Academic journal article Southeastern Geographer

The Furniture Foothills and the Spatial Fix: Globalization in the Furniture Industry

Academic journal article Southeastern Geographer

The Furniture Foothills and the Spatial Fix: Globalization in the Furniture Industry

Article excerpt

Spatial shifts in the location of manufacturing continue, but understanding why particular regions prove attractive to particular industries and elements within those industries lags. A sharp increase in fuel cost prompted considerations of a major geographic shift shortening the distance between producers and markets in the furniture industry. This research focuses on the role of logistics based manufacturing location decisions in furniture's global value chain. A succession of sites through the product life cycle is proposed along with segmentation of different types of furniture that prioritize different locations based on the relevant competitive advantage. New pricing considerations since the late-2008 economic downturn indicate spatial fix strategies continue, with shifts in the location of global value chain components.

Los eambios espaciales en la ubicacion de la industria de la manufactura continuan en la aetualidad, pero el entendimiento de por que determinadas regiones resultan atractivas para determinados sectores y elementos dentro de las industrias ha quedado rezagado. Un fuerte aumento del costo del combustible provoca consideraciones sobre un gran cambio geografico acortando la distancia entre los productores y los mercadas en la industria de muebles. Esta investigacion se enfoca en el papel que juega la logistica basada en las decisiones de localizacion de la manufactura en la cadena mundial del valor de los muebles. Una sucesion de localidades a traves del ciclo de vida del producto se proponejunto con la segmentacion de los diferentes tipos de muebles que priorizan diferentes lugares basados en las ventajas competitivas relevantes. Las nuevas consideraciones de precios desde finales de la recesion economica de finales de 2008 indican que los estrategias de localizacion territorial continuan, con cambias en la ubicacion de los componentes de la cadena de valor mundial.

KEY WORDS: furniture, global value chain, spatial fix

INTRODUCTION

Global competition at the end of the 20th century devastated the furniture industry in the Piedmont region extending from Virginia's south central counties bordering North Carolina through a central swath of the Tarheel state, weakening a major segment of the region's traditional economic base along with tobacco and textiles. The soaring price of fuel in 2005, accelerating in early 2008, impacted the cost of transportation sufficiently for some major manufacturers to increase or consider increasing U.S.-based production capacity in heavy, bulky goods: machinery components, steel, heavy equipment suppliers, building material and furniture (Engardio et al. 2008). Since then fuel costs decreased sharply but are again slowly rising, with analysts posing the possibility that peak oil attainment foreshadows an inexorable increase in the cost of fuel (Li 2008).

This case study of the North Carolina-based furniture industry is situated within the theoretical frameworks of global-value chains and production networks (Sturgeon 2008; Gereffi et al. 2006; Coe et al. 2004), clusters and the spatial fix (Harvey 1982). It tests the hypothesis that a variety of factors, including logistics (shipping costs, delivery time), market niche and agency in the form of individual actors exercising leadership, are crucial parts of the geographic location decision. Labor cost differentials at various locations, while certainly important, are only one of many considerations for corporate relocation. The major challenge for companies remaining in their traditional U.S. location, in an industry afflicted by outsourcing, lies in the search for a non-labor cost-based comparative advantage. This study asserts that several avenues and some evidence remain for regional sustainability on the basis of innovative organizational practices, taking the high road of best-practices implementation rather than the low road of wage reduction (Tewari 2005).

Terminology needs to be sorted out early for clarity. …

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