World furniture production amounted to over USD 400 billion in 2018

The CSIL World Furniture Outlook seminar takes places every year in conjunction with Salone del Mobile Milano. The meeting, which reached its 16th edition this year, represents a unique chance for furniture players to be updated on the sector current trends and on its future perspectives.

The traditional format of the seminar meant a ninety-minute- long focused discussion with a panel of eight qualified speakers from different countries providing market insights to an audience of over 100 furniture manufacturers, suppliers and sector related companies and institutions.

The seminar was chaired by Giovanna Castellina, International Marketing Director, CSIL. Following her opening remarks, the seminar kicked off with a talk by Alessandra Tracogna, Senior partner, CSIL, who provided the outlook for the furniture sector and highlighted the key issues affecting the industry.

Her message was that furniture production is growing at a global level, with some countries and areas growing faster than others and being more competitive on the international markets.

According to CSIL figures presented, world furniture production amounted to over USD 400 billion last year, up 3 percent on the previous year and cumulatively growing by 25 percent in the last decade.

Tracogna pointed out that Asia Pacific stands out in a global comparison, with over half of world production taking place in the region, and with China getting the lion’s share with over 70 percent of the regional production. However, the speed of Asian production growth has somewhat decelerated.

The regional context is registering increasing competition within the area and on export markets (Vietnam is growing faster than China) and the industry is facing some common challenges in furniture production affecting the producers’ competitive advantages.

Linda Tu, Vice Secretary General, China National Furniture Association (CNFA) and Vice Chairman and Secretary General of Council of Asia Furniture Associations (CAFA), highlighted the main pillars of the Made in China 2025 strategy, which is aimed at building a platform for innovation in manufacturing with a focus on themes like: smart manufacturing and green approach.

She also reported on the main issues the Chinese furniture industry is facing.

Among them: competition from other Asian suppliers, increasing production and logistic costs and technical barriers, as the enhancement on environmental requirements, on export markets.

It was also mentioned that the national association is working on reinforcing cooperation with partners worldwide both by boosting an extreme powerful fair system in China and by carrying out several bilateral initiatives abroad.

Within Asia, Vietnam is also an important player. According to CSIL data, it is the fifth largest furniture exporter in the world and a fast-growing producer in Asia (the Vietnamese speed of production growth is higher than the Chinese one).

As reported by Nguyen Quoc Khan, Chairman of the Vietnamese Handicraft and Wood Industry Association, the furniture industry can count on a positive macro context and an increasing inflow of Foreign Direct Investments as well as on some sector specific comparative advantages including wood availability and competitive labor.

Vietnam signed the Voluntary Partnership Agreement (VPA)/FLEGT in May 2017 and the National Assembly promulgated the revised Forest Law in November 2017, creating a fundamental change in legal timber awareness.

In closing, Khan stated that Vietnam is confident in producing wooden furniture for the world from legal timber.

Despite the growth in Asia, Europe is still a leading player in the furniture industry, being the second largest producing region in the world. According to CSIL estimates presented at the seminar, the region accounts for around one quarter of the total sector output (it was around 40 percent a decade ago).

According to Roberta Dessì, Secretary General of European Furniture Industries Confederation (EFIC), the European Union furniture sector employs over 1 million people in almost 200,000 companies, mainly SMEs.

Alexander Oswald HDH-VDM, National Confederation of German Woodworking and Furniture Industries, provided an insight on the current situation in Germany, which is the largest European market. The country is the first manufacturer and exporter in the European Union (followed by Italy and Poland).

Despite a lower number of companies and employees within the sector in the last decade, the sector turnover exceeds pre-crisis level.

Stagnation on the domestic market was reported due to several factors including: an aging population, point towards increased growth: new dwellings and consumer confidence are at record level on the domestic market, and unemployment is at historically lowest level.

Investment in furniture production is increasing and the Polish Furniture Flagship Program that was briefly presented aims to boost production optimization and automatization (to be more competitive); to favor consolidation and M&A (to overcome the limits of small size of companies); and to increase innovation in design, functionality and materials (to create value added).

A focus on the European market was also provided by Mauro Spinelli, CSIL senior partner, who outlined the opportunities arising in the contract market, quantifying this sector and highlighting the main market trends.

The production of contract furniture and furnishings in Europe was worth around EUR 10 billion in 2017, whereas consumption amounted to about EUR 7.7 billion according to the latest brand research issued by CSIL. Hospitality, office, real estate, marine and restaurants were the fastest growing segments and performed above the European average. Retail and Education increased at a slower rate.

North America emerged in CSIL world picture for its recent positive performance. Furniture production has been increasing in the last five years (growing faster than in Europe). The U.S. was the driving force of the area, driven by the positive performance of the U.S. market.

Local sources seem to be optimistic for the coming years, even if issues related to trade policy of the US administration constitute an important element of uncertainty weighting on the scenario. Expectations are that 2018 will see retail sales of furniture and mattresses continuously growing, even at higher rates than in 2017.

Another element confirming the positive and healthy status of the U.S. furniture sector came from Randy Fiser, CEO at ASID, American Society of Interior Designers, who provided an insight into the interior design industry in the US.

His presentation focused on this industry, which generated a turnover of around USD 10 billion last year and is set to grow, according to estimates, year after year up to 2019 in all the main sub-segments: office, hospitality, retail, education and healthcare.

Still, some concerns were expressed on the negative impact on the U.S. economy of a ‘possible trade war’.

The overall global perspective, from CSIL forecasts presented to the audience, is positive for the coming years with the furniture market growing at a 3 percent yearly rate (in real terms) up to 2020. Fastest growing regions are Asia Pacific, followed by North America, the Middle East and Africa.

Furniture and furniture components are increasingly traded on a world scale. Currently, international trade is worth around USD 140 billion according to CSIL estimates and is set to grow in the coming years up to 2020. This is an important engine for sector growth.

The main drivers are: the presence of international value chains, the global sourcing strategy operated by leading retailers and manufacturers and the increasing import penetration in several markets.

On the other side, the uncertainty of trade policies and the presence of tariffs and technical barriers are seen as the main obstacles.

The seminar concluded with a final remark by Giovanna Castellina, who recapped the global dimension of the furniture sector, as a playing field where sector strategies should be aimed at facing the arising challenges and supporting companies in strengthening their competitive advantages.

Be the first to comment

Leave a Reply

Your email address will not be published.