Factory Man

1. The Rise and Fall of American Furniture Manufacturing

"If it's made north of the Mason-Dixon Line, it's a furniture set. If it's made south of the Mason-Dixon Line, it's a furniture suite. And if it's made in China, it's junk."

Industry evolution. The American furniture industry, once dominated by Northern manufacturers, shifted to the South in the early 20th century. Companies like Bassett Furniture Industries grew from small family-owned businesses to industry giants, capitalizing on cheap labor and abundant hardwood resources.

Globalization's impact. By the late 20th century, the industry faced intense competition from overseas manufacturers, particularly China. This led to:

• Massive job losses in traditional furniture-making regions
• Closure of hundreds of American factories
• Shift towards importing rather than domestic manufacturing

The transformation mirrored broader trends in American manufacturing, as companies sought to reduce costs and increase profits by outsourcing production to countries with lower labor and regulatory costs.

2. John Bassett III: A Furniture Dynasty's Last Stand

"I was born with a silver spoon in my mouth, and I had no intention of taking it out."

Family legacy. John Bassett III, born into the furniture-making dynasty that founded Bassett, Virginia, grew up expecting to inherit the family business. However, family politics and corporate restructuring led to his ouster from Bassett Furniture Industries.

Resilience and reinvention. Rather than retiring or joining the import bandwagon, JBIII:

• Took over the smaller Vaughan-Bassett Furniture Company
• Modernized production methods and equipment
• Fought to keep American furniture manufacturing alive

JBIII's story embodies the struggle of traditional American manufacturers against the tide of globalization, showcasing both the challenges and potential strategies for survival in a changing economic landscape.

3. Globalization's Impact on Small-Town America

"We made 'em rich."

Economic devastation. The offshoring of furniture manufacturing had profound effects on small towns that had relied on the industry for generations:

• Massive unemployment rates (15-20% in some areas)
• Closure of supporting businesses and services
• Increased poverty and social problems

Community transformation. Once-thriving industrial towns like Bassett, Virginia, experienced:

• Population decline as younger residents left for job opportunities
• Aging and increasingly diverse remaining population
• Struggles to reinvent local economies and attract new industries

The story of these towns illustrates the broader consequences of globalization on American manufacturing communities, highlighting the human cost behind economic statistics.

4. The China Price: Uneven Playing Field in Global Trade

"You don't even realize what kind of spiderweb you've got going."

Competitive advantage. Chinese manufacturers gained significant market share in the furniture industry due to several factors:

• Extremely low labor costs
• Government subsidies and support
• Lax environmental and safety regulations

Dumping allegations. American manufacturers accused Chinese companies of selling products below cost to gain market share, a practice known as dumping. This led to:

• Intense price competition that American companies couldn't match
• Rapid loss of market share for domestic producers
• Calls for government intervention to level the playing field

The situation highlighted the complexities of global trade and the challenges of competing in an international market with different economic systems and regulations.

5. Antidumping Petition: A Fight for Fair Trade

"When you see a snake's head, hit it."

Legal action. Led by John Bassett III, a coalition of American furniture manufacturers filed an antidumping petition against Chinese manufacturers, alleging unfair trade practices. The process involved:

• Gathering industry support (at least 51% required)
• Presenting evidence to the U.S. International Trade Commission
• Navigating complex international trade laws

Mixed results. The petition resulted in:

• Imposition of duties on some Chinese manufacturers
• Controversy within the industry, as some companies opposed the action
• Temporary relief for some American producers, but no long-term solution to the challenges of globalization

The antidumping case highlighted the difficulties of addressing global economic issues through national legal frameworks and the divisions within industries facing international competition.

6. Innovation and Adaptation in the Face of Competition

"Don't make it complicated."

Strategic shifts. To compete with imports, American furniture companies like Vaughan-Bassett implemented various strategies:

• Modernizing production facilities
• Developing new product lines tailored to American tastes
• Emphasizing quick delivery and customization options

Diversification. Some companies adopted a "blended strategy":

• Maintaining some domestic production
• Importing components or finished products
• Focusing on retail operations and branding

These adaptations demonstrated the potential for traditional industries to evolve in the face of global competition, though not all companies were able to successfully make the transition.

7. The Human Cost of Offshoring and Factory Closures

"There are some people who are not capable of doing what I did, whether it's a mental block or maybe the math. What do you do with those people beyond saying, 'Everybody's gonna go to college and get a better job,' especially when there aren't many jobs to retrain for?"

Job loss impact. Factory closures led to widespread unemployment in furniture-making regions, with long-lasting effects:

• Loss of well-paying jobs with benefits
• Difficulty for older workers to retrain or find new employment
• Increased reliance on social services and government assistance

Community decline. The loss of manufacturing jobs had ripple effects throughout local economies:

• Closure of supporting businesses
• Declining property values and tax bases
• Increased social problems such as drug abuse and crime

The human stories behind the statistics reveal the profound personal and community impacts of large-scale economic shifts, challenging simplistic narratives about the benefits of globalization.

8. Corporate Responsibility vs. Shareholder Value

"We've been a public company since 1930, with shareholders that have to get profits. At the end of the day, we are not a social experiment."

Conflicting pressures. Publicly traded furniture companies faced difficult decisions:

• Pressure from shareholders to maximize profits
• Desire to maintain domestic production and support local communities
• Need to compete with lower-priced imports

Different approaches. Companies responded in various ways:

• Some, like Bassett Furniture, shifted heavily towards importing and retail operations
• Others, like Vaughan-Bassett, fought to maintain domestic production
• Many adopted a mixed strategy, balancing domestic and overseas production

These decisions highlight the tensions between corporate social responsibility and the demands of the stock market, raising questions about the long-term sustainability of prioritizing short-term profits over other considerations.

9. Government's Role in Protecting American Industry

"Look, we do things football coaches do. We don't do things MBAs do."

Policy debates. The furniture industry's struggles sparked discussions about the government's role in protecting domestic manufacturing:

• Calls for stricter enforcement of trade laws
• Debates over the effectiveness of tariffs and duties
• Questions about the balance between free trade and protecting American jobs

Limited action. Despite some interventions, such as the antidumping duties, government response was generally limited:

• Reluctance to interfere with "free market" forces
• Concerns about international relations and trade agreements
• Focus on retraining programs rather than industry protection

The case of the furniture industry illustrates broader debates about industrial policy and the appropriate role of government in managing the effects of globalization on domestic industries and workers.

Last updated: November 18, 2024