Romania Furniture Industry

Transcription

1 This work shows the evolution of Romanian furniture industry during with a special chapter of foreign trade covering the period between 2003 and Romania has an area of 238,391 km 2 of which 26.7% is covered with forests (70% in mountainous area). The most outspread wooden species is beach (32.3%) followed by coniferous (30.4%), and oak (17.1%). The origins of Romanian wood-processing industry date back to Through 1915, there were in operation 12 furniture factories and 70 joineries and by 1944, 73 furniture factories and 86 joineries, respectively, which manufactured doors, windows, and pieces of furniture. New furniture factories endowed with innovative equipment started manufacturing and trading operations after 1950 and by 1990, there were 497 furniture factories as part of a large group of wood-processing enterprises. After 1990, those huge enterprises were restructured into trading companies. The wood-processing industry has been shaped on the principle of fully processing the national wood stock, only some sorts of wood like oak, sweet cherry, walnut, and exotic species being necessary to fetch from abroad. The wood-processing industry has a significant status within national economy due to some special reasons: important industrial branches are in need of wooden products, which are ecological and available for ecological recycling, and also hold an important share in trade. During the analyzed period, the value of furniture output and other unclassified activities has scored a constant rise from RON million, through 2002, to RON million through 2007, current prices. The whole range of assortments was well represented and included furniture for dwellings, shops, and socio-cultural areas, office and school furniture, reproduction furniture inspired by the old style as well as modern furniture, meeting the needs of customers on domestic and foreign markets. The structure of Romanian furniture assortments consisted of: bedroom furniture 12.5%, dining-room furniture %, office furniture - 2.6%, upholstered furniture - 7.7%, kitchen furniture - 2.8%, chairs %, small furniture - 22%, and other assortments %. Over 50% of the furniture output was made of beech wood, 20% - oak, 15% - coniferous species, and the rest of other wooden species. Romanian Trade Promotion Center,

2 General overview of the wood-processing industry The Romanian wood-processing industry benefits from a diversified wood stock and enjoys a long tradition and experience resulting in constant streamlining and improvement. The wood-processing industry covers the following sectors: -Wood exploitation and transport; -Production of timber, wooden parts, and panels; -Production of wooden semifabs such as laminated wooden panels (chipboard, fiberboard, hardboard, plywood, panel), and veneer; -Production of wooden building parts such as formwork, framework etc; -Production of wooden packaging: industrial cases, containers, and pallets; -Production of furniture, pencils, matches, musical instruments, sport articles, boats, and other wooden end-products; -Production of tools and equipments for wood processing. Between 1989 and 2007, the gross volume of wood stock had an oscillating evolution and went down by 11.5%, from 19,464 thousand m 3 in 1989 to 17,238 thousand m 3 in Wood stock in the economic circuit* (at end of the year), over the period Thou. m 3 gross volume - Total Coniferous Beech Oak Hard Soft species species Source: NIS, ROMANIAN ENVIRONMENT, 2002 Ed.; Romania s Statistical Yearbook, 2008 Ed. Note: **wood stock for economic circuit = gross volume (standing trees) offered to economic units for exploitation based on exploitation license and task book provided by the forestry units. Romanian Trade Promotion Center,

3 General overview of the furniture industry The furniture industry in Romania enjoys a well-known tradition based on several favorable premises, such as: indigenous raw materials, which are being fetched from short distances; relatively low prices of the raw wooden materials; low cost of the labour force as against its qualification level (highly qualified and experienced personnel, capable to adapt to modern, technical and managerial requirements); high share of exports within total output, and, consequently, a slight dependence on the home market evolution during periods of recession; the existing production capacities can constantly turn efficient by up-grading; due to sector s specific features, it will be possible to set up new units with small or medium-sized production capabilities, located next to the source of raw materials; preservation of some foreign traditional markets. The persistence of certain factors, which were solved but partially, influenced the development of furniture industry, which has slackened over the last decade. Moreover, the financial crisis has inflicted a rather big impact on Romanian economic sector starting the Q4 of The furniture industry makes no exception and has to face severe challenges such as the shrinkage of demand with negative consequences upon employment. Furniture output Between 2002 and 2007, the value of furniture output and other unclassified activities had an oscillating evolution with a top level in 2007 (RON million) and a bottom level in 2002 (RON million). Through 2007, the value of furniture output and other unclassified activities accounted for 3.1% of total output of Romanian manufacturing industry and for 2.5% of total industrial output, respectively. Romanian Trade Promotion Center,

4 At the level of the year 2002, the furniture output (and other unclassified activities) had a share of 2.6% in total industrial output and 3.4% in total output of Romanian manufacturing industry. The average number of employees has been diminishing year-onyear coming to 97 thousand in 2007, an 8.5% reduction as against 2003, when it was a peak year. The average number of employees accounted for 6.9% of total labour force of Romanian manufacturing industry and for 6.0% of total labour force of Romania s industry. Although the investments in the furniture industry and other unclassified activities reached RON million current prices in 2007 (+79.5% against 2002), the share in overall investment in industry went down from 2.6% in 2002 to 1.8% in the last year of the analysis. Industrial production by NEAC activities, during the period Million RON - current prices INDUSTRY- TOTAL, of which: Manufacturing, of which: >Wood processing (excluding furniture) >Furniture and other unclassified activities Furniture Source: NIS. Romania s Statistical Yearbook, 2008 Note: data not available Domestic consumption By 2008, the total expenditures/month/household stood on an average of RON compared with in the prior year and practically matched the total income (89.8% and 91.4%, respectively). Out of total money expenditures, 71% were allocated to consumption. The average total money expenditures/household, allocated for consumption reached RON Through 2008, the expenditures of a household for purchasing food and non-food goods and services had a share of 61.9% of total expenditures (RON ). The other share of total money expenditures allocated for consumption, i.e. the expenditures for in-house food and non-food products stood at RON per household and had a share of 9.4% of total expenditures. The dynamic of consumption expenditures had an upward trend. Romanian Trade Promotion Center,

5 The expenditures for non-food goods scored the most significant increase (+18.9%) and were followed by the expenditures for food goods (+12.8%), and for services, respectively (+12.7%). The expenditures for non-food goods had a share of 30.3% of total expenditures in 2007 and 31.5% in 2008, and amounted to an average of RON per household, of which the expenditures for purchasing furniture and articles thereof amounted to RON 10.1 per household. The income groups, residence area, and professional status of the head of the family made quite an impact on these expenditures. From the total expenditures of a household allotted to furniture and articles thereof, RON 9.6 was for furniture. The expenditures for purchasing furniture and articles thereof stood at RON 12.9 in urban area, out of which only for furniture RON 12.1 within urban area and, respectively, at RON 6.5 and RON 6.3 within rural area. The accession of Romania to the European Union, on the 1 st of January 2007, provided the main stimulus to consolidating the domestic market. Therefore the demand of consumer goods will increase concurrently with the improvement of living standards. The national strategy of economic development of Romania on medium term is seeking to create the prospects for economic recovery and to cease the decline. The macroeconomic policies for structural adjustments are expected to influence the switch of trend in terms of domestic market demand. The government policies of increasing the real salary and relaunching the construction sector will lay the grounds for expanding the domestic consumption of furniture, on the Romanian market. Foreign trade in furniture The furniture export flows are by tradition directed towards the EU markets. The use of new technologies for producing solid wood panels for furniture and multi-layer parquet entailed the growth of exports on the EU market, over the last years. The import operations include some raw materials (timber and veneers of oak, sweet cherry, walnut etc, paper covered panels), auxiliary materials (varnishes, adhesives), metal fittings, equipment and spare parts, as well as some finished items, in a smaller quantity, for meeting customer s demand. Those items are locally missing or are not being produced in sufficient quantities. The Romanian furniture industry is one of the few local industrial branches with small imports as compared to exports. In 2008, the share of exports/imports of furniture in Romania s total exports/imports was 3.3% and 0.9%, respectively. Romanian Trade Promotion Center,

6 The figures in the table below show us that the furniture exports have increased from million in 2003 to million in The imports of furniture have advanced from a dip of million in 2003 to a peak of million in The evolution of Romanian foreign trade in furniture and parts thereof, during the period thou Exports (FOB), of which: 698, , , , ,133, ,117,535.7 Chairs even transformable into beds and parts thereof (HS code 9401) Mattress supports; articles of bedding, sprung, stuffed, etc (HS code 9404) 135, , , , , , , , , , , ,979.5 Other furniture and parts thereof (HS code 9403) 552, , , , , ,439.1 Import (CIF), of which: 123, , , , , ,874.5 Chairs even transformable into beds and parts thereof (HS code 9401) Mattress supports; articles of bedding, sprung, stuffed, etc (HS code 9404) 25, , , , , , , , , , , ,986.7 Other furniture and parts thereof (HS code 9403) 94, , , , , ,064.4 Balance, of which: 575, , , , , ,661.2 Chairs even transformable into beds and parts thereof (HS code 9401) 110, , , , , ,293.7 Mattress supports; articles of bedding, sprung, stuffed, etc (HS code 9404) 5, , , , , ,007.2 Other furniture and parts thereof 458, , , , , ,374.7 (HS code 9403) Source: NIS, Romanian Statistical Yearbook 2008; NCA The balance of trade with furniture and parts thereof has been positive and increasing each year (from million in 2003 to million in 2008). The geographical orientation of Romanian exports of furniture, through 2008, was as follows: three countries were main target markets i.e. Germany, France, and Italy (a 49.6% share of total exports of furniture). The top ten countries targeted by the Romanian furniture exporters were: Germany (20.0%); France (19.7%); Italy (9.9%); United Kingdom (7.7%); the Netherlands (5.3%); Austria (4.8%); Belgium (4.3%); Hungary (3.5%); Sweden (3.0%), and Spain (2.7%). Those countries held a total share of 80.9%. Romanian Trade Promotion Center,

7 Sweden 3.0% Spain 2.7% Others 19.1% Germany 20.0% Hungary 3.5% France 19.7% Belgium 4.3% Austria 4.8% Netherlands 5.3% United Kingdom 7.7% Italy 9.9% The geographical orientation of Romanian imports of furniture, through 2008, was as follows: Italy (21.4%); Poland (16.4%); China (14.2%); Turkey (10.4%); Germany (7.7%); France (4.8%); Hungary (4.5%); the Czech Republic (2.1%); Austria (1.9%), Greece (1.5%). Those countries held a total share of 84.9%. Three countries were main import partners i.e. Italy, Poland, and China (a 52.0% share of total imports of furniture). Austria 1.9% Greece 1.5% Others 15.1% Italy 21.4% Czech Rep. 2.1% Po land 16.4% Hungary 4.5% France 4.8% Germany 7.7% Turkey 10.4% China 14.2% Current situation and prospects The wood-processing industry is a prominent element of the national economy, which allows a highly turning into account of the most important natural and regenerable resource of the country, which has a positive contribution to the foreign trade balance due to its very high level of covering the imports by exports. Romanian Trade Promotion Center,

8 Alongside with the other industrial sectors the furniture industry has to address the current economic and financial crisis and its negative outcomes such as market volatility, liquidity crunches, rising unemployment and downturn in export demand. Providing that furniture industry will overcome the difficulties generated by reorganization and will take advantage of the implementation of a coherent strategy at macroeconomic level, the furniture output should undergo a recovery. At present, the Ministry of Small and Medium Enterprises, Trade and Business Environment has initialized the process of building a new National Export Strategy over the next period , by engaging in action both the private and public sector i.e. the associative framework of the business environment and the official decision makers. After Romania s accession to the European Union, on the 1 st of January 2007, the furniture industry derives the advantages from the Community specific policy for SMEs a policy of promoting the entrepreneurship and a SMEs-friendly business environment. As a result, the Romanian SMEs engaged in furniture business have free access to EU projects and financial instruments on the Single Market of the European Union. There are some 23 million SMEs in the European Union, providing around 75 million jobs and accounting for 99% of all enterprises. SMEs are a key part of European industry, not least as they contribute up to 80% of employment in some industrial sectors, such as textiles, construction or furniture. (Source: Implementing the Community Lisbon Programme Modern SME Policy for Growth and Employment (COM (2005) 551 final of ) Europe s small and medium-sized entreprises are the motor of the European economy and the main drivers for achieving sustainable growth and more and better jobs to the EU economy, two of the major objectives of the Community s Lisbon Strategy. The Commission is therefore committed to promoting entrepreneurship as a means of creating and nurturing strong SMEs across all industrial sectors. In 2005, with the Communication Implementing the Community Lisbon Programme Modern SMEs Policy for Growth and Employment (COM (2005) 551 final of ), the European Commission tabled a new, more pragmatic, comprehensive and inclusive policy for Europe s SMEs. The Commission s approach puts particular focus on more systematic consultation and cooperation with SME stakeholders to involve them in the policymaking process at an early stage. The Commission proposed to Romanian Trade Promotion Center,

9 integrate the Think Small First principle into all policies both at the national and EU level to make them truly SMEs friendly; it is also committed to simplifying regulations and ensuring that the forthcoming legislation does not inhibit SMEs growth and innovation potential. This approach is complementary to other policy instruments for the promotion of entrepreneurship and SMEs already in place, such as: The European Charter for Small Enterprises; The SMEs Envoy, which is the Commission s key interface with the SMEs community, and coordinates the EU policies and activities for SMEs; Enterprise Europe Network: launched in February 2008, this new European Commission initiative offers entrepreneurs a one stop shop where they can seek advice and benefit from a wide range of easily accessible business support services. To facilitate SMEs access to finance, the Commission analyses market trends, develops policies and provides financial instruments which are accessible through national financial intermediaries. It contributes to the exchange of good practices in enterprise finance and works to improve the relationship between financial institutions and SMEs. Special attention is paid to crafts, small businesses, and target groups to promote these categories of business and entrepreneurs (such as women entrepreneurs, young entrepreneurs, and entrepreneurs from ethnic minorities) as well as to the enterprise issues regarding the social economy. As of January 2007, some of these activities are brought together under the Competitiveness and Innovation framework Programme (CIP) This programme is the successor of the multiannual programme for Enterprise and Entrepreneurship (MAP) for The CIP aims to promote innovation and foster the competitiveness of European businesses, particularly SMEs; accelerate the development of a sustainable, innovative and inclusive information society, and promote energy efficiency and new and renewable energy sources and eco-innovation. Designed to be complementary to the Seventh Framework Programme for Research and Technological Development (FP7), it includes three specific programmes, one of which is the Entrepreneurship and Innovation Programme (EIP). Finally, regional and local authorities are being encouraged to create a favourable environment for business, in particular small and medium-sized enterprises, and recognise the best initiatives with the European Enterprise Awards. Romanian Trade Promotion Center,

10 In June 2008, the European Commision endorsed the "Small Business Act for Europe" whose main aim was to set principles and concrete measures to improve the framework conditions for European SMEs. Key areas of intervention: Better regulation for the benefit of SMEs, putting SMEs at the forefront of the society, facilitating SMEs access to markets, supporting SMEs access to finance, skills, and innovation, turning the environmental challenges into opportunities for SMEs, and enhancing the implementation of EU SMEs policy principles. Conclusion The accession to the EU will continue to speed up the economic growth and social development of Romania. All the industrial sectors and the furniture sector in particular are in great need of a public bail-out plan consisting in a package of measures for supporting the economic growth and for boosting the exports and investments. Romanian Trade Promotion Center,