17 - 23 August 2000

The international dimension of the furniture market

The Sectoral Analysis Report on the Maltese Furniture Industry looked at the international furniture market, identifying trends and their implications for the Maltese industry.

The report found that the international furniture market is still dominated by developed countries, in both output and demand.

These countries consume 78 per cent and produce some 74 per cent of the Lm64.4bn market. The EU (with 42 per cent of output) and USA (18 per cent) are the main regions.

Riding on the back of a healthy US economy, a Europe emerging from recession, faster than expected recovery of the Far Eastern economies and the opening of new markets, world furniture consumption is increasing, and forecasts for 2000 - 2001 are looking good.

There is an increase in "global" transactions, with more furniture being sold outside the region of production.

The bulk of the international market - at both the low and high ends - is dominated by panel technology and wood composites. In Italy, panel technology accounts for up to 90 per cent of all furniture produced.

Panel technology and wood composites offer a number of advantages: quality is high as the technology has matured over the past 20 years; quality is consistent; the composites can be treated to be fire-proof or flame retardant, or water resistant, and with a variety of finishes; and panel technology allows mechanisation and automation of the production process thus cutting costs.

Additionally, the market is changing from product-based to system-based competition at all levels of the value chain, led by the distribution end of the business.

This means that, in distribution, that retailers are adding services like car parks and child-care facilities to make the shopping experience easier and cheaper, and that manufacturers concentrate on improving delivery times and reliability.

Manufacturers are also supporting retail by advertising. The emphasis is on making the purchase easier and making delivery quicker and more reliable.

Impact of the EU

The acquis communautaire will affect the way business is done,

and the furniture sector is no exception.

Enterprises in the furniture sector will mostly be affected by the enforcement of existing legislation on health and safety and product liability.

The more restrictive directives on the environment will also impact enterprises, possibly requiring changes in the practices of individual enterprises.

The impact of the adoption of the common external tariff is not likely to be great, given the high share of imports and exports with the EU and the relatively minor changes in existing tariffs on non-EU originating products and raw materials.

Funds from the EU will be mainly available post-accession, though Malta will be able to participate in the Leonardo and FP5 programmes as of this year.