Somewhere between the stacks of woven Chinese lawn chairs and the cooling vinyl by the chaise-lounge welding station, Gerald Shvartsman is straddling the hope and peril of South Florida’s battered manufacturing industry.
The one-time nightclub owner dived into the Miami furniture business in 2008 with a start-up focused on low-cost imports of high-end furniture. Shvartsman said he was able to undercut struggling competitors by keeping his overhead low and his margins tighter than the competition did.
“I unloaded the first container myself,” the 35-year-old founder of Source Outdoor furniture recalled. He got the idea of lower cost furniture when he was looking to fill the balcony in his new Aventura apartment. “I went to a couple of local retailers and I would see crazy prices. A sectional was $8,000. I thought something was wrong.”
With furniture so cheap from China (Shvartsman said he got a comparable sectional for about $800 bulk), Source Outdoor was able to offer prices low enough to break into the market and start supplying local furniture stores. But as Source began fulfilling more bulk orders for hotels, he found his Chinese manufacturer was churning out aluminum chairs and tables with flaws: lightweight recycled metal, mismatched fabric colors on cushions, discolored coating on metal.
So Shvartsman decided to get into the manufacturing business himself. It started with a small upholstery operation to make custom cushions. And in January, Shvartsman cleared out part of the warehouse floor dedicated to storing Chinese wicker furniture and brought in $60,000 worth of equipment: welding torches and grinders, an oven for warming vinyl and metal lathes for forming curved table legs and other custom-made parts.
It was Source Outdoor’s first stab at making furniture rather than buying it overseas. “We’re in the manufacturing business now,” he said. “We’re making in America the same stuff I was bringing in from China, but at much better quality.”
The manufacturing arm of Source now employs about 20 people, out of the overall payroll of 70 people. Shvartsman expects about $1 million of Source Outdoor’s sales this year to come from furniture made in its warehouse in the 3400 block of NW 112th Street. Last year, the company reported $7 million in sales overall.
The company’s showroom is still dominated by foreign-made goods: luxe deck chairs large enough to hold three adults and sprawling outdoor sofa sets with bright oversized cushions. Most feature black woven wicker handcrafted in China by workers earning wages low enough that Shvartsman said he could never hope to create it himself in Miami.
“It could only be made in Asia,” he said. “It is labor-intensive.”
The comment touches on one of the reasons manufacturing remains the most battered industry in South Florida, even when compared to construction. With foreign labor, particularly in China, so affordable and communication so much easier with online ordering, the smallest of companies can secure cheap products overseas and sell to local customers. The combination has helped send manufacturing into a discouraging trend both nationally and in South Florida.
In 2000, manufacturing employed 106,000 people combined in Broward and Miami-Dade counties, according to federal statistics. Now that’s down to 61,000, a 42 percent decline. By comparison, construction has dropped from 80,000 people to 65,000, a nearly 19 percent drop (though employment in the building industry is down about 50 percent from peaks hit during the construction boom).