction to remain competitive, particularly in the lower price points.
Meanwhile, veneered product is produced in Vietnam, where factories also process and assemble solid wood components ranging from parting rails on case pieces to chair and table legs.
Martin said the shift of its production from Mexico to Asia occurred for another reason: increasingly expensive labor in Mexico. While the impact on the cost of product varies, he declined to say the difference in the cost of the finished product now coming out of Asia. However, he said, the company’s retail customers will be the beneficiaries of those savings.
“Mexico has become a more expensive place to produce furniture mainly because of government guidelines on labor,” he said. “So when we moved to Asia, we had better pricing from our factories and the landed cost is better. And we’re passing it along to our customers.”
Customers also will be able to buy product in multiple ways: direct from the factory, on mixed containers from a temperature-controlled warehouse in Vietnam and from its distribution facilities in San Diego. While lead times from the factories in Asia will be slightly longer — eight weeks versus six weeks in Mexico — customers will have access to finished goods on an ongoing basis.
So while they may be waiting for new goods to be produced at the factory, they can still order from either the Asia or domestic warehouses and still receive goods in a matter of weeks or even days.
Martin thanked the estimated 325 workers in Mexico who have been a loyal and dependable part of Martin Furniture’s supply chain for many years. While some are still at the plant in areas such as administration and maintenance, others have left, having received a severance that the company has paid as part of its transition out of Mexico.
Regarding the 150,000-square-foot plant, he said it remains a viable option for anyone who might need it. Thus, the company is considering whether to lease or sell the facility outright to anyone looking to utilize the many benefits that Mexico still offers, namely a proximity to the U.S. market.
“I’m in the process of just cleaning everything up and thinking about what the future holds,” he said. “Our focus is on Asia and I don’t know what I am going to do with the factory. But I think it has a lot of opportunity for somebody. It would be a turnkey operation.”