WASHINGTON North Carolina has lost tens of thousands of furniture-making jobs over the past decade.
But Bruce Cochrane, who worked as a consultant in China and Vietnam after his family sold their furniture business in 1996, says rising Chinese wages and an increase in shipping costs have created an opportunity for him back home.
Cochrane has invested $5 million and is hiring 130 workers to build middle- to higher-priced solid-wood furniture in the same sprawling Lincolnton, N.C., warehouse that his family once ran. He even moved into his dads old office.
Now, President Barack Obama wants to know what Cochrane saw and why hes taking such a chance in a region and industry battered by outsourced jobs. Cochrane stood Wednesday in the East Room of the White House as Obama said the Lincolnton man was proof that you dont have to be a big manufacturer to make a difference.
Jobs in the nations furniture industry fell nearly 50 percent in the last decade, according to the Census. The N.C. Commerce Department estimates the state has 1,301 furniture companies employing 32,800 workers.
The president asked Cochrane, owner of Lincolnton Furniture, and several other business owners to join him at the White House on Wednesday to discuss what can be done to urge other companies to follow their lead and bring jobs home.
Obama shared Cochranes family story of selling the business and then watching jobs go overseas. Cochrane then went overseas himself to work as a consultant for American furniture makers. And then, Obama said, Cochrane noticed something he didnt expect.
Their customers actually wanted to buy things made in America, Obama said. So he came home and started a new company, Lincolnton Furniture, which operates out of the old family factories that had been shut down. Hes even re-hired many of the former workers from his family business.
The Cochrane familys furniture roots date back to the 1800s in Iredell County. In 1905, family members moved from Charlotte to Lincolnton and began making mantels and display cases.
Obama said his administration would introduce new tax proposals that reward companies that bring jobs home and eliminate tax breaks for companies that are moving jobs overseas.
But business leaders like Cochrane are trying to buck well-entrenched practices in the business world. Companies in the Standard & Poors 500 index now earn more than half of their revenue from overseas. U.S. multinationals have eliminated more than 800,000 jobs in the United States in 2000-2009 while adding 2.9 million overseas, according to the Commerce Department.
Cochrane, though, sees opportunity: He said labor costs are rapidly increasing in China, shipping costs have doubled, and the rising yuan has begun to eliminate many of the benefits that attracted furniture companies overseas.
Hal Sirkin of the Chicago-based Boston Consulting Group acknowledged the risks, but said Cochrane has a good chance of success. He said Cochrane is part of a fundamental shift in the manufacturing world. He sees the beginnings of a manufacturing renaissance where the wage gap with China shrinks as some U.S. states become some of the cheapest locations for manufacturing in the developed world.
Wages in China are climbing at 15 to 20 percent a year, according to Sirkin. Factoring in inventory and shipping costs, Sirkin says the cost advantage for operating in China could almost be erased in the next four years.
Referring to Cochrane, Sirkin said many manufacturers are feeling pressure from retailers to deliver goods faster.
He doesnt have to ship furniture that will take three months to get to the U.S., Sirkin said. He can build it tomorrow and it can be in California in five days.
Its not just furniture manufacturing.
Instead of increasing production for the Fusion in Mexico, Ford Motor Co. announced plans to bring that additional work to its Flat Rock plant in Michigan. Randy Wilcox, head of Otis Elevators North America operations, said his firm is bringing back 260 mainly American workers from Mexico to make energy-efficient lifts at a former Maytag laundry machine factory in Florence, S.C.
Richard Bennington, a home furnishings professor at High Point University, is more cautious, but said the potential trend is exciting. Hes heard more talk about businesses relocating to the region in the last six months than he has for years. But he says there is a great deal of conflicting information. He sees the greatest potential for unique, custom made products.
At some point some of them will come back, he said. Other parts will be hard to come back. You can still see bedroom furniture at prices produced overseas that you cant possibly see produced here.
Cochrane admits he didnt vote for Obama nor did he expect much from the trip to Washington. But he said he was surprised by the level of assistance being offered by the U.S. Small Business Administration as well as potential incentives that could help other businesses.
I thought it was going to be a waste of time and waste of money, but I was very satisfied with the engagement of the administration and the staff.
The Associated Press contributed.