Like many parts of the woodworking industry, the molding and millwork sector is faced with increasing competition from overseas markets that pay employees pennies on the dollar compared to U.S. woodworking employees.
Modern Woodworking spoke with Matt Allen, current president of the Wood Moulding and Millwork Producers Association and president of Mt. Taylor Millwork, Milan, N.M., to discuss some of the latest issues and trends in the molding and millwork industry.
MW: What is the single biggest issue facing the molding and millwork industry today?
Allen: I believe the biggest issue facing the molding and millwork industry in the United States is offshore competition. As long as we have foreign competition paying their employees so much less than we pay our employees, we will be faced with a challenge that may one day become insurmountable. Our government has allowed a huge trade deficit to accumulate and continues to do so. I visited with a representative of one of these foreign-owed firms. He informed me that, on average, his company pays their workers around $425.00 per month.
If you take the average number of hours in a working month (173), and divide that into the $425.00, it works out to a pay rate of $2.45 per hour. Of course, there are other expenses involved for these companies in maintaining their employees and the argument has been made that the disparity is not as large as we believe. However, if the disparity is minimal, how is it that these firms are able to afford to ship their products thousands of miles and yet still beat U.S. manufacturers’ prices?
MW: What countries are rapidly encroaching on U.S.-made millwork?
Allen: Chile and Brazil are coming on strong. Mexico seems to have fallen to the wayside but I think we will continue to see product coming from New Zealand, and soon from the former Soviet block countries. I also believe that China will become a major player.
MW: What can U.S. molding and millwork manufacturers do to compete with the import invasion?
Allen: Our philosophy to try and compete with the import invasion is to try and provide the best service possible, excellent quality and to provide services that could be termed “value-added.” Value-added products might include specialized packaging, finishes and other additional things not offered by the imports.
MW: What factors in the United States have affected the molding and millwork industry?
Allen: I think the molding and millwork industry in the United States has changed in the face of the U.S. environmental movement. I feel that the environmental movement created a vacuum in our industry. Environmentalists tied up timber sales in court, which resulted in logging companies and sawmills being unable to survive. Demand for wood products has continued and the resulting vacuum is being filled by offshore competition. The ridiculous part is that we must log our forests. The devastating forest fires occurring, especially in the Southwest, are the result of the vast amount of raw material and debris available to burn. Currently there is grant money available for businesses that want to remove underbrush and small diameter trees from the forests. This is, of course, logging. Rather than remove useful products from the forest, we will be removing products containing very little if any economic value.
MW: What do you see as some of the emerging trends in millwork material and design?
Allen: I think that we will see more and more companies leaning toward producing low-end millwork such as MDF moldings. MDF is a neat product if your customers are interested in paint-grade millwork. It comes in consistently long lengths, is relatively easy to machine and has resulting low waste factors. On the other hand, I also believe that there will always be a niche market for manufacturers that specialize in solid lineal moldings. I don’t foresee any huge changes in species, rather a shifting in the marketplace away from those species easily provided by the foreign marketplace.
MW: What is the WMMPA’s outlook of the U.S. molding and millwork industry for the remainder of 2003 and into 2004?
Allen: This is difficult to answer as many of our members are involved in different aspects of the industry. Some of our members are expanding into more and more of the MDF market. Others are moving into value-added products to help maintain their market share. The bottom line is that although the market is brisk, profit margins are low for most members. Assuming the stock market continues to recover, we believe the market will stay steady. However, until our government does something about our trade deficit and blocks some of the influx of cheap imported millwork products, any economic recovery will actually benefit foreign economies rather than our own.
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