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• Position: North Carolina's furniture makers - Industry Overview

Furniture makers fear things might be winding down just when they got back on their feet.

As North Carolina furniture manufacturers head into 1995, they can't say they weren't forewarned that after two great years things were bound to level off. "I don't know if the party's over, but the rate of growth will certainly slow down," says Joseph Logan, director of finance and economic research for the American Furniture Manufacturers Association in High Point.

Nonetheless, the last few years have been great. "We had the best market in 15 years," says analyst Wallace Epperson of Richmond, Va.-based Mann, Armistead & Epperson. "We have longer workweeks and bigger backlogs than in several years. The problem in this environment is, can you get labor and get the materials?"

But, says John Ong, director of corporate communications at High Point-based LADD Furniture Inc., "I think a lot of people are expecting slower growth in 1995 than '94 or '93." The AFMA predicts inflation-adjusted growth of 1.6% in industry shipments for '95. That's after real growth in shipments of 6.3% in '94 and 8.5% in '93.

Epperson just doesn't believe that things are going to slow down that much that fast. He cites deferred demand from the recession, growth in new-home sales, additions and remodeling during the last few years, plus the disposable income generated by home refinancing. "The fundamental demand is going to be there," he says, "if it's not canceled out by the actions of the federal government in interest-rate hikes or a war or a recession."

And even if things do slow down this year, "the industry will be at the highest level of shipments we've ever had," says Ken Smith, national director of BDO Seidman Furniture Industry Services in High Point. According to AFMA estimates, the industry shipped $19.8 billion in furniture in 1994 and is expected to ship $20.8 billion this year.

"During the early '90s, with volume down and no way to raise prices, everybody started to look for efficiencies," he says. "As we came out of this recession, the industry was much more efficient, and so the increases we've had allowed more to go to the bottom line." Says Logan: "Furniture companies' profitability is up."

LADD, for instance, saw net earnings for the nine months ended Oct. 1 jump 46% over the same period a year earlier on a net sales increase of 12%. But that's not good enough, Ong says. "We've shown a strong recovery, but it hasn't been as strong as some other furniture...