|
Report
from
Europe
EU furniture production declines while imports rise in
2012
The share of imports in total EU wood furniture supply
peaked at 16% in 2010 and then fell away again to 13% in
2011 (see February 2013 report). Eurostat has yet to
publish furniture production figures for the whole of the
EU in 2012, however the data already available suggests
that import penetration rebounded again last year.
The Eurostat index of furniture production in the EU,
which was rising in 2011, fell throughout the course of
2012 (Chart 1).
However the total value of EU27 wood furniture imports
(from outside the EU) increased by 3.8% to euro5.39
billion (Chart 2).
In 2012, EU imports of upholstered seats increased 10.1%
to euro1.47 billion, dining/living room furniture increased
4.8% to euro1.15 billion, bedroom furniture increased
7.2% to euro750 million, and office furniture increased
1.7% to euro180 million.
These gains offset a 6% decline in imports of nonupholstered
seats to euro430 million and a 1% decline in
all other wood furniture categories to euro1.42 billion.
Falling furniture production in Italy, Poland and France
during 2012
Furniture production trends at national level in several
leading manufacturing countries indicate that overall EU
production is likely to have fallen last year.
According to CSIL, the Italy-based furniture industry
research organisation, Italy maintained its position as the
EU＊s largest manufacturer of furniture during 2012 despite
a 10.5% decline in production value to euro18.14 billion.
Imports fell 10% to euro1.58 billion and exports increased
by 0.7% to euro10.51 billion. Apparent consumption fell
by 19.4% to euro10.28 billion.
Data from the consultancy firm B+R indicates that the
value of furniture produced in Poland, the EU＊s third
largest manufacturer, declined last year. B+R report a
7.3% fall in Polish production value to PLN29.4 billion
(euro6.91 billion).
B+R suggest that declining production value was mainly
due to a fall in demand from large commercial and public
sector clients in Poland. By contrast, Polish furniture
exports are estimated to have risen by around 3% last year.
France, Europe＊s fifth largest furniture manufacturing
country, also slowed in 2012. According to information
jointly compiled by the French trade associations FNAEM
and UNIFA, and the IPEA research institute, turnover in
the French furniture sector declined 3% to euro9.54 billion
in 2012.
Turnover fell in nearly all sectors of French furniture
manufacturing including cabinets (-3.9% to euro3.28
billion), kitchens (-1.6% to euro2.38), upholstery (-4.7%
to euro2.33 billion), bathroom furniture (-2.9% to euro270
million), garden furniture (-1.8% to euro140 million).
These falls were slightly offset by 0.5% growth in the beds
and mattresses sector to euro1.14 billion.
German furniture sales increase 1.3% in 2012
There was better news from Germany, Europe＊s second
largest furniture manufacturer. According to the German
Federal Statistics agency, sales of furniture (excluding
mattresses) manufactured in Germany increased by 1.3%
to euro16.28 billion in 2012.
Sales of home furniture increased by 0.3% to euro8.46
billion, kitchen furniture increased 3.9% to euro4.20
billion, and shop and other contract furniture increased by
4.5% to euro1.62 billion. These gains offset a 2.1%
decline in sales of office furniture to euro3.62 billion.
German furniture production was rising strongly across all
sectors in the first half of 2012 but then slowed again in
the second half of the year.
Intra-EU versus extra-EU furniture trade
Chart 3 shows the ratio of extra-EU imports to intra-EU
imports for wood furniture product groups.
The ratio provides a measure of the extent to which EU
importers of these products are dependent on suppliers
outside the EU relative to suppliers inside the EU.
In 2012, extra-EU imports of all wood furniture products
of euro5.39 billion compared to intra-EU imports of
euro13.43 billion, a ratio of 0.40.
This compares to 2011 figures of euro5.20 billion for
extra-EU imports and euro13.54 billion for intra-EU trade,
a ratio of 0.38. This trend suggests a slight increase in EU
market penetration by non-EU manufacturers during 2012.
In 2012, market penetration by external suppliers
rebounded particularly strongly in those sectors which are
already relatively dependent on manufacturers outside the
EU 每 the bedroom, dining/living room, and upholstered
seating furniture sectors.
However market penetration by external suppliers in 2012
was low and declining in the shop, office, and kitchen
furniture sectors.
EU27 furniture imports by supply region and
destination
Chart 4 highlights the extent to which China has come to
dominate EU imports of wood furniture products. During
the period 2008 to 2012, China＊s share of EU import value
increased from 49% to 55%.
During the same period, the share of imports from other
Asian countries fell from 32% to 29% and share from
Latin America fell from 4% to 2%. Share of imports from
the CIS region, Africa, and North America have been
negligible during this period.
However, non EU European countries maintained share of
around 10% import value throughout the 5 year period.
Over the last five years, a rising share of wood furniture
imported into the EU has been destined for just three
countries: the UK, Germany and France (Chart 5). In
2012, the UK accounted for 31% (euro1.69 billion) of all
EU imports, Germany for 18% (euro1.00 billion), and
France for 15% (euro840 million).
Between 2011 and 2012, import value increased by 13.8%
into the UK, 4.1% into Germany and 10.3% into France.
EU wood furniture imports from China
EU imports of wood furniture from China increased by 8%
to euro2.97 billion in 2012. This partially reversed a 13%
decrease in imports from an all-time high of euro3.16
billion in 2010 to euro2.75 billion in 2011.
Between 2011 and 2012, the EU recorded a rise in imports
from China of upholstered seats (+11.7% to euro1.02
billion), dining/living room furniture (+8.8% to euro590
million), bedroom furniture (+14.4% to euro370 million),
and office furniture (+3.0% to euro80 million).
However in 2012 there was a 5.5% decline in EU imports
of non-upholstered seats from China to euro150 million.
EU＊s 10 largest wood furniture importers in 2012
Chart 8 shows total imports of wood furniture by 10 EU
Member States, including imports from both inside and
outside the EU.
Chart 9 indicates very high variability in Member State
dependency on wood furniture imports from outside the
EU 每 ranging from close to 60% in the UK to less than
10% in Austria. This variation is due to a number of
factors including:
The presence of very large domestic
manufacturing furniture sectors in some countries
(particularly Italy, Germany, and Poland);
Proximity to these manufacturers elsewhere in the
EU (most other Central European countries also
source a very large proportion of furniture from
Italy, Germany and Poland);
The level of loyalty to domestic furniture brands
(a major factor behind low levels of imports into
Italy);
Extent of consolidation in the retail sector 每
external suppliers have had more success developing
markets for furniture products in countries with relatively
large consolidated retail networks (such as the UK,
Benelux countries, Germany and France) than in countries
with more fragmented retail networks (such as in Italy and
many Eastern European).
Immense challenges in Implementing EUTR in the
furniture sector
The challenges of implementing the EU Timber
Regulation (EUTR) in the furniture sector are probably
more pronounced than in any other sector.
The wood content of furniture products is often extremely
complex, a single piece combining composite and
reconstituted panels with a variety of veneers and sawn
timber, a large proportion of which may be finger-jointed
from off-cuts in a wide variety of woods from numerous
sources. Much of the wood content of a furniture item may
be hidden, particularly in upholstered products.
For the time being, this is less of a problem than it might
be for EUTR for the simple reason that a large proportion
of furniture products are not actually covered by the
regulation.
The EUTR currently only applies to wood furniture
included under Harmonised System (HS) Code 9401
(furniture other than seating). Wood furniture under HS
Code 9403 (seating) is excluded.
Wooden seating accounts for euro1.94 billion (36%) of the
euro5.39 billion of wood furniture imported in 2012.
Considering just imports from China, euro1.18 billion
(40%) of imports of euro2.97 billion are excluded from
EUTR.
Implementing EUTR in the furniture sector is also
complicated by the lack of vertical and horizontal
integration. There has been some consolidation in the
international furniture industry in recent years 每
particularly driven by IKEA in Europe 每 but the sector
remains very fragmented compared to many other
industrial sectors.
The world's 200 largest furniture manufacturers only
account for around 30% of total production worldwide.
The wood furniture sector particularly is characterised by
relatively low barriers to entry, is still often based on small
scale artisan operations, and is very widely distributed.
Even IKEA, the largest and most integrated furniture
company in the world, has emphasised the considerable
challenges of fully conforming to a strict interpretation of
EUTR requirements across all its operations.
The company is sourcing wood raw material from
hundreds of different forests every year. At every stage of
the supply chain and during the manufacturing process,
there is mixing of wood material from innumerable
different sources.
Despite the resources at its disposal and implementation of
a very comprehensive due diligence system, IKEA
emphasise that "it is not normally possible to trace an
individual product back to the forest" and that "physical
tracing of wood is resource inefficient".
In an effort to ease implementation of EUTR in sectors
like furniture, the European Commission has issued
specific guidance on how to handle composite products
under the regulation. The guidance is rather cursory, and
falls well short of providing all the answers. However, it
offers some flexibility in interpreting the law which should
assist the furniture trade.
The EC's Guidance on composite wood products relates to
Article 6(1) of the EUTR which sets out requirements for
the due diligence system that must be implemented by the
※operator§ (i.e. the company that ※places timber on the EU
market§).
The due diligence system must include "measures and
procedures providing access to the following information
concerning the operator's supply of timber or timber
products placed on the market". The required information
includes "description, including the trade name and type
of product as well as the common name of tree species
and, where applicable, it＊s full scientific name; country of
harvest, and where applicable sub-national region where
the timber was harvested and concession of harvest."
The guidance emphasises that the obligation to have
※access to information§ on the species content and place
of harvest applies no matter how many different tree
species are in any one product or how many countries of
harvest are involved.
However, the guidance also observes that there may be
particular challenges to achieving this objective for
composite products. The guidance accepts that the species
mix in any one product group may be very wide and vary
over time. It notes that.
※If the species of wood used to produce the product varies,
the operator will have to provide a list of each species of
wood that may have been used to produce the wood
product".
The guidance for composite wood products also needs to
be considered alongside an obligation in the EUTR
Implementing Regulation that.
"operators shall apply the due diligence system to each
specific type of timber or timber product supplied by a
particular supplier within a period not exceeding 12
months, provided that the tree species, the country or
countries of harvest or, where applicable, the sub-national
region(s) and concession(s) of harvest remain
unchanged".
This indicates that the list of possible species in each
product group needs to be regularly reviewed at intervals
not exceeding 12 months. Furthermore it implies that
suppliers of wood products into the EU must be ready to
inform operators immediately of any change that might
occur in the species mix or region of origin.
The EC guidance goes on to give example descriptions of
operator＊s supply. These imply (although do not make
explicit) that the following is acceptable when dealing
with composite products where there is a negligible risk of
illegal harvest:
a. To define "supply" as all the consignments of a
specified product (e.g. "flat-pack kitchen
fittings") over a specified period of time (e.g. "1
Jan - 31 Dec 2013");
b. To use broad terminology with no need
necessarily to reference percentage mix to
describe the species content of these
consignments (e.g. " Mixed conifer: mainly Scots
pine (Pinus sylvatica) and Norway spruce (Picea
abies)");
c. Having identified "country of harvest", to then
use broad terminology to describe the
"concession of harvest" (e.g. "Multiple private
forest owners");
d. To use national, regional or product-specific risk
assessment prepared ※under certification
guidelines§ as one way to demonstrate legal
origin.
However, when sourcing products with a non-negligible
risk of illegal harvest, the example descriptions imply
(again without making explicit) that more specific
information is required.
For example, the illustration for "12-mm plywood§
indicates that detailed source information should be sought
for bintangor face veneer. In this instance, the operator
should have access to information on the individual
concession in a specified province.
This may be demonstrated by documentation issued by a
government agency in the country of harvest or by
independent certification. Given that the commercial name
※bintangor§ encompasses 180-200 individual species
within the genus Callophyllum, the illustration indicates
that the species may be identified for purposes of EUTR
conformance as ※Callophyllum sp.§
* The market information above has been generously provided by the
Chinese Forest Products Index Mechanism (FPI)
| 
