This soft economy leaves manufacturers no cushion.

• Position: Furniture

North Carolina's furniture makers are coming off two tough years. Like nearly every industry, theirs has been battered by recession. Furniture is the sort of big-dollar buy that people skip when they're worried about their jobs or, worse, unemployed. And imports are hurting even the high-end producers who used to be immune from competition from abroad.

These days, China doesn't just export molded-plastic knickknacks and dirt-cheap clothing. It's turning out better furniture, too. "Growth from China is frightening," says Jerry Epperson, Richmond-based analyst with Mann, Armistead & Epperson. "They're doing like $2 billion of wood furniture this year. That's maybe a third of all imports." Imports account for about 43% of the wood furniture sold in the United States, compared with about 13% of upholstered goods.

The High Point-based American Furniture Manufacturers Association had predicted that pent-up demand--U.S. furniture shipments fell 10% from 2000 to 2001--would help the industry rebound in the fourth quarter of 2002. But by December, the association had reduced its estimate, saying it expected 2002 shipments of $23.8 billion, up from $22.9 billion in 2001. For 2003, it predicts a 2.4% increase to $24.4 billion.

The lowest mortgage rates in decades and, initially, strong housing sales had augured a rebound, says Joe Logan, the AFMA's vice president of financial services. But that was undercut by consumer uncertainty about the economy, terrorism and the possibility of war with Iraq. What's more, auto dealers, who are offering rebates and no-interest loans, may have lured away people who otherwise would have bought furniture.

St. Louis-based Furniture Brands International, which owns such well-known North Carolina makers as Lenoir-based Broyhill, Thomasville-based Thomasville and Morganton-based Henredon, said in December that its fourth-quarter earnings would be hurt by anemic demand. Furniture Brands, the country's biggest maker of residential furniture, blamed soft sales at Thomasvile, Henredon and several other subsidiaries. The company had tried to anticipate the problems when, in September, it dosed a Thomasville plant in Thomasville, laying off 425 workers. The plant made bedroom and dining-room furniture.

Weak demand also caused the closing of a Mocksville plant owned by Lexington-based Lexington Home Brands. The plant employed 350, but the company was able to find jobs elsewhere for 100 of them. Both Furniture Brands and...