David Blair (left), Sandy Culbertson and Christian Simmons work the stain-wiping line near the end of the manufacturing process at Jasper Desk. Worker output has risen 25 percent over the course of a four-year improvement effort. -- John Severson / The Star

JASPER, Ind. -- Chad Giesler's veins are filled with sawdust and tradition.

Giesler is plant superintendent at Jasper Desk Co., which claims to be the oldest office furniture maker in the nation, in a community billing itself as the nation's center for wood office furniture.

Tour the plant with 33-year-old Giesler, and he proudly hoists to waist level the carcass of an unfinished office desk and drops it to the wooden floor with a clunk to prove it won't break.

But Giesler and others in Indiana's hardwood industry, which claims to be sixth-largest in the state, are running scared of Chinese competition.

Having decimated residential furniture makers in North Carolina and other parts of the Southeast in the past few years, the aggressive, sophisticated Chinese manufacturers soon will turn their sights on office furniture and cabinetry, Jasper residents fear.

Long-time observers worry the competition will gut Indiana's hardwood industry if sleepy Hoosier companies don't scramble to become more efficient while fighting what they say are unfair trading practices.

Giesler believes Jasper Desk has two to five years to prepare for the expected onslaught.

"We'll fight it every day," he said. "There's no way I'm going to have a part of not being here another 128 years."

Indiana's oak, walnut, cherry and other hardwoods are considered some of the best in the world.

Mostly concentrated in southern counties, the plentiful wood gave rise to an industry that today employs 21,900 across the state at an average wage of $13.63 an hour.

But the proud industry is worried.

While the 2001 recession and terrorist attacks weakened demand, Chinese competition is uppermost on their minds.

Chinese imports of furniture and parts exploded to $5 billion in 2001 from only $145 million in 1990, according to the U.S. Department of Commerce. That's gained China 27 percent of the global market.

Chinese factories use the latest American technology to churn out products comparable to the best produced in the United States.

Indiana furniture companies are loathe to admit it, but some have begun buying the lower-priced Chinese components.

Jasper-based Kimball International, which divides $1.2 billion in sales between office furniture and electronics, buys a small amount of components from China, said spokesman Marty Vaught.

"We are a global manufacturer, competing globally," Vaught said.

The weak economy forced Kimball to lay off 1,800 -- one in five -- of its U.S. workers, Vaught said. Roughly 835 were in Indiana.

Kimball closed plants in the South, and in Indiana shuttered plants in French Lick and West Baden and moved workers to a Jasper plant.

Chinese competition and the slow economy drove layoffs and closings at several other Jasper wood companies, though fast-growing firms like MasterBrand Cabinets and Jasper Engines & Transmissions, a remanufacturer of engines and transmissions for cars and trucks, have absorbed much of the slack.

Gary and Jane Horney, ages 48 and 50, respectively, lost jobs when Jasper Cabinet Co. closed suddenly a year ago in part because of Chinese import pressure.

Gary had painted designs on furniture for 31 years and Jane was involved in purchasing and other tasks for 26 years.

The couple had hoped to retire from there.

Though Gary found work at a plant nursery and Jane landed a purchasing job at another furniture company, their take-home pay is down by a third.

Now they think twice before spending money to turn a weekend into a quick vacation.

"It kind of deflates your ego, makes you feel like you were not worth as much as you used to be," Jane said. "We both believe in doing a job and doing it well, and showing up every day."

Indiana companies blame China for most of their woes.

China has minimal environmental and labor regulations, they say. Few plants in China are held to the same standards for collecting dust, for example.

Also, Chinese workers typically are paid only cents an hour.

Worse, Hoosier wood executives say, China's yuan currency is tied to the dollar at a low value, making Chinese exports to the United States artificially cheap.

Wood products companies have joined other manufacturers in calling for the United States to force China to float its currency, which they think would increase its value at least 20 percent.

"There's a lot of good things to be said about free trade," said Jasper furniture maker Bill Klem, but "there's an unlevel playing field."

"It puts tremendous pressure on the U.S. manufacturer," he said.

The pain is becoming acute, a recent survey of members of the Wood Component Manufacturers Association shows.

Steve Lawser, executive director of the Marietta, Ga., trade group, said 72 percent laid off workers in 2002, a rate far greater than disclosed in 20 years of the surveys. Profit margins also were the smallest in the history of the survey.

Many members complain they can't make products for the price at which Chinese rivals can buy American lumber, make a product and ship the product back to the United States.

Yet China is only part of the problem, said Purdue University wood products professor Rado Gazo.

"We need to go through some revolutionary change," Gazo said. Wood companies "do not adopt new technology very quickly."

Not the first

Wood companies miss the point when complaining about China, said Milt Cole, who owns Cole Hardwood in Logansport.

Chinese manufacturers certainly benefit from fewer regulations and lower labor costs, Cole acknowledged.

But China spends as much for shipping as American companies spend complying with labor and environmental regulations, he said. Labor, which accounts for only about 13 percent of the cost of a finished product, is China's only real advantage.

Indiana's furniture industry must radically increase the amount of production it gets from each worker, Cole said.

It can be done, he insisted. A company that makes cabinet moldings turned a 15 percent profit margin in the year ended in September after sharing profits with employees.

People involved in Indiana's hardwood industry are salt of the earth, and so trustworthy that transactions commonly are based on word of mouth, Cole noted. But their love of wood and the business hasn't necessarily translated to a firm grip on finances or the latest technology.

"People create their own culture," Cole said. "You will gravitate to the lowest level you will tolerate."

Even Lawser of the Wood Component Manufacturers agrees that American companies need to improve business practices.

"They tend to do things the way they've always done it," Lawser said.

"It has to do with the mentality. The majority of them have not plowed a lot of money back into their plants."

Metalworking industries like automotive and aerospace ramped up technology and management expertise to compete with foreign rivals decades ago, noted Del Schuh, president of Indiana Business Modernization and Technology Corp.

Furniture makers also haven't been faced with the same competitive pressures to continually revamp models, like carmakers are, Schuh said.

Moreover, furniture makers aren't accustomed to intense sales and marketing.

Schuh recalled that one company that makes hotel furniture hadn't written a marketing plan following a sales decline after Sept. 11, 2001. When he asked if the company considered making furniture for college dormitories, the executive seemed confused: Why go to the trouble when he could wait for Holiday Inn to begin buying again, he replied.

"They don't seem to have the need to be more sophisticated in their business practices," Schuh said.

Jasper summit

Alarmed at the surge of Chinese imports, Indiana wood products executives met in Jasper this summer in a rare, if not first, meeting across lines traditionally dividing loggers, sawmills and manufacturers.

In follow-up meetings, Indiana Business Modernization and Technology Corp. discussed how to cut costs and improve marketing.

Now Jasper-area economic development officials are forming a network of manufacturers involved in wood, metalworking and other products to help improve their companies.

Representatives of Sen. Richard Lugar, R-Ind., and Rep. Baron Hill, D-Ind., have attended some of the meetings.

"If these guys are as scared as they think they are, you will see changes in their bottom lines by June," Schuh said.

Jasper Desk is in its fourth year of an intensive improvement program.

Sales climbed to $10 million from $8 million despite the weak economy, and productivity -- the amount of work derived from each employee -- has increased 25 percent.

Giesler and General Manager Phil Gramelspacher hope to boost the key measurement 15 percent a year for the next four years.

That won't be easy because much of Jasper Desk's sales are custom orders that aren't given to setting up equipment to churn out hundreds of pieces of the same part.

Yet they feel they have little choice but to push hard if they want the company to survive another century.

"We're not planning on going anywhere," Giesler said.

Call Star reporter Norm Heikens at 1-317-444-6532.

Email this

Print this

Post message

Send letter to editor

Reprint info