Two case goods suppliers are no longer as optimistic about Mexico as they once were, and one has decided to stop all business there permanently.
At a time when ocean freight rates were still extremely high, Legends Furniture and American Woodcrafters both set up sourcing from Mexico for the recent spring High Point Market. Suppliers felt the need to broaden their sourcing options because COVID-related disruptions in Asia were still common.
However, as the pandemic subsided and freight costs decreased over the following months, Mexico’s worth came into question.
“Mexico is not as good,” According to Tim Donk, vice president of sales at Legends, Furniture Today. “It’s not quite as good of a deal. Nearly as much freight travels by truck from Mexico to Ohio as it does by ship.”
Additionally, there are issues with trucking, chiefly a shortage of drivers, he claimed.
Legends doesn’t want to abandon Mexico because, according to Donk, the company is still committed to its blended sourcing strategy and because there are still advantages to the country.
“Mexico has the advantage of not requiring you to wait before cutting. There is no requirement that you commit to, say, five containers.”
At the spring market, American Woodcrafters joined Legends as a newcomer to Mexico. It introduced the bedroom, dining, and occasional line known as Artisan’s Grove.
Chuck Foster, the CEO of the company at the time, was enthusiastic about the expansion, especially regarding the finishes of the line.
“Finish is key for us and we really wanted that high-end feel,” Foster had said. “Finding a factory in Mexico that could do that proved to be difficult. However, our Mexican finishes are so lovely that I feel like a child in a candy store.”
Mexico used to be a good deal, but not anymore, just like with Legends.
“Mexico is on pause,” At this week’s market, Foster spoke with Furniture Today. “The value it once represented has been lost.”
Two new bedroom collections and one new dining line were introduced by the mid-priced case goods supplier at the October market. All come from Indonesia, which is the company’s main source of supply.
Foster claimed that the cost of shipping a container has decreased to around $9,000. That’s so pitiful as to make one wonder about Mexico, and the business even decided to eliminate its ocean freight surcharge at a loss.
“We’re still carrying high-price inventory,” Foster said. “Our ocean surcharge has been eliminated, but doing so has cost us money.”
Foster nonetheless thinks that eliminating the surcharge was essential to retaining retailers. “Retailers want an incredible price,” he said. “They should receive it from us.”
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Source: https://www.furnituretoday.com/international/mexico-not-as-good-of-a-deal-as-it-once-was-say-two-furniture-suppliers/
