THB, Banditos, Wayward and more confirmed for Cosmic Cocktail!



Five years ago, Italian furniture exporters might not have worried that Mexico eventually would displace them as a principal supplier to the U.S. market.

But now, just such fear has Canadian manufacturers shifting nervously in their seats.

Their dread has been fueled by two and a half years of losses as a result of free trade with the United States, and their apprehension is heightened by the prospect of Mexico's inclusion in the proposed North American free trade pact.

"We're quite concerned about NAFTA [the proposed North American free trade agreement], as are some U.S. producers. Free trade with United States has not been very good for us up until now," said Robert Diguer, executive vice president of the Canadian Council of Furniture Manufacturers, Canada's largest furniture trade association.

What concerns Mr. Diguer is that Canada has lost $400 million in its furniture trade with the United States since the start of the U.S.-Canadian Free Trade Agreement in 1989. At the same time, Mexico has increased its furniture exports to the United States by about $150 million.

Over the past few years, Mexican furniture makers have proved adept at competing in the U.S. furniture market, the household segment of which is worth $27 billion on the retail level, according to Furniture Today, the foremost U.S. trade publication in the sector.

"We're giving the Italians a run for their money," boasted Ray Bennici, sales director for Dania, Fla.-based Monterrey Furniture Inc. His 2-year-old company is the worldwide distributor for Grupo Industrial Mix, of Mexico City, which makes furniture finished with a marblelike appearance. This product trend began in Italy, he noted.

U.S. companies may actually gain more from the North American pact than they lose, some say.

"We've seen Mexico as more of a market than a threat," said Les Riddell, executive vice president of the Western Furnishings Manufacturers Association, a Santa Fe Springs, Calif., trade group representing 2,000 furniture makers in 13 Western states.

The association recently has gained per-mission, after a two-year battle, for U.S. companies to exhibit at the February furniture show in Guadalajara, Mexico's largest furniture fair.

Meanwhile, Mexican buyers have been purchasing more U.S. goods at the semiannual furniture show in High Point, N.C., several U.S. producers said.

It may be the case, then, that with increased buying and selling between U.S. and Mexican businesses, Canada will get the cold shoulder at the North American furniture trade table.

Indeed, "the whole [market share] transfer may be one between Canada and Mexico," suggested a senior analyst at KPMG Peat Marwick's Washington-based Policy Economics Group.

In a May analysis of the likely winners and losers in the proposed trade pact, Peat Marwick projected that Mexico's furniture production would increase by $200 million, or 8 percent overall. In contrast, the analysts reckoned that employment in the U.S. furniture industry would drop, but only by 800 jobs or 0.14 percent, with an associated production loss of only $60 million.

"Thus, relative to U.S. numbers, the impact of Mexico would be virtually nothing," the Peat Marwick analyst concluded.

One reason the impact on U.S. companies will be mitigated is that many U.S. manufacturers now have maquiladora, or export-oriented factory operations in Mexico. Furniture Today estimates that 150 U.S. companies have plants in Mexico now.

The U.S. General Accounting Office, in an April study, suggested that at least a dozen U.S. companies have relocated to Mexico to avoid strict environmental regulations. But that count should be closer to 50 companies, said an official of the Western Furnishings Manufacturers Association, which assisted GAO in its study.

"Companies that moved to Mexico before the '90s are grandfathered, and will continue to have certain liberties [under Mexico's strict new environmental laws]," said one U.S. businessman with a factory in Mexico.

"But any company going in now will pay the price," he said.

Copyright © 2019, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad