A recent financial report shows that Natuzzi leather sales were down 18% for the first quarter of 2007 with an operating loss of 7.9 million euros. Upon further inspection sales were sharply off by 27% in North and South America. Based in Italy, Natuzzi leather has been a top of the line furniture maker for many years. Suddenly, they are faced with the dilemma of a world economy characterized by high local wages and outsourcing. Many European furniture manufacturers are already producing furniture in China such as Kuka and Actona. To further complicate the situation, the quality of Chinese made furniture has increased tremendously. As a result of quality improvements, now there are fantastic pieces of furniture available at a fraction of the cost of a Natuzzi piece. Consumers now find it hard to justify spending a lot more money on a piece of furniture, because the gap in quality has shrunken so much. Natuzzi has a strong brand that consumers will always recognize. Italian made leather has a history that is unparalleled in the furniture and fashion industry. It will be interesting to see if they begin producing a new line of furniture from China or move some of their manufacturing to that country.