Vietnam worker shortage a boon for Cambodia’s furniture industry

A shortage of workers in Vietnam is causing furniture makers to scout other countries for factories, such as Cambodia and Bangladesh. POST PIX

PUBLISHED 11 JANUARY 2020

by Thou Vireak

PHNOM PENH (The Phnom Penh Post/ANN) - Some furniture makers are now scouting Cambodia and Bangladesh for factories, as a shortage of workers in Vietnam is getting severe.

A shortage of workers in Vietnam – a huge beneficiary of the US trade war with China – is getting severe that some furniture makers are now scouting Cambodia and Bangladesh for factories, said the CEO of Haverty Furniture Co, Clarence Smith.

Smith told Bloomberg on Thursday that labour rates in Vietnam are rising and workers are getting increasingly scarce. Haverty Furniture uses Asian factories to make its company-branded products.

Even though Asian suppliers continue to source much of the timber they use from the Appalachian region of the US, the manufacturing of wood furniture “is not coming back to the US”, Smith said.

Bringing manufacturing jobs back to the US was one of the Trump administration’s stated goals in imposing tariffs on Chinese-made goods.

For now, most of the disruption is behind them even if the first phase of the US-China trade deal will keep the 25 per cent tariffs on Chinese-made furniture in place, Smith said.

Haverty still imports leather and upholstered pieces from China, although it no longer gets any wood furniture from the country.

The factory relocations aren’t going to end. “They’re already building plants in Cambodia. It’s moving just like it’s always moved,” he said.

Ministry of Commerce spokesman Seang Thay told The Post on Thursday it is a good sign and we welcome investors from the US and other from around the world who seek to invest in Cambodia.

‘Major companies coming in’

“It is good news. All relevant government institutions and the ministry will provide them with all the help they require to set up businesses in Cambodia. We will help to facilitate their queries and assist them in every way,” he said.

Thay said as for Cambodia’s trade with the US, it has gotten better even though there remain some issues. “I don’t have US investor figures, but we see major companies from the US and Japan coming in,” he said.

Cambodian exports to the US increased 40.48 per cent during the first 11 months of last year vis-a-vis the same period in 2018, data from the US Census Bureau shows.

Goods exports to the US during the same period were worth $4.961 billion – up from $3.531 billion last year. Imports from the US were worth $484 million during the first eleven months – up 20.09 per cent year-on-year from $403 million, it said.

The Kingdom’s exports to the US have continued to grow since travel goods – including handbags, backpacks and luggage – were granted duty-free status under the Generalised System of Preferences (GSP) in July 2016.

Bloomberg said the Atlanta-based furniture retailer wrestled with supply chain disruptions last year as the manufacturers it buys from fled China and set up operations in Vietnam.

Some suppliers stopped making Haverty’s top-selling merchandise, forcing it to find new sources in Vietnam on the fly. This caused product shortages at its roughly 120 showrooms in the US.

Smith compared the shift from China to Vietnam and other developing Asian countries to the US furniture industry’s shift to North Carolina from Michigan a century ago.

The Bloomberg report said the upholstered furniture industry has seen a recent resurgence in North Carolina, but Smith said it is far cheaper for Asian factories to make wood furniture from logs harvested in the Carolinas than for companies to manufacture the same products in the US.