Malaysian furniture manufacturers appealed to the federal government not to increase the levy on foreign workers under the second stimulus plan, reported The Star. The federal government had earlier announced that the current levy imposed on foreign workers would be doubled in order to create more employment opportunities for local workers. According to the president of the Malaysia Furniture Entrepreneurs Association, Mr. Desmond Tan, the levy would have an adverse effect on the furniture manufacturing sector as most local workers are not keen to take up employment in furniture production lines. Furniture manufacturing is very labor intensive in Malaysia and its survival dependent on foreign workers. Mr. Tan said the government should reduce or abolish the levy altogether as the global recession continues to bite deeper into the industry.

Call for Second Stimulus Plan to Aid Furniture Sector

Furniture manufacturers in Muar, a major furniture manufacturing zone with 200 factories in the state of Johor, called on the federal government to put the second stimulus plan of RM60 billion to work as soon as possible. The Star reported that some manufacturers were beginning to reduce working hours as well as cut production as a result of the slowdown. RM15 million has been set aside for the timber sector’s utilization and will be managed by the Malaysian Timber Industry Board (MTIB).

Export Demand for Italian Furniture Proves Resilient

The Italian furniture sector held up reasonably well to the end of 2008 considering the scale of the economic downturn. Preliminary 2008 end-year figures suggest that Italian sales of wood furniture fell by 5.6% in 2008 compared to the previous year. Much of the decline in sales was due to a fall in the overall level of Italian domestic furniture consumption. The value of Italian wood furniture exports fell by only 2%. The likelihood is that the Italian furniture sector extended its share of the global wood furniture sector in 2008. The latest available international data indicates that the share of Italian furniture on the global market in 2007 reached 9.1%, rising from 8.9% in 2006. After the sharp upturn in overseas sales during 2006 and 2007, a 2% drop in exports is by no means a positive result. However, it is an indication that Italian furniture products remain highly competitive in international markets. During 2008, there was a severe downturn in Italian furniture exports to two markets worst hit by the credit crunch, the UK (-13%) and the US (-22%), together with Germany (-5%) and Spain (-14%). However, these losses were offset by strong gains in exports to Russia (+17%), the United Arab Emirates (+37%), and Greece (+4%). Exports to France and Austria remained stable. Two factors had a bearing on the drop in Italy’s domestic furniture consumption in 2008. On the one hand, there was a severe loss of consumer confidence during 2008 and, on the other, there was a significant slump in the real estate and rental markets even before the construction industry was hit by a sharp fall in demand. But overall, Rosario Messina, President of the Italian wood furniture association Federlegno Arredo, believes the figures are a reason for optimism. ‘This is a crisis that is being imported, quite unlike those in the past which were all linked largely to a gap in our country’s competitiveness and in part to our business system. We are stronger now: we have had time to absorb the competitive shock generated by embracing the Euro and spot exchange rates that were far from favorable to Italian exports. We have taken stock of an increasingly global market and of the difficulties inherent in true internationalization. Much still remains to be done, but businesses have responded well....the fact that Italian companies suffered to a lesser extent than others on the international markets is largely attributable to the quality of our products’. Italian furniture companies have certainly been hit by the crises and small artisan businesses in particular have registered an overall decline of 2.6% in numbers. However, employment figures have been holding up. According to Rosario Messina there are very definite reasons for this: ‘at times like these family-run businesses [which dominate the Italian furniture industry] are in a position to tighten their belts and focus on medium-term objectives. There are many cases in which families have fallen back on their own reserves during a credit crunch or a lack of liquidity and, equally, family-run businesses offer greater flexibility in terms of choice when times are hard. When entrepreneurs identify with their own businesses, they are less likely to make staff cuts, tending to view these as a last resort. This in turn avoids setting a vicious circle of consumer uncertainty and cutbacks in motion, which then rebounds on the businesses themselves’. These comments might provide some crumbs of comfort to timber importers in Italy, but it is also clear that the benefits of the furniture sector’s apparent resilience have yet to filter through to the wood trade. Trade data suggests that the Italian wood sector suffered more severely than the furniture sector during the latter months of 2008. This was due in part to widespread destocking by furniture and joinery manufacturers in response to the uncertain economic conditions and also to a sharp downturn in construction sector activity. According to Federlegno Arredo, Italian wood industry sales fell by 7.5% (an overall total of approximately 15 billion Euros) in 2008 compared to the previous year, mainly due to a decline in Italy’s internal wood consumption which plummeted by 9.1%.

Salone del Mobile Furniture Show Reflects Market Resilience

The Salone del Mobile in Milan is perhaps the most significant furniture show in the world where a huge number of exhibitors jostle for attention, many employing the services of some of the world’s top designers. In terms of sheer volume of production, Italy was recently overtaken by China as the world’s largest furniture manufacturing country. However the Italian furniture sector generally, and the Salone show in particular, continues to have a huge impact on furniture fashion trends in all areas of the world. A key part of the Italian furniture sector resilience during the global downturn has been a heavy emphasis on design and marketing. Underlining the determination of the Italian furniture sector to stay on top, or perhaps a reflection of greater desperation to generate demand during the economic downturn, this year’s Salone show boasted a huge increase in the numbers of exhibitors compared to last year. The show, which ended on 27 April, hosted 2,723 exhibitors (of whom 911 were non-Italians) and covered an exhibition area of 202,350 square meters. In 2008, there were 1,068 Italian and 230 foreign exhibitors and the overall exhibition area stood at 152,207 square meters. The key question doing the rounds of insiders in the runup to the Salone show was this: ‘How will manufacturers and designers respond to the crisis that has the world economy in its grip?’ The show’s publicists, based on their own survey of products on display, felt that the economic downturn had contributed to two contrasting trends in Italian furniture design. They note that ‘some designers and firms have striven for greater pragmatism, a more balanced relationship between object and cost and a greater focus on consumer demand. Others have sought refuge in escapism. An important element of this trend has been to link furniture design to the world of nature’. The first approach is believed to have led to an ‘unexpected return to minimal’, scaling down the decorative explosion of the last few years. There is greater emphasis on timeless objects that are built to last rather than paying lip service to passing fashions. There is an emphasis on ‘gracious’, non-aggressive designs that can ‘stray’ from one room of the house to the next. Many of the wood furniture items on show adhered to the minimalist ideal. The Dutch furniture company Arco was displaying a table manufactured 100% in wood with no metal or other elements. The simplicity of the design combined with use of real wood veneers and avoidance of other potentially expensive materials meant the product was extremely cost efficient. Another example is the Eno chair in black oak designed by Mikko Lakkonen for Covo. Other exemplars of the minimalist look in wood were the Italian FEG company, the Swiss Mobimex, and the Italian Mathias company. There was a strong preference in these modern minimalist designs either for very dark brown, often black woods, or for whitened woods. Walnut was used most extensively to achieve the darker colors. Wenge was occasionally seen, although much more typically oak was stained to achieve the black look. Ash was often painted for the white look. Another common theme was to combine a minimalist design with a more exotic finish. A simple chair or table may be manufactured in a heavily grained even stripey wood, or in plywood cross-cut to produce an interesting look. A particularly good example was the Gem 743 table designed by Gianni Astolfi and Sergio Mian for the Mathias Company in ziricote (Cordia dodecandra), a tropical hardwood from Central America. The second trend towards ‘escapism’ and ‘naturalism’ had even clearer implications for the use of wood, particularly tropical. According to the show publicists, this trend has contributed to the strong emergence of outdoor furniture (often with a dual ‘outdoor/indoor’ function). They note that ‘outdoor collections are multiplying; costlier materials and finer designs are being employed’. It was evident from the show that while tropical wood is benefiting to some extent from this trend, it now has to share the outdoor furniture sector with a huge range of other materials. Gone are the days when teak was dominant, a reflection both of a fashion for mixed materials and the increasing difficulties of obtaining high quality large dimension teak. Much of the outdoor furniture on display at the Salone show was manufactured from plastic, steel, aluminum and fabric. Alternative woods were also being used for exterior furniture. The Belgian company Tribu was promoting a new line of garden furniture made of painted acacia wood. Schonhuber Franchi now combines teak with aluminum and is also promoting a line of aluminum/palissandro products. Fornasarig was displaying outdoor furniture by Japanese designers Shinibu and Setsu in treated oak chosen primarily for its ability to produce curvatious designs. Gloster, while maintaining their strong loyality to teak, were introducing a new design which combines the tropical wood with copious quantities of soft material for a more comfortable look. The concepts of ‘escapism’ and ‘nature’ were also major influences in the indoor furniture sector. While designers were interpreting these themes in a huge variety of ways, certain threads tended to be repeated, such as the widespread use of natural fibers and reclaimed materials, and of non-geometric ‘rough’, ‘ethnic’ and ‘rural’ designs. The Italian Riva company was particularly firm adherents to the ‘natural’ concept. Their stand was dominated by a huge timber board 12 meters in length and 2 meters wide carved from a New Zealand kauri tree (agathis australis). The theme of the stand was ‘eco-design’, Riva having brought together around 20 of the world’s top furniture designers to create unique furniture, all in real wood. The company claims to use only sustainably managed woods – although interestingly there was no reference to any specific sustainable forestry standard or labeling system such as FSC or PEFC (in fact no-one seemed to be visibly promoting either of these labels at the show). Instead, Riva emphasizes its heavy reliance on American hardwoods. All the products on display were manufactured in American black walnut. Generally, tropical timbers were not strongly featured in the visual elements of indoor furniture displayed at the show. The only exception was Indian rosewood (Dalbergia latifolia) used widely in veneer form to produce a highly exotic and glossy striped finish on more classic furniture lines. There was a little teak favored for the darker brown grainy look which is currently in fashion. In line with the ‘natural’ and ‘rustic’ themes, there were also a few companies displaying furniture in reclaimed teak. Tropical redwoods appear to be very much out of fashion in the European furniture sector. But closer examination of some furniture items revealed a bit of tropical wood under the skin. For example, mahogany was occasionally being used for frames in high quality classic furniture lines where it is valued for its strength and stability.

Sharp declines in Brazilian furniture exports to Argentina have been appearing, similar to a cycle observed in 2000 and 2001. This has been caused by a strong deceleration of the Argentinean economy, noted Gazeta Mercantil. The Association of Furniture Companies of Rio Grande do Sul (MOVERGS) reported that in the first bi-month of 2009, Brazil’s exports to Argentina were 51% less than the same period of last year (USD6.4 million in 2009, compared to USD13.1 million in 2008). This was the worst fall since 2004. The average annual growth in exports to Argentina between 2004 and 2008 was 72% per year. However, the average drops to 39.5% if the first two months of 2009 are included. The annual average growth rate of Brazilian furniture exports between 2004-2008 was 10.6%, but if including results from the first two months of 2009, it slows down to only 2.1%. Additionally, a new trade rule in Argentina requires importers to have an import license for Brazilian furniture products, which is considered to some a new obstacle in the bilateral relationship. The measure has been the subject of negotiation between the governments. Venezuela has already adopted the license system and Ecuador has recently increased import tax from 24.5% to 60.5%. These markets do not have enough mills to meet their demand. One-third of shipments of Brazilian furniture go to the European Union (EU). However, the situation there is not unlike that in Argentina. In the first two months, exports to France decreased 38.6%, 19.1% to the United Kingdom, 11.1% to Germany, 11.5% to the Netherlands and 50% to Spain. Brazil closed its January-February balance with a 31.7% drop in furniture exports over the same period of 2008 (USD96.5 million against USD141.2 million in 2008).

Business Events Expected to Generate Nearly USD13 Million for Furniture Exporters

The ‘International Purchaser Project’ Fair, held from 10-12 March at the Movelpar 2009 Furniture Fair in the state of Paraná, promoted 402 businesses among 20 importers and 48 furniture manufacturers, fair exhibitors and participants, and was organized by Apex Brazil and ABIMOVEL (the Brazilian Furniture Association). Research conducted among importers from 17 countries at the Movelpar Fair indicated 75% of the meetings resulted in prospects for future business, estimated at USD12.9 million by value. A survey among the furniture producers indicated deals closed at the end of the business rounds were worth about USD3.8 million. Portal Moveleiro has reported that one of the main obstacles for furniture manufacturers to overcome is the export crisis. Recently, Brazil has had to undertake measures to maintain its competitiveness in international markets. In recent months, the federal government had been asked to reduce taxes on particleboard imports to maintain the furniture sector’s competitiveness. Additionally, ABIMOVEL is establishing a partnership with design professionals to produce high quality furniture in order to heighten its competitiveness in the international market. To some, Brazil is considered to be more competitive than China in the international furniture market, since Brazil is known for having higher raw material quality and design. According to ABIMOVEL, Chinese furniture is more expensive due to a number of factors, including freight costs for exports and a reduction in the weekly working hours now set at 40 hours, whereas Brazilian workers clock over 44 hours. Brazil exports about 10% of its furniture production. According to the Federal Secretary of Foreign Trade (SECEX), furniture exports fell 1.7% in 2008 compared to 2007. In January 2009, it dropped 27.4% compared to January 2007. Despite these negative indicators, there is a prospect of a 5% increase in sales to the domestic market and a 3% rise in sales to the international market. ABIMOVEL is also requesting the federal government reduce tax on industrialized products (IPI) from 10% to 5% and to include the furniture sector in the Growth Acceleration Program (PAC) for housing, which is expected to cost about BRL90 billion by 2010.

Furniture manufacturers of several states will have a rough indication of 2009 production from a local furniture fair in Arapongas, a furniture cluster located in the Northern part of the state of Paraná, the second largest furniture producing area in Brazil. Large retailers of the country and 23 importers will attend the Movelpar furniture fair in Arapongas, where 190 exhibitors are expected to participate. The target is to reach BRL 400 million in trade deals, 30% more than the 2007 Movelpar fair. According to the Brazilian Association of Furniture Companies (ABIMOVEL), the revenue of the furniture sector increased from BRL 22 billion in 2007 to BRL 27 billion in 2008 due to an increase in domestic market demand, which showed positive trend in the first nine months; although this trend reversed after September 2008. Production decreased 16.2% in December 2008, contributing to a 1.3% decrease over the year and a reduction in the number of employees by 11.9%.

Currently, nearly 10% of domestic production is exported, with overall exports expected to be lower in 2009. Nevertheless, there is a strong optimism from producers that figures for furniture exports will improve in 2009, with some projecting growth of 3% to 5%. According to ABIMOVEL, gains for the sector are expected in the second semester.

Guangdong Furniture Enterprises Generate USD10.2 Billion In 2008

The total output value of the Guangdong forestry industry in 2008 totaled RMB140.4 billion Yuan. The total value of Guangdong foreign trade amounted to USD15.754 billion. Of the total, the value of exports was USD10.227 billion and the value of imports was USD5.527 billion. According to official statistics, there are 20,000 factories and 2 million employees engaged in timber processing in Guangdong. There are 6,000 furniture enterprises with RMB5 million Yuan of annual sales revenue. The total output value of wooden and bamboo furniture from Guangdong exceeded RMB100 billion Yuan in 2008, making up 30% of the national total. According to the statistics from Gongbei Customs, the value of furniture exports through Guangdong Port rose 24% to USD800 million when comparing monthly figures from January 2009 to February 2009. The US was still the largest destination market for Guangdong furniture and the value of furniture exports to the US grew 11% to USD370 million, making up 46% of Guangdong’s total exports. In addition, the value of furniture exports to Hong Kong increased 29% (USD180 million), and jumped 49% to the EU (USD130 million).