Furniture industry should seek strategic alliances - IPSE report

by Franco Aloisio

A report to be published next month by the Institute for the Promotion of Small and Medium Sized Enterprises (IPSE) on the Maltese furniture industry has proposed the setting up of strategic alliances between several furniture companies and individual operators.

These alliances are seen as part of a wider strategy by means of which the furniture sector would be able to survive present and future challenges including the removal of protective levies. Such alliances would, for example, include the joint tendering for furniture work both in Malta and overseas.

The furniture industry in Malta is very labour intensive and there has been concern that the sector would not be able to withstand the removal of protective levies, resulting in redundancies. Forming alliances, or even merging, could be one way of becoming more competitive and withstanding foreign competition. The number of furniture companies has increased over the last years and some observers believe that the Maltese market is too crowded.

A consortium made up of several individual carpenters was formed last year in order to be more competitive and be in a better position to export locally-produced

furniture.

Joe Vella Bonnici, the chief executive officer of the IPSE, confirmed to The Malta Business Weekly that the report has been completed and will be published in March. A series of meetings will take place in order to explain the findings of the report to the public, especially those directly involved in the furniture sector.

This study was the first to have ever been assigned by IPSE. The report was prepared by the local consultancy firm Economic Management Consultancy Services (EMCS) and the Italian consultancy firm CAST Consulting Srl. which has offices in Italy, Germany, US and China and has wide expertise in many areas, including the furniture industry.

The study focuses on the repositioning of the Maltese furniture industry in the light of economic restructuring. Mr Vella Bonnici told The Malta Business Weekly the report evaluates the present scenario in which the local furniture manufacturing sector is operating.

He said it outlines the challenges ahead for the sector and the impact of certain macro-economic changes such as the lifting of levies on furniture imported from abroad. While the study will not identify specific solutions, it highlights the future strategy for the survival of the furniture industry.

Mr Vella Bonnici said that each firm will reach its own conclusions from this report.