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Austin-Based Custom Business Furniture Company Stays Creative as Traditional Materials Rise in Costs

formaspace
Photo via formaspace.com

Formaspace, a leading designer and manufacturer of custom business furniture, is concerned about the possibility of a slowdown in the economic recovery due to a lack of raw material supply. What are the main reasons for this shortage and when will the situation normalize?

The company Formaspace supplies about 80% of the Fortune 500 companies. Therefore, as reported in a recent publication, they are particularly interested in the analysis of material supplies shortage in their industry, i.e. furniture manufacturing.

At their factory headquarters in Austin, Texas, they use a lot of carbon steel to assemble the frames found in all Formaspace workbenches, workstations, desks, and tables. In keeping with their Made-in-America policy, they usually source carbon and other metals locally, which allows them to obtain materials with a lead time advantage over suppliers who buy their products overseas.

Unfortunately, as the demand for raw materials increases, suppliers are seeing their inventory levels decrease drastically. That said, carbon production prices measured by the CRU index show a 360% increase.

What we see in the case of carbon is repeated for many commodities, and prices are soaring for multiple reasons:

  • U.S. tariffs on imported metal products are keeping metal prices high in the United States.
  • Demand for metal products is also increasing due to increased construction activity. If the infrastructure bill passes, demand for metals used in bridges, wiring, etc. will increase further.
  • Metal raw material prices are up sharply, with hot-rolled coil steel (used in extruded frames, for example) up 360% over last year.
  • Demand for metals bottomed out in 2020 due to weak demand, causing mills and foundries to cut production. But demand has returned, creating significant shortages.
  • Many overseas mills and smelters are still experiencing high levels of COVID infections among their populations, slowing the return to full production capacity.
  • Other metals not commonly used in furniture production, such as copper and lithium used in green energy projects, are also in short supply and could slow down efforts to build new green infrastructure projects to combat climate change.

You can read more here.

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