The Woodworker's Treasure Chest

Blueprints For Wood Projects

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Great difficulty produces great opportunity. If this is true, the furniture industry in the U.S. offers an incredible opportunity, because at least today it is experiencing great difficulty.

Woodworking today uses essentially the same methods as it used fifty years or even a hundred years ago. Of course, the methods have been refined and modernized, but the fundamental structure and operating methods of the wood industry are little changed.

Until about fifteen or twenty years ago, there was little reason to change. The methods worked and a reasonable business could function using these methods. Then things began to change. Fundamental factors began to modify the economy in which the furniture industry operated. First, business became international. No longer could you simply compete with a few local companies who operated pretty much the same way you did. Instead, you were now forced to compete with companies that operated in countries where lumber was almost free and labor was even cheaper. Sure they had to ship their product here, but their starting cost was so low that they could ship it here and still undercut your prices.

At the same time, business in the U.S. was becoming more competitive. Just-in-time production methods and a drive for low inventory levels were just not compatible with the normal production structure in a woodworking plant. Instead of cutting 5,000 or 10,000 suites once or twice a year you were now cutting 500 suites every month or two.

To this, technology added a further burden. New machines were much more technical requiring a higher level of skill and technical knowledge. Computers, networks and advanced communications increased the intensity and pressure of daily business. It was more than most could handle.

The results were not unexpected. 4,000 furniture companies turned into 2,000 in about ten years. The consolidation continues. Surviving companies, with very few exceptions are doing very poorly by modern standards. Return on investment of 1, 2 or 3% just doesn't get anyone excited. Large conglomerates tried to buy up a multitude of furniture companies and use economies of scale to reduce costs. Dismal results soon had them searching for greener pastures. The best and brightest young students moved into more exciting areas with better growth prospects. The furniture industry has all the signs of a dying industry. Will the furniture industry go the way of the television with low cost foreign companies dominating the market?

Perhaps, and perhaps not. I believe it depends on the fundamental decisions made in the next five to ten years. If the industry stubbornly holds on to the past, they are doomed. If, on the other hand they are willing to consider a fundamentally different structure, perhaps they can survive and maybe even prosper.

What is a "fundamentally different structure"?

If you look at efforts to improve productivity in the woodworking industry, you will find companies trying desperately to gain a percent or two. After all, for some companies this could double their profits. To survive they need to be searching for 25, 50 or 75% improvements not a percent or two.

To most people this sounds ridiculous and impossible. If you are striving for one or two percent it is impossible. But if you are aiming for those higher numbers they are well within you reach.

The company I work for builds machine tools. Machine tools are not much different than furniture. The machines are made up of a multitude of machined components assembled by hand into a final product. Furniture is made up of a multitude of components hand assembled into a finished product. The difficulty in improving productivity in building machine tools is about the same as the difficulty in improving productivity in building furniture.

Despite this, we were able to reduce the labor per machine by half in less than three years and reduced it by half again on certain machines. That is a 75% reduction. It is not impossible!

Just after the Berlin wall came down, we were introduced to one of the largest defense contractors in Russia. In a desperate quest for business to replace their defense work, they began machining parts for our machines. The savings were astounding. A part that cost us $1,000 to have machined in the U.S. could be purchased for $2 in Russia. The quality was as good or better and the delivery was reliable and yet today we buy nothing from them. In fact, if their product were free we would still not buy from them. We can produce the part ourselves for less than the shipping cost alone.

Think about it. If they were a competitor, they couldn't compete.

I think the furniture industry can not only compete but can become a highly profitable growth business. To do this they will need to address the fundamental structure of their industry. If you are trying to gain a percent or two, you can pretty well do things the same as you have been, just do them a little better. If you are trying to gain 25 or 50%, you must pretty well abandon your current thinking and start from the basics.

We've done this successfully in our business and I did it in one other area, a furniture company of sorts.

In the mid 1970s, stereo consoles were a significant business. I was retained by a major consumer electronics company to design, build and run a stereo console factory for them. They wanted to produce a product that was substantially better quality and substantially lower cost than their competitors. Traditional methods simply wouldn't work.

We designed a product that was somewhat unique because it was folded up using a molded plastic shell. The really unique aspect, however, was the design of the production plant.

In the planning stages, we modeled the plant along traditional lines and then tried to operate it. There was no way to achieve the results we needed. We then abandoned that approach and built a single production line similar to that found in an automobile plant. The line cycled every minute. The case was assembled and the top fitted, it was finished through a seven step finishing process, the electronics were installed and tested and the product was packaged. When it first started out, it produced a completely finished, packaged and 100% tested stereo console every minute. Eventually it was able to produce two consoles every minute.

As we were designing the plant we were assured by many knowledgeable people that it could not work. Every objection you can think of was offered. How do you keep from painting the grill cloth under the console grill? You can't get a finish schedule that will work on this line. You can't fully test the electronics in one minute. The biggest objection we heard, however, was that any problem anywhere on the line would shut down the entire factory.

This was true. If any department had a problem it would shut down everyone. When each department runs independently, problems do not have nearly the serious consequences. This means that it is much more acceptable to have problems in a traditional structure than in the single line structure. In practice, the line almost never shut down. Because the consequences of a problem were so great, each department put incredible effort into totally eliminating any problem that might shut down the line. I doubt seriously if even half that effort would occur in a traditional furniture plant.

For several years the venture was extremely successful, returning a profit each year equal to the total plant and equipment investment. A 100% return on investment. Only after it was turned back to the owners were more traditional methods added. As this occurred, fortunes declined until the facility was sold.

Are we suggesting that furniture be built like automobiles? Not at all. The high volume world of stereo console production does not exist today.

We are simply suggesting that other fundamentally different approaches be considered. In this book, we hope to give you some analytical tools you can use to evaluate different structures and approaches to major improvement. We hope to provide ideas and concepts that are not common in woodworking today. The same approach will not work for all companies. All companies that plan to survive, however, must have a strategy to dramatically improve productivity.

In this book we will focus mostly on the area of machining components. Many of the concepts will work in other areas of the company, however, getting the fully processed parts to the assembly area at the lowest cost is the core of a furniture manufacturing company. We will also introduce you to a new concept in furniture building which is technically possible today and may hold great promise for the future.

We will approach this from a mathematical and logical viewpoint, however, we will also discuss some of the human aspects of these programs. These human aspects have a strong bearing on the success of productivity enhancing efforts. If people's natural human tendencies will cause productivity to improve, it will be much easier to achieve your goals. These natural human tendencies are determined by the corporate structure. If people are naturally trying to make your programs work, the structure is correct. If your people are fighting your efforts it is not their fault, it is yours. The structure and philosophy of most companies cause employees to mistrust management and fight change. It is difficult enough to fight the market, but if you have to fight your own people in addition, your chances of success are slim.

The single biggest obstacle to improvement in the woodworking industry is attitude. There exists within the industry a accepted formulae defining the "correct" way to do things. These methods have been passed down from generation to generation. Also passed down is the belief that if you simply follow the formulae everything will be all right.

Everybody pretty much uses the same thinking and the industry gets a great deal of security from this collective knowledge. Sure, it takes much time and experience to gain the knowledge, but once it has been won, you have the magic formulae to success. Unfortunately, this is no longer the case. Pretty much everyone using the formulae are failing. If not failing, then certainly not prospering like many other industries.

Examining new fundamental structures robs you of the security offered by following the accepted methods. There is security in emulating those that went before you, but it is false security. There really isn't any security in business today and if you feel confident and secure you are vulnerable.

We will attempt to provide you with both insights and new ideas. We will try and illustrate these as carefully as possible. But, if you don't approach these new ideas with an open curious mind, they will do you little good. For the remainder of this book, we ask you to abandon your current thinking and ideas and examine the new concepts carefully. Think about them and imagine them working.

The current thinking, structures and philosophy used by the woodworking industry in the U.S. today will likely not work in the future. It has failed almost half the companies in the industry in the last ten years and it will fail most others. Each company will need to change. Not small changes but fundamental core changes to the way business is conducted. It is time to start seeking these new ideas. We hope this work can provide you with a good starting point.

Chapter 1

The Formula

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