weekly feature
The furniture industry is starting to feel the shutdown’s impacts—here’s what to know
Jan 23, 2019
Robyn Smith

Thirty-three days into the longest government shutdown the U.S. has ever seen, stories of furloughed workers and TSA backlash abound. Though the full extent of its consequences for the furniture industry remain to be seen, several governing agencies are largely shuttered, and some companies are beginning to feel the sting, with slowing sales and delayed shipments. The most common side effect, however, seems to be a mood of uncertainty.

“Uncertainty is the key impact of the government shutdown on the [American Home Furnishings Alliance] members, which include the top manufacturers and importers of furniture for the residential market,” Patricia Bowling, AHFA vice president of communications, tells Business of Home. “For manufacturers and importers of home furnishings, the shutdown has created certain vulnerabilities.”

On a surface level, the shutdown has appeared to not have had much of a direct impact on the home business—at recent trade shows in Atlanta and Dallas, talk between attendees revolved mainly around TSA delays in travel. However, consequences may be imminent. “Company imports could be slowed down due to agencies not being able to process international commerce,” Warren Shoulberg, former editor in chief of HFN, tells BOH. “If container ship deliveries are slowed or blocked, that would be devastating for an industry that gets the vast majority of its goods from overseas.”

The furniture industry is starting to feel the shutdown’s impacts—here’s what to knowThere must be a more effective way of working through opposing views in our government without harming government employees and U.S. corporations.
—Lisa Rickert

Lisa Rickert, CEO and creative director of New Orleans–based Jolie Home and Ave Home, has already experienced such delays which have affected the company’s order fulfillment time frames and, ultimately, customers’ projects. “There must be a more effective way of working through opposing views in our government without harming government employees and U.S. corporations,” she tells BOH.

Angie Barillas, founder of Guatemala-based Ebb and Flow Furniture, has also experienced hardship with imports. “The government shutdown has delayed all ports by causing two- to three-week delays in customs clearance for our containers,” she tells BOH. “In turn this has caused delays in order processing, and we’ve had to expand costs to find expedited delivery. We are making sure to be transparent with our clients [about the reasons] for the delay as we aim to be reliable.”

The second-longest government shutdown, at 21 days, was in 1995. A 2010 congressional study on its effects mostly focused around the impact on government spending, but the report found that the shutdown had a ripple effect, dragging down all sectors of the economy. Shoulberg sees a similar dynamic at play today, particularly in Washington, D.C. “There is a large percentage of government employees not being paid,” he says. “Furniture and home stores in that marketplace have to be feeling the pain, which gets worse by the day.”

Due to the ripple effect, some companies have already had fewer orders placed than normal, including wallcoverings brand Aux Abris: “I had thought we weren’t affected by the government shutdown, but upon review, it has been a slower month,” owner Karen Robert says.

Dave Dawson, president and CEO of The Urban Electric Co., which operates in a manufacturing facility in Charleston, South Carolina, concurs with Shoulberg’s big-picture perspective. “Even apart from the direct economic distress on government workers, there’s a serious risk to sentiment at large,” Dawson tells BOH. “If consumers and business leaders lose confidence and pull back, that alone could lead to an even bigger self-fulfilling negative impact.”

A number of agencies that regulate the home furnishings industry are already feeling the pain of the shutdown, though the effects are not yet calculable. One, the U.S. Consumer Product Safety Commission, has the highest percentage of furloughed staffers among the 11 consumer and worker protection agencies, according to Public Citizen, with 96 percent of the agency’s staff on unpaid leave.

When fully funded, the CPSC regulates consumer product safety standards by processing injury reports and research. Though no regulators are currently available to assist manufacturers, companies aren’t off the hook when it comes to reporting. “Do not assume a government shutdown means that reporting obligations at the CPSC are on hold,” wrote Cheryl A. Falvey and Carolyn Wagner in a guidance for Crowell & Moring, a Washington, D.C.–based law firm. (Before becoming a partner at the international firm, Falvey was the general counsel for the CPSC.) “The obligation to report is not suspended during the shutdown, even if there may be slower than normal response on matters that do not present an immediate threat.”

Any manufacturer, importer, distributor or retailer is still obligated to report any defective product that puts consumers at risk for substantial injury or death. Because filings are tracked by date and time, there’s no way to avoid them without penalty, and if companies need assistance, whereas before they could seek advice from regulators, currently they are encouraged to invest in legal counsel—or, with apparent risk, figure it out on their own.

It’s still unclear how long it will take for the reports to be processed, as there’s nearly no one at the CPSC to receive them. The remaining 4 percent of the organization is encouraged to prioritize work “necessary to the orderly termination of agency activities, to protect against imminent threats to human safety and to protect government property,” wrote Covington & Burling LLP, an international law firm with offices across the U.S.

The furniture industry is starting to feel the shutdown’s impacts—here’s what to knowActivities not happening at CPSC during the shutdown include recalls, letters of advice telling companies when their products are likely in violation, and listing the CPSC’s desired corrections, data collection and standards participation.
—Patricia Bowling

“Activities not happening at CPSC during the shutdown include recalls, letters of advice telling companies when their products are likely in violation, and listing the CPSC’s desired corrections, data collection and voluntary standards participation,” says Bowling. This leaves companies in the tricky position of having to decide whether to unilaterally launch a product recall without the CPSC for help.

“The risk of moving forward with a recall without the CPSC is that once the agency reopens, they will be examining recalls that were announced during the shutdown period to determine whether they agree that the appropriate remedy was provided to consumers and that [the messaging was effective],” Matt Howsare, a consumer product safety lawyer at D.C. firm Mintz and former CPSC chief of staff, tells BOH. “The longer the shutdown continues, the more unilateral recalls we should expect to see. Companies should not just sit on a recall simply because the CPSC is closed if they believe there is a risk to their customers.”

It might not be every day that bespoke furnishing gets recalled, but for big box stores the injury risk is real and should be taken seriously. “In this country, a child is injured about every 30 minutes from a TV or furniture tip-over,” reported the Huffington Post. Between 2016 and 2018, Ikea received 186 reports of tip-overs with one of its dressers, which it recalled with the help of the CPSC.

The EPA is also operating on a diminished basis. “The EPA will cease reviewing new and existing chemicals under the Toxic Substances Control Act, meaning the agency will halt risk evaluations and stop designating chemical substances on the TSCA Chemical Substance Inventory as either ‘active’ or ‘inactive’ in U.S. commerce,” reported Covington.

All companies that import regulated composite wood, either as component parts or finished goods, have until March 22 to complete import certification, a requirement within the Formaldehyde Emission Standard for Composite Wood Products. “U.S. Customs and Border Protection and the U.S. Environmental Protection Agency had promised guidance on how to complete the new declaration, but that is no longer likely to occur before the deadline,” says Bowling.

Here’s what we know we don’t know: It’s not clear what consequences will take shape in the coming months—or how long it will take these agencies, which were already overwhelmed, to catch up.

Homepage photo by Andy Feliciotti

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