Why office-chair maker All33 is moving manufacturing from China to the US

Over the past few years, importing products from China amid a volatile supply chain has meant high tariffs, escalating shipping-container costs, and long lead times for office-chair maker All33—but it isn’t taking the margin hit sitting down.

This month, the company reshored its manufacturing, moving to a vertically integrated Tennessee facility that includes 100,000 square feet of production space and 33,000 square feet of office space.

All33—named for the 33 vertebrae it works to support with its chair—was founded in 2017, landing investments from Bruce Willis and Snap’s Evan Spiegel and a Shark Tank appearance featuring Justin Bieber. It first started manufacturing in China, simply because there was no affordable way to do it stateside, CEO Bing Howenstein told Retail Brew.

“Making a chair is hard. It takes a lot of investment, big tools—there’s a lot that goes into it to build something like this,” he said. “There was really no other way to do it just because of the cost of expensive tooling and all these things that you can’t do it here anymore—you can, but it would be five, six times the price.”

Pulling up a chair

The Tennessee-based company began evaluating moving manufacturing to the US in 2019 after being hit with 25% tariffs on imports, which “eats at your margins and makes it very prohibitive to compete,” Howenstein noted.

• The supply-chain chaos over the past two years has only made margins worse. Shipping a 40-foot container from China to the US used to cost the company $3,500, he said. Lately, it’s been $20,000+.

“‘Prohibitive’ is the word that people would say about building in America pre-pandemic,” Howenstein told us. “But if you add the tariffs and those logistics costs, we’re actually now able to come out ahead.”

The move to the US will add five points to the company’s gross margin to produce the $999 chairs, Howenstein shared. In China, it would have to pay 50% manufacturing and 50% shipping deposits, money that would be “out of play” for what could be several months. Now, All33 has a “radically reshaped cash-conversion cycle,” Howenstein said.

• That $$ will, in part, go toward new product innovation, starting with a new chair called the Axion that it released earlier this month. (By the way, its prices are staying the same.)

Reshoring means All33 will also be able to speed up shipping. The timeline from order to receiving product was previously at least six to eight weeks (or in some cases more than three months), according to Howenstein. That will now be cut down to 10 days to a few weeks.

• Plus, the trip to the Tennessee facility is a bit shorter than the flight to Shenzhen, which should help the company ensure product quality.

“We can be on top of every piece of material—when it’s made, who made it, where it came from,” he said. “All these are things that are just so hard to do in China.”

Sitting tight: But the move stateside wasn’t easy. There isn’t a large office-chair industry in the US beyond multi-billion dollar companies like Herman Miller, which has been in biz for over 100 years, Howenstein noted.

• “Outside of that, the industry was gone,” he said. “There’s no small industry.”

All33 essentially had to “start from scratch” to build out its supply chain—a process that took more than two years. About 5% of its (coincidentally) ~33 parts, including wheels and gas lifts (the chair part that lifts it up and down) are hard to source in the US, so they’re still being imported, Howenstein said.

Despite this, Howenstein said he’d be “shocked” if more companies in the industry didn’t start evaluating similar moves.

• According to an April report from US manufacturing nonprofit Reshoring Initiative, the furniture industry reshored 4,451 jobs across 40 companies last year, and 85,416 positions—or 6% of the industry’s workforce—since 2010.

But wider reshoring across the furniture industry could be tough. The “economics are daunting,” Willy C. Shih, a professor at Harvard Business School, told the New York Times earlier this year, because it requires a lot of manual labor that can be tough to automate. “It’s hard to beat wages of $2.50 an hour,” he said.

“There is an expense to it. It is hard and it’s a challenge,” Howenstein admitted. “But we think it’s worth it.”