Between 2003 and 2004, North Carolina lost five percent of its total manufacturing employment - 31,000 jobs in old and new industries. Fifty-three hundred were in furniture manufacturing.

At about the same time, 75 percent of wood and metal furniture sold in the United States in 2002 was imported, according to “Outsourcing in North Carolina’s Furniture Industry,” a 2004 report from the University of North Carolina.

A similar scenario ambushing the cabinetry, window, flooring or doorskin sectors in Minnesota or Wisconsin would be devastating.

The Forest Products Group at the University of Minnesota Duluth Natural Resources Re-search Institute aims to give regional business a competitive edge. ‘’We don’t want to see the loss of manufacturing jobs like we have seen in North Carolina, primarily due to China’s low-cost labor,’ said Brian Brashaw, NRRI’s Forest Products program director. “Since U.S. furniture manufacturers typically had lead times greater than four to eight weeks, China could build and ship products to the U.S. within that same timeframe, for less cost.”

Low interest rates have kept the cabinet industry booming and custom cabinetry has worked to the Upper Midwest’s advantage. But that won’t last forever without intervention.

“We want to help these companies implement strategies to decrease lead time and improve productivity,” said Brashaw.

His project team focuses on wood materials innovation and manufacturing, improvement in this vital industry, employing the lean manufacturing model initiated by Taiichi Ohno (Toyota). The common sense approach concentrates upon eight dynamics to shorten lead time: defects, excess production, delay, wasted employee talent, transportation, inventory, motion and extra processes.

Last spring, Brashaw and 16 other regional representatives toured several of China’s wood products industry and research facilities on a Lake States Lumber Association-sponsored trade mission. They had two objectives: to understand the whole process and establish strategies to sell high grade hardwoods in China, and to better understand competition in wood products manufacturing.

“Their workmanship is excellent,” Brashaw said. “They will have 70 workers on the floor doing things manually, where we rely on automation technologies and less people.” Wood handling issues such as moisture, stain and re-drying is commonly performed at the manufacturing facility.

Chinese companies cover ‘campus’ housing, meals and medical bills of workers. “But they pay about 20 cents per hour, compared to our $14 to $15 an hour,” he said.

“Many plants use total quality management.” said Brashaw. “We would see in every plant that was certified, ISO 9001 and ISO 14,001.”

China has its own timber challenges. Its government banned logging in virgin forests after massive floods on the Yangtze River in 1998. Scientists convinced the government that logging in the headwaters of the river, the third largest in the world, contributed to flash floods and caused billions of dollars in damage.

In response, Chinese companies are renting large forest areas and harvesting rain forest hardwoods from neighboring countries, contributing to a ballooning global black market for timber.

Furniture, cabinetry and door demand is high in China and the giant lumber yards there have huge potential sales. The Lake State Lumber group witnessed an enormous international doorskin, flooring and furniture trade show, like those in North Carolina just 10 years ago. Of its 1.3 billion citizens, China has a middle class of 50 million, small by percentage, but a very large number of consumers with spending power.

For the rest of the world, it adds up to a particularly compelling challenge: to protect natural resources, trade and jobs.

“It’s easier to keep the jobs we have than try to create new ones,” said Brashaw. “There’s always competition in business-whether it’s down the block or across the ocean. I have a lot of respect for the Chinese. They were very gracious hosts.”

Regional success: TrueRide

The NRRI wood materials and engineering program has assisted plants throughout the region make a shift to lean manufacturing. In 1999, TrueRide Inc., Duluth, wanted to refine and develop a new look for its skate ramps, increase sales, improve customer service and create jobs.

“They tested materials for longevity and strength, they also tested the ramp systems sections,” said Greg Benson, TrueRide co-owner. “We set up a bench line with the testing so we knew to reduce or add material. They tested the way we were building.”

NRRI helped improve the plant’s manufacturing efficiency, decreased cycle time and material waste while increasing manufacturing capacity. Performance tests of skate ramps indicated TrueRide can substitute some of its current materials with lower cost, better looking recycled products. The improved look of the products increased sales, Benson said.

A one-week “Kaizen Blitz” (overhaul) restructured the entire facility, he said. “We reduced the amount of floor space necessary by restructuring, retooling and discovering more efficient use of space,’ Benson said. “It changed the way we thought about our business.”

NATURAL RESOURCES RESEARCH INSTITUTE

Natural Resources Research Institute website

at a glance…

Location: Duluth

Founded: 1985

Affiliation: University of Minnesota

President: Michael Lalich, PhD

Director, secondary wood products

program: Patrick Donahue

Director, forestry program: Bill Berguson

2005 activities budget: $16 million

Employees: 150

UMD-NRRI Forest Products Group

Overall, in millions…

State Base … $3.6

Indirect Cost Recovery … $0.4

Other State Funding … $0.9

Permanent Univ. Fund … $1.4

Federal … $5.4

Industry … $4.2

Foundation … $0.2

Match … $1.4

NRRI Project Activity

total budget … $16.0 million

Center for Applied Research and Technology Development

(CARTD) … $7.5 million

Forest Products Group … $1 million

$250,000 … In-kind company or cooperator match

$100,000 … University or state funds

$180,000 … USDA Cooperative State Research, Extension and Education Service

The remainder is funded by competitive grant funding or from private industry hard dollars.

Source: NRRI, Fall 2005

NRRI sends three with Pawlenty trade mission to China

Governor Pawlenty is leading more than 200 business, government, academic and civic leaders to China Nov. 11-19. The trade mission includes events in Beijing, Shanghai and Hong Kong.

As Minnesota's fourth-largest trade partner, China buys more than $650 million worth of Minnesota products every year.

Goals of the Minnesota-China Partnership are to:

• Increase economic activity between Minnesota and China;

• Provide training programs and develop international business activities;

• Open doors for Minnesota companies

to do business in China.

Delegations will focus on the medical, information technology, environmental technology, food and agriculture, steel

and mining and renewable energy industries. In addition, there will be delegations for general business and higher education.

NRRI sent president Michael Lalich and Director Donald Fosnacht to explore opportunities in environment, steel and mining, respectively; and Patrick Donahue, program director, as a general delagates.

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