Potential Effects on the RTA Industry –
Technically
this is a repost of CARB Count from May but for those of you confused
by the Furniture Today Article, I thought you might want to read my
analysis again after reading the previous post.
Material Shortages in Asia –
While
there is not a short term need for every furniture manufacturer to
switch each and every product over to fully certified board immediately
in order to meet the 2009 regulation criteria, there could be two
compelling pushes that could cause a supply shortage. First, a
couple of key retailers, most likely in my estimation, Wal-Mart and Staples (due to being one of the Green
leader in the OSS marketplace so far), will likely push back on the
furniture manufacturers and accelerate the 2011 schedule or require
more documentation than is required by the ARB standards as written,
which can only be satisfied by a fully certified board supplier and perhaps even go so far as to incorporate the Lacey roles and require FSC-certified wood too.
Therefore anyone wishing to sell to Staples will have to buy board from
the few certified board suppliers available now. The second push could
come if the remaining industry manufacturers continue to panic and any
one of them tries to corner the market on the new board creating a
“buying frenzy” and convincing everyone else by example that it is what
it takes to comply or win business.
Significant Cost Increases & Lower RTA Furniture Quality –
MDF
could be decreasing significantly in popularity with price discrepancy
in the soon-to-be Asian certified version. While it is more cost
equivalent in the U.S., the MDF that meets the ATCM standards in Asia
is about 30% more right now according to ARB sources. They are hoping
that it actually helps equalize the U.S. and Asian furniture markets
but I am sure that the less reputable Asian manufacturers will just opt
to use less durable wood substrates for paper, vinyl and veneer to be
laminated on top creating RTA product that has even lower quality than
most now. Both those RTA manufacturers and the retailers with direct imports that are not in their direct control are going to be very risky propositions in the future from a QA and audit perspective. While you may think you are saving money with a direct import model, you need to add to you model the costs of additional audits, QA and the risk if the factory is misleading you both from a legal perspective and from a consumer confidence loss.
Limited Supplier Base –
An
even greater worry could be the limited supplier base. If few board
manufacturers are approved for sales and use in California many large
home building retailers will purchase only from those suppliers for
their nationwide needs (as many have “Green” corporate initiatives that
they will be using California as the model.) So if Home Depot and
others are tapping the same suppliers that all the furniture
manufacturers are, then there could begin to be allocation of material
issues. That combined with little or no security and privacy protecting board source on what is purchased.
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