It's not just about you! Reflections on the New World Order of wood products manufacturing.

Do you sometimes catch yourself thinking how troublesome these times are in our industry as we speed along in the 21st century, and then tong for "the good ol' days," like I do?

We have seen so many furniture plants close in Virginia and North Carolina and, indeed, around the country. Those jobs seem to be flying to every corner of the globe with lightning speed, and more are surely on their way.

In the bygone years, we made our own products right here in the states and shipped them to our own customers. I think about how, back then, we did a good job and made money and expanded our businesses--adding jobs by the hundreds. Compared to today, life in the wood products industry seemed simpler.

Then I wake up to reality. All of us forget, sometimes, that international trade is not new, as goods have been traded across the oceans and seas for centuries. The difference is that instead of trading for ivory, gold, food, or even wood, today it is computer chips, automobiles, finished furniture, and other value-added wood products that are being traded for dollars--your dollars and mine. What is driving all of this?

To answer that question, I want to briefly look at globalization through the eyes of your overseas competitors--today's and tomorrow's.

You and I Are the Culprits

At a speaking engagement a few years ago, a fellow (whom I'll call Greg) asked me if I ever felt guilty when I (or someone in our firm) helped formulate strategies for a developing country so that they could build an industry that could be globally competitive. Greg also asked if I similarly felt guilty assisting individual overseas wood working companies. He explained what he meant by pointing out the obvious--that those companies would, sooner or later, export to the United States and thus take jobs from our domestic wood products manufacturers.

Not wanting to be contentious, I simply asked Greg that if he went to buy a suit and found one he liked for $250 in one store and one that Looked identical for $99 in another store, which one would he buy? He admitted he would Likely buy the $g9 suit. I continued: If a homeowner goes to a furniture store and sees a bedroom suite she likes for $899 at one store and a similar one for $599 in another store, which one would she likely buy? More often than not, the answer will be the product with the lower cost. Why?

Consumers in this country want to spend less and get more--that's the simple truth. Thus, you and I will buy a $15 shirt instead of a $30 shirt, so that we can get a tie or something else with the "money we saved" Thus, I told Greg that it is the U.S. consumers and not the consultants that are causing jobs to be sent offshore. Furthermore, I mentioned we had recognized that our industry was going global and decided to follow the trend as a strategy for our firm.

Economics 101

I can clearly remember a lecture on the global economy in my Economics 101 class at N.C. State University back in 1960. The professor told us that a massive redistribution of the world's wealth was about to occur. He explained how industry had historically moved and relocated to where labor costs were cheaper, and that as third-world countries began industrialization, their lower-priced products would attract consumers' attention in wealthy, developed countries--exactly what is happening today.

Most Americans have no idea of the poverty that exists in the modern world. We don't realize how many millions of people are struggling to just put food on the table. I have seen entire families in Honduras Living in cardboard houses--scarcely 100 total square feet. Everything, other than sleeping and escaping the elements, is done outside those walls.

On the other hand, many of the poor around the world have access to cell phones and satellite TV and are not so isolated as to be ignorant of what is going on elsewhere. They see the wealthy West and look at it as a huge market for their products and services. Many naively think that consumers are just waiting in line to buy their wood products and they are going to find a way to get them to the United States or to Europe, or Australia, or to the wealthy oil-producing countries of the Middle East.

A Forgotten Country

I was in Bangladesh earlier in the year doing just what Greg was discussing. This is a country between India, China, and the traditional furniture-producing Southeast Asian countries like Malaysia, Thailand, and now Vietnam. Is there a furniture or cabinet industry in Bangladesh now? No, not really--even though there are a few plants that would, unfortunately, rival some of those in this country. Will there be a viable wood products industry there one day that can compete with you? Count on it.

The photo on this page shows a typical woodworking shop in Bangladesh. Furniture manufacturing is still done by hand by carpenters. The boys and young men actually live in the factory. They work, eat, and sleep all in one room. There is no dormitory.

Horrifying, isn't it? Yet, those in the photograph are better off than many since they do, at least, have a place to live and enjoy a hot meal every day. In addition, they earn money for themselves and for their families. These workers are trying to pull themselves out of poverty. There are worldwide non-government organizations that recognize their plight and plan to help these wood products industry entrepreneurs enter the global marketplace. One day, you may find these men making furniture or cabinets that will compete with yours--or they may make parts or products for you.

These kind and gentle people are struggling like so many in other developing countries in Asia, Eastern Europe, Africa, and South and Central America. Some do not have the stable governments, nor the freedoms and opportunities that we do, but they are optimistic. The younger generation is more educated and determined to do something for their country to help bring them out of poverty and into the 21st century economy.

What Now?

For any reader--even those who still feel disconnected with the globalization of the wood products industry and the implications to their own company--I present the above to suggest that it is not all about you, but the forces of the new woodworking world order in our industry. It is driven by the needs of others and our own appetite for spending (and saving). This reality should be the single most important consideration in your deliberations when developing a strategic plan for your own future and that of your company.

At the beginning of this column, I mentioned longing for the "good ol' days." It is time to embrace reality and integrate the new world order in your company planning and make these the "good ol' days." How you make them so is up to you. It doesn't matter if you are a cabinetmaker in Nebraska or a furniture manufacturer in Vermont. You can embrace offshore sourcing, import finished or semi-finished products, form joint ventures, invest in a company in a developing country, export to emerging markets, or a host of other strategies, including sharpening your own competitive manufacturing skills, as we have discussed in this column for years.

I am personally very optimistic about the future of our industry as I see many of you in the United States and Canada re-inventing your companies to gain a competitive advantage over offshore manufacturers. I encourage you to go forward boldly and enthusiastically as you realize that these times are about more than just you and me--and that they are here to stay. Find a way to make the days ahead the "good ol' days" for you.

Tom Dossenbach is the managing director of Dossenbach Associates LLC, a San ford, NC-based international consulting and research firm. Contact him at [phone] or e-mail [e-mail]. Visit his Web site at www.dossenbach.com. Past Management Matters columns are archived on www.iswonline.com.