Times don't sit well with manufacturers.

• Position: Furniture companies hope for improved outlook - Statistical Data Included

They shed 2,000 jobs last year, and 2001 is off to an ominous start for Tar Heel furniture makers. In January, High Point-based Universal Furniture Ltd. closed its only North Carolina factory, letting go 360 workers who made bedroom furniture in Marion. More jobs and plants are in jeopardy.

In fact, some predict a season of trial. "You are seeing short-time work, layoffs and some closings," says Fred Schuermann, CEO of Greensboro-based LADD Furniture Inc. "Furniture makers are hunkering down for the winter, but our outlook is for a longer winter than we'd like."

Residential shipments are projected to rise 2.1% this year, to $26.3 billion, down from last year's 3.2%, according to the American Furniture Manufacturers Association in High Point. Retail-sales growth will be the weakest since 1992, up only 1.2% to $66 billion and far below last year's 8.1%. "At some point, it's got to slow down," says Ken Smith, director of the national furniture division of BDO Seidman LLP, an accounting and consulting firm. "We've had several strong years, back to back."

The good times began fading in May, when orders slowed. The lull persisted the rest of 2000 and is now forecast to drag down sales and profits through the first half of this year, if not longer. Executives and analysts lay most of the blame on nervous consumers.

After years of spending freely on big-ticket items, they're discouraged by higher interest rates, rising gasoline prices and home-heating bills, the uncertain stock market and layoffs, particularly among once-highflying dot-coms. "Furniture is very susceptible to consumer expectations," Schuermann says. "You've got to step out on a limb to buy a $3,000 bedroom suite."

While an interest-rate cut might spur sales, Margaret Whelan, a New York City-based analyst with the investment firm UBS Warburg, a division of the Swiss bank UBS AG, doubts demand will pick up until summer, though she's optimistic battered stocks will rebound sooner. "It seems the market has already dinged the furniture stocks for what they think is coming. They're probably as low as they're going to go and should start recovering in the new year."

That's not to say manufacturers don't have to grapple with other problems. Inventories have grown at twice the rate of sales, partly as a result of the August Chapter 11 bankruptcy filing by the nation's largest furniture chain, Richmond, Va.-based Heilig-Meyers Co. Sixteen of 302 closed stores were in North Carolina.

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