Europe Furniture Market News
¡¾2002.03.30¡¿

After the good industrial growth in year 2000 (+5,2%), in the first quarter of 2001, uncertainty in worldwide trends, negatively affected industrial production in different manufacturing sectors, with the car industry being an exception.

Industrial production slowed, registering a -0.2% decrease in the second quarter of the year (+0,3% in the first quarter) and manufacturer opinion became more pessimistic, following the worldwide slowdown, the new economy crisis and, because of the events of September 11. However, during the third quarter, industrial production, while still falling in many of the industrialized countries, remained stable in France. Intermediate goods were the main victim of decline, consumer goods seemed not to have been heavily affected, but orders diminished in the autumn, in particular export orders.

Industrial price growth, after being affected by inflationary dynamics due to the increasing oil prices, seem to have progressively fallen in 2001 mainly because of the diminishing worldwide demand.

After a rapid growth of investment in 2000 (+10% in value), forecasts for year 2001 are of a +3% (against a +9% foreseen at the beginning of the year) and estimates are negative for year 2002. The same trend applies to industrial employment, which is marked by a negative trend for year 2001, in particular for the consumer goods sectors.

Furniture sector

French furniture production registered a growth in the first quarter of 2001. During the same period, a fall on the export front and a growth of furniture imports were the cause of a negative trade balance. However the trend worsened in the second quarter, with furniture production growing +1,2 with respect to the same period of the previous year and even became negative in the third quarter, registering a -1,3% decrease with respect to the third quarter of year 2000.

Furniture prices followed the trend of global industrial prices, rising first and then diminishing during the balance of the year.

The negative trend observed in the furniture sector is also confirmed by turnover data collected from major companies. According to Sessi (Service des études et des statistiques industrielles du Ministere de l'Economie, des Finances et de l'Industrie.) data shows a moderate growth in the first quarter, a reduced increase in the second quarter and a trend which became negative in the third quarter.

French Furniture and Joinery Association News

According to IPEA (L'Institut de Promotion et d'Etudes de l'Ameublement), furniture consumption grew by 1% in 2001, with different sectors performing differently. Among specialized retailers, household furniture chains (except, Conforama..) did better than the others, registering a +6,7% average annual growth year on year growth. Department stores, which are at present trying to modernize and renovate the distribution strategy in order to reach a better positioning, registered a moderate 1% growth.

French Company News

EPI 2001 Results

EPI, the French kit furniture, parquet and laminated floor manufacturer expects to invest EUR 10mil. in 2002, including 3mil. which have not been used as part of the EUR 15mil investment programme for 2001. The company posted an operating profit of EUR 10.9mn this year, up from 12.9mn in 2000. Turnover was slightly down at EUR 134.8mil. instead of 136mn, with laminated floor products accounting for EUR 84mn (compared to EUR 96mil in 2000). Net profit was down too, at EUR 6.7mil. following EUR 8.9mil. in 2000.

Ikea in Nantes

Ikea opened its 13th 13.000sqm unit in Nantes in February. The investment, which amounted to EUR 35 million, will generate employment for 230 people, 63% of which will be full time workers.

News From Salon Du Meuble - Paris
Thefurniture show, Salon du Meuble de Paris 2002 had a wealth of events. It was marked by the setting up a modern-style division into sectors adapted to the modifying of consumer behaviour, the birth of the French Line and Bureaux d'Aujourd'hui-Les Solutions exhibitions.

Despite a reduction in the number of visitors, anticipated due to the international situation and the reluctance of many to fly, many exhibitors claimed they were particularly satisfied with the quality of the contacts made during the five days. In all cases, the organisations who banked on innovation have found success at their exhibition.

2002 positioned le Salon du Meuble de Paris as an exhibition of both trade and trends. An exhibition reinforced by the agreement of marketing cooperation which has just been signed with le Salon du Meuble de Cologne, the effects of which will be seen from the 2003 exhibition.

A Trade Exhibition

In the world of furniture experiencing growth in industrialization, the 2002 show emphasised the weight of buying groups on the development of the market. It is notable that these groups came from all over the world. For all of them it seems the exhibition was an important means of reinforcing their business. Le Salon du Meuble de Paris has clearly become a business opportunity and a virtual "directory for the industry". L'Institut de Promotion et d'Etudes de l'Ameublement (IPEA) estimates the trading volume during the show amounted to nearly to 3 million euros.

A Mix of Styles

On the French market during 2001, 7.3 million households, which represents nearly 30 % of the population, purchased at least one piece of new furniture. 75 % of furniture sold was of a modern or contemporary style. This is a significant shift in taste and was also experienced at the Salon du Meuble de Paris 2002 where a growing number of classic furniture specialists proposed modern lines.

The classic furniture offerings however retain a steady and probably unassailable part of the purchases. This style reveals itself more and more in the authenticity and knowledge of the products and integrates a touch of exoticism. The consumer has become a lover of beautiful pieces which he or she is willingly to place it even into a contemporary or modern environment. The main consequence of this change towards modern lines is a drop off in the market of furniture that is sold together such as complete bedrooms or dining rooms - to the benefit of furniture sold separately. Another proof, if there is need of one, that the consumer is searching for new styles which establish a link between heritage and modernity, a mixing of genes.

Market and Company News from around Europe

Slovakia

In 2001 the Slovakian furniture industry reported a very positive development, with the turnover of the companies with over 25 employees increasing by 31.8% to Sk 14.3bil compared to 2000 and small and middle sized furniture firms estimated turnover amounting Sk 2bil..

The furniture industry created 1,000 new jobs in 2001, employing a total of 9,992 people. Exports rose by 23% to Sk 16bil. in 2001 against 2000. This was due to active marketing of the Slovak firms and overseas investments. On the import front, the increase amounted to Sk 1.4bil. in 2001, however, the industry reported a positive trade balance of Sk 7bil..

IKEA to open new outlet.

In Finland, Ikea will build a new store in Vantaa. Construction work started in February. The 26,000 sq.m outlet will be opened in summer 2003. Managing Director Mats Kotka of IKEA's Vantaa unit estimates that there is growth potential on the Finnish markets. The growth rate of sales of Swedish IKEA decreased in Finland during 2001, despite the 23-25% growth registered over the past two years.

Success for Sedus Stoll.

In 2001, office furniture producer Sedus Stoll AG of Waldshut raised its group turnover by 1.5% to EUR 132.6mil.. The group's Sedus brand was particularly successful: its turnover increased by 5% to EUR 99.8mil.. Sedus subsidiary Klober GmbH, however, recorded a 6.2% turnover drop to EUR 33.5mil.

Samhall shuts down

Swedish Samhall, the furniture manufacturer is shutting down its Partille-based furniture factory employing 180 people. The company's production of beds for Ikea will be relocated to Stromstad and Orsa. According to Samhall, no jobs will be cut as a result of the relocation, all employees will be offered new positions in the company.

Suppliers affected by Slow-Down

Since mid-February, a wide range of suppliers to the German furniture industry have been reporting a significant weakening of demand once again. The indications are that business in March will become more difficult after January had brought a modest recovery following the very poor volume of business in the last quarter of past year.

A repeated weakening of sales on part of the wood-based panels and the surfaces industry extends the difficult trading environment in most sales sectors. Additionally the furniture industry still has to fight with high unemployment. The building components branches suffers under the same weak construction market. The laminate flooring branch, so far having largely avoided this negative development, has now become subjected to this downward trend..

US To Ban Arsenic Based Wood Preservatives

While the European Commission is still considering a ban on arsenic-containing wood preservatives, on February 12 the US Environmental Protection Agency (EPA) announced it will ban the use of arsenic-containing wood preservatives for wood applications as of January 2004. The EPA release also said that the wood-working industry in the US would have agreed to voluntarily refrain from the using arsenic-containing wood preservatives and to change to alternative treatment processes.

Poor Demand in Plywood Markets

Unchanged poor demand in almost all European markets for imported plywood prompted the import trade to cling to its very reserved buying policy. In the near future plywood producers could hardly expect an improvement of sales. At present, mainly non-European plywood suppliers suffer most under this development. But also several European supply countries had to take a dip in sales over the past weeks. Plywood qualities for structural applications in particular are liable to consistently strong pressure. Moreover, the market related demand developments have been aggravated by a substitution of several plywood products by OSB.

The poor volume of demand for Brazilian pine plywood is reflected by the unchanged slow sales under the tariff-free arrangement in the EU. North American plywood has become almost insignificant on the European market but Brazil is still a supplier. At the end-February about half of the total tariff free allowance of 650,000 cubic metres was reportedly unsold so that, this year again, quantities under the tariff-free quota will be available for some time still. Brazilian plywood producers still complain that it has been impossible to effect the price increase planned at the end of 2001. Prices for 20.5 mm C+/C have remained largely unchanged at about US$180-185 per Cu.m fot Bremen according to EUWID.

Business in Asian plywood is weak and unchanged. In view of the consistently poor demand from their major markets Asian plywood producers resorted to additional cuts in production, and several plywood mills have reportedly discontinued all together. But even these measures failed to achieve a stabilization of prices. Most recently, the prices for raw plywood BB/CC fell again falling to below Indo'96 - 35%. Buyers are reportedly already talk about prices of Indo'96 - 37%.

Film-laminated plywoods, too, are facing constant price pressure. Average prices for 21mm film/film currently are at US$320-325 per Cu.m and 4mm film/film has apparently fallen to US$610-620 per Cu.m.