TIJUANA, Mexico — As consumer demand for furniture continues with the reopening of retail stores across the country, many wholesalers and retailers alike are seeking reliable and quick sourcing solutions to replenish goods on the sales floors.
For some, Mexico is proving to be a solution and safe bet, not only in terms of quick shipments but also quality and styling.
Long known for its largely rustic mix, Mexico is slowly turning heads for its ability to produce the more contemporary lifestyle looks popular in today’s marketplace. Whether in bedroom, dining, home office or home entertainment, furniture is produced for the U.S. market by factories all over the country, from Tijuana in the north to Puebla and Guadalajara further south.
Upholstery, too, is fast becoming a more important part of the mix. Resources like Palliser have produced upholstery there for years, as has Zuo Modern. Now companies such as Kuka and Urban Roads also are beginning to test the waters for upholstery, given the proximity to the market and the availability of skilled labor.
In terms of shipments, Mexico has not changed much in recent years. In 2015, for example, it shipped $1.18 billion in furniture to the U.S. By 2018, that dropped to $1.12 billion, a due partly to competition from lower-cost Asian countries such as Malaysia and Vietnam.
By 2019, however, it saw a rebound. Shipments rose 5.2% to $1.17 billion, a sign that some were seeking an alternative to product facing China tariffs.
In order of importance, miscellaneous wood furniture that can include anything from occasional tables to home office and home entertainment was the most important category, representing some $388.2 million in shipments.
This was followed by wood frame upholstered seats at $249.7 million, wood frame upholstered chairs at $177.8 million, metal frame upholstered seats at $109.5 million and miscellaneous wood bedroom furniture at $74.6 million.
As in many places around the world, manufacturing slowed this spring due to stay-at-home restrictions relating to COVID-19. Producers also faced limited demand, as most retailers in the U.S. were also closed during this period.
But Mexico has rebounded, presenting a logistically friendly alternative to Asia as demand has risen.
Zuo Modern has produced upholstery for about four years in a small factory in Tijuana about 25 miles from the U.S. border in San Diego. The factory produces mostly for West Coast customers due to its geographic location, noted Luis Ruesga, president and CEO. It is also close to its supply base with fabrics sourced in the U.S. and foam and frames sourced and/or produced in Mexico.
Ruesga noted that the plant has proven not only to be a good alternative to places like China due to tariffs, but also due to rising freight costs out of Asia to the U.S.
“The biggest interest there now is related to ocean freight,” he said, noting that the shipping expense per sofa rises due to the amount of space each unit takes up in a container. “You cannot fit that many cubes in a container; that makes it all the more attractive to source out of Mexico.”
Zuo’s Mexican-made sofas retail as low as $399, and arm chairs retail around $299, which remains competitive with China pricing given the tariff and rising freight costs.
But just as important are lead times. The company can ship full truckloads from Mexico in as little as three weeks from the time of order.
“That is from the time you place the order to the time we cross the border,” Ruesga said, adding that from there, “we can hit any destination they want.”
While the 80,000-square-foot factory had to shut down for a short time due to COVID-19, it has been reopened since early July, although working at a slightly reduced capacity due to social distancing requirements that make it a challenge to produce large orders.
Today it is producing about 140 sets a week, including sofa, loveseat and chair combinations. However, the company has some additional existing capacity along with room to grow, Ruesga said.
Proximity to the market is perhaps the most commonly noted advantage in Mexico right now according to sources interviewed this story.
That includes Gil Martin, CEO of Martin Home Furnishings, which produces commercial grade and residential grade home office as well as home entertainment in its nearly 200,000-square-foot plant in Tijuana.
This spring, the plant also was operating at a reduced capacity due to COVID-19 but was expecting to have up to 50% of its 500 workers back working around the third week in July, up from about 30% in the weeks immediately prior.
“Mexico has a lot of advantages, including proximity and a good labor pool,” Martin told Furniture Today, noting that the plant produces more commercial grade office and e-commerce product than brick-and-mortar retail.
“With Mexico, we can turn around product a lot quicker,” Martin added, noting that about 40% of the company’s volume comes from Mexico currently, with the remainder mostly coming from Vietnam. “With e-commerce you have to ship it in 24 to 48 hours. We also seem to be able to make proprietary product in Mexico a lot easier, and there aren’t as high MOQs (minimum order quantities) in Mexico, so we can be more flexible.”
While the company’s Mexico plant produce both wood/veneer (60% of the mix) and laminate product (40%), with most materials sourced from the U.S. and Canada, Martin noted that the facility is particularly well-suited to produce commercial grade office that isn’t as large a fashion statement as residential furniture made in Asia.
Progressive Furniture also has a dedicated plant near Tijuana in a seaside town called Rosarito. It produces bedroom and home entertainment and some occasional made with solid Northwestern pine.
The company also sources from plants in the Monterrey area for metal and wood occasional and some home office and accent furniture and in Puebla further south for accent furniture. It has done business in Rosarito for about 25 years, Monterrey for about 15 and Puebla for the past five, said Dan Kendrick, president.
Combined, these areas produce roughly half its volume, with the other half coming from various countries in Asia.
Kendrick noted that the solid pine construction makes it lighter weight than MDF, which makes it particularly good for e-commerce.
“The solid pine is definitely a story for us,” Kendrick said, in reference to the solid wood lines coming out of Rosarito and Puebla. “It is good for Internet sales and less prone to damage. And when a retailer takes advantage of it, it is good to say it is a solid wood suite.”
Lead times also are competitive at roughly five to six weeks — vs. four months from Asia — and even quicker on stocked goods.
“When we know what we are going to order we can deliver it in 10 days from Rosarito,” Kendrick added of product that can be purchased and shipped from inventory. He added that the company ships full 53-foot truckloads to a warehouse or directly to a customer, the proximity of which affords freight savings to many customers, including those in the western half of the country.
Kendrick acknowledged some limitations, including the ability to work with some wood species outside of solid pine. This is particularly a challenge for dining chairs, which need to be made with harder wood frames for support. He and others also noted that Mexico also doesn’t have much ability to produce KD product.
“Everything pretty much has to be set up, and that adds to the element of freight and it not being as competitive as China,” he said. “No one in Mexico is set up to do that kind of product.”
But he added that Mexico does work well in mixed media and also is strong in hand finishing. This includes working in multiple colors and two-tone finishes seen on the interior and exterior of the types of cases produced in Puebla.
“We continue to keep a presence in Mexico due to its strengths even though we can find some better pricing in Asia,” Kendrick said, noting that categories such as home entertainment remain competitive due to the “cube factor.” “The proximity and other advantages make it more compelling to be there. Even though we still import from Asia, it is nice having that supply down there in Mexico.”
Jason Schoenfeld, who handles sales and product development for case goods manufacturer Issa Muebles, said that Mexico will never be Asia in “respect to first price,” a reference to the immediate cost of goods from the factory.
“They may be moving closer, but there is always going to be a gap there,” he said. “But Asia will never be Mexico with respect to logistics. That is the single greatest factor that Mexico has going for it.”
He noted that Mexico also has made strides in the one of the largest industries in the world — automotive — ranking in the top five countries in terms of exports.
“Tech is down there, automotive is down there, clothing is down there,” Schoenfeld added. “It’s all geography of place.”
Yet unfortunately, Mexico still suffers from challenges of perception, namely that it is a dangerous place overridden by drug lords and gangs. While many say that fear is unfounded — particularly if you stay away from the wrong places — they agree it has discouraged some from visiting our southern neighbor.
Others say there also are other challenges — ranging from damage to furniture after trucks get stopped and held up on highways during inspections to rising labor costs resulting from employee paid benefits such as health care, free meals and free transportation — that have held Mexico back.
In Mexico, sources note, it is also extremely difficult to fire workers, which could keep ill-performing individuals on staff for years.
Finally, there’s the perception that Mexico can only produce rustic furniture.
But furniture produced by Issa Muebles, Jorman Furniture, Zarkin and others mentioned in this story, has long broken that mold and is starting to shift such thinking.
Schoenfeld noted that while Mexico also is not strong in areas such as metal plating, KD or the type of heavily carved ornate product coming out of countries such as China, the producers there are getting better in more lifestyle looks.
“I think in transitional and contemporary case goods they are very strong, and in upholstery they are very strong,” said Schoenfeld, who has traveled between the U.S. and Mexico selling to U.S. and Mexican retailers alike since 1988. “And in certain metals they are very strong. They can’t plate because of environmental rules, but in terms of creating mixed media product, they are great.
“I understand that Mexico doesn’t have some product categories, but the product categories they do have they can be competitive, and you can get the stuff in a fraction of the time,” he added.
Karl Eulberg, vice president, sales and marketing for youth bedroom and occasional/home entertainment manufacturer Oak Furniture West, said one of Mexico’s biggest advantages is its proximity to the U.S. market, which not only allows retailers and others to invest less time in trips, but also helps speed up the product development process.
“Our product development cycle is so much faster than in the past,” he said, noting that changes can be made quickly and for customers to see when they get to the factory located on the outskirts of Tijuana. “We can have revised samples done in three to five days. That process out of Asia takes months.
“You can literally come there to do a product development trip and be back to the U.S. in 48 hours. In Asia, it is a 10-day trip; our L.A. customers can come down for the day.”
He said the speed of product development is also aided by investments in new equipment which can produce the type of lifestyle looks popular in the marketplace today.
“There is a perception from retailers that primarily what you get out of Mexico is rustic furniture,” Eulberg said. “I think that is partially true, but at Oak West in the past couple of years we have made investments in processes and machinery where we can do updated lifestyle and contemporary looks you would never think came from Mexico.”
He added that finishes have also improved, yielding higher levels of clarity in the Oak Furniture West product line.
“A rustic finish hides a multitude of sins,” he noted, adding that investments in processes and equipment allow the company and its customers the ability to develop new product or made modifications on existing items.
“If they (retailers) try something from us and it is not successful, they can try something else,” he said, noting that lead times are six to eight weeks and sometimes shorter. “It gets in their pipeline very quickly.”
The quick turnaround is also illustrated in the company’s its ability to ship full truckloads across the border directly to a customers’ door vs to a warehouse in the U.S.
“We only deal with the largest retailers in the industry,” Eulberg noted. “And because we do full truckloads only, our values are exceptionally good. We don’t have a warehouse in the U.S., and our factory is equipped for large runs. So it is going from the factory directly to the customer.”
Jenniffer Navarro, who overseas operations for case goods manufacturer North American Wood Furniture, said the company’s line includes bedroom, dining, home entertainment, youth furniture – and home office, which has grown to become the biggest selling category.
While she said producing product in Mexico is not inexpensive — due to expenses ranging from to tariffs paid on raw materials coming into the country and tariffs paid on finished goods leaving the country, to the cost of employee health care and transportation — there are benefits, including proximity to the U.S. market.
In addition the company owns the real estate where it manufacturers product, which helps lower product prices. Solid wood beds, for example, retail from around $999 to $1,199 depending on how the retailer prices the goods.
“My parents were born in Mexico, and they can purchase the land and maintain the land without the government interfering in that,” she said. “That helps keep prices low. Having a plant in Mexico vs. here in the U.S. is pretty much the same thing. The only difference is the land part.”
Projecting the future
So does Mexico have a good future in furniture manufacturing? That largely depends on whom you ask as many are still watching and waiting to see what happens with China tariffs.
Ruesga, who is originally from Mexico, understands the opportunities and challenges of Mexico, which include managing capacity when there are still uncertainties with China tariffs. This uncertainty includes the possible extension of product exclusions that have given some importers a reprieve on various categories including upholstered products.
“One week, you can get hundreds of orders and it is going great, and then suddenly the tariffs go away, the freight goes down, and everyone goes back to China,” he said. “It is hard to build a program for the long run; it is hard to build your labor force.
“What we are looking for in terms of capacity is more steady business. We want something that can give us steady and stable work.”
Gil Martin, of Martin Furniture, was concerned about some of the anti-business rhetoric coming from the Mexican government.
“They are making us maquiladoras (factories run in Mexico by a foreign-based company that primarily exports) sound like we are money-grubbing bandits that don’t care about the environment,” he said.
Yet those same companies are governed by Mexican laws such as when they were able to reopen following the pandemic. They also provide much-needed and stable jobs in various sectors including furniture.
But overall Martin is optimistic about Mexico and believes the company has a long future there.
“The good thing about Mexico is that they are really good people, and there is a great labor pool,” he said. “I still think Mexico is a great place to manufacture furniture. The labor pool is excellent; they want to work.”