"One of these days we will have searched the ends of the earth looking for the cheapest place to make furniture. When we finally find it the playing field will be level. No one will be able to go anywhere else to make furniture any less expensively."

I heard that statement at an industry conference several years ago. Things haven't changed much since then, have they? The industry is still in perpetual motion, looking for a country that offers an abundance of raw materials and lower labor costs. I thought it would be interesting to ask three Americans who have been importing furniture from Asia for a while now to give me their thoughts on where they see our industry heading. Their industry experience ranges from 20 to 50 years. All are very successful. They asked to remain anonymous so that they could speak frankly and openly.

I started with a list of Asian countries and asked how they viewed the positive and negative advantages of doing business in each country.

China

Advantages:

• Many experienced factory owners and skilled labor force.
• The ability to work in multiple categories across multiple channels. You can source almost anything in China.
• Most types of suppliers are in China so it is easier to get quotes and samples.
• There is still a cottage industry. Smaller output facilities that offer smaller run sizes and competitive pricing with other countries.
• There are still pockets of value in certain product categories. Metal is still a better value than in other Asian countries.
• It's easy for a foreigner to travel and get to the factories.

Disadvantages:

• Inflation is becoming a factor. Currency appreciation has driven labour rates over 40% in the past three years. (One of my interviewees stated that one factory he buys from quoted double the price for the same product he purchased 12 months ago).
• The general duty rate of almost 8% has almost put China out of the export business for bedroom furniture.
• The labour force in China is aging compared with Vietnam. The younger generation prefers to work in a climate controlled environment such is found in the technology industry. (One interviewee said that when he recently visited a factory in China there was a table set up outside the gate to hire workers. Occasionally he would see someone looking for work. In Vietnam there would always be a long line of applicants).

Vietnam

Advantages:

• Good source for bedroom furniture in the mid-price range.
• Vietnam devalued its currency last year and, of course, has no duties. There is less impact of material inflation as well.

Disadvantages:

• There are fewer quality vendors in Vietnam. (This is to be expected as Vietnam has not caught up with China on the learning curve and investment cycle. Global uncertainty and the current economic climate contribute to reduced investments in facilities).

Malaysia

Two of the three interviewees had no experience doing business in Malaysia. The third said that Malaysia's strength was in promotional straight line product.

Indonesia

Advantages:

• Vast availability of lumber and other raw materials.
• Good resource for furniture at mid, upper middle and high end price points.
• Good vendors. New suppliers become available every year.
• Labor costs are stable. Plants are well-run.

Disadvantages:

• Getting to factories can be difficult.
• Components can be hard to find.
• The government can regulate or slow sourcing of parts & components.
• Religious holidays can affect output and delivery dates. Delivery schedules inconsistent.

Thailand

Advantages:

• A stable work force.
• Reliable suppliers.
• Easy to get around to visit factories.
• Great food.

Disadvantages:

• Inflation problems. Higher costs.
• Limited number of suppliers. Not enough good factories.

Philippines

Advantages:

• The upper end is still viable.
• Great artistry and craftsmanship.

Disadvantages:

• Labor is expensive. They are no longer competitive with other Asian countries that can purchase materials, like shell, from them and manufacture the product less expensively.
• Small quantity capacity limits the number of buyers who can buy from the Philippines.

There was a general consensus among the survey participants that American importers are shifting from China to Vietnam and that Indonesia will probably be the next resource country of preference.

I then asked: "Which country will the industry move to next?"

Two out of three said India would make the most sense. India offers exotic woods, metal and crafted items. All expressed concerned about the availability of lumber in quantity, lack of infrastructure and potential cultural or political problems.

Respondents believe Brazil will not be competitive because of its higher inflation and labour rates. They also note Brazil doesn't appear to be aggressively pursuing the U.S. market as they have a large enough one of their own to satisfy first.

My final question was: "Do you think furniture manufacturing will return to the U.S.?"

The replies were very similar. All believe furniture for the mass market is too expensive to be produced in the U.S. - an argument that probably holds true in Canada in many cases as well. By necessity, the manufacturing of entry level product (and even some portions of the mid-market) will go to emerging countries. This will be driven by the cost of labour. It is difficult for manufacturers in the U.S. (and probably Canada as well) to compete by producing product that requires ornate hand work or complex finishes.

North America will produce some furniture in the upper middle and high-end price ranges - particularly if custom made (although this applies primarily to upholstery, tag order casual dining and bedroom furniture is becoming more widely available). Wood factories that can run small cuttings will have the greatest advantage. The U.S. will play a role in solid wood and Amish-style furniture (straight line contemporary).

There will continue to be price adjustments and fluctuations in the marketplace - most likely to higher prices.

By the way, the industry executive I quoted at the beginning of this column, who spoke about finding that level playing field, also believes the leading manufacturers of tomorrow will be those offering not only the best quality and design but the fastest delivery as well. But hasn't that been the name of the game all along?

Joe Carroll, former publisher of Furniture/Today, is an international marketing consultant. He can be reached at .