Five Year Trends in US Furniture
Sector
Globalization of trade and the strength of the US dollar have profoundly changed the
American furniture market. While consumers benefited from a broadening choice of furniture
at ever lower prices, the effect on American furniture manufacturers has been devastating.
American furniture consumption is on a long-term upward trend, but most of the growing
demand has been - and still is - satisfied by imported furniture. It is a misconception to believe that the cause of this
flood of furniture imports lies with foreign manufacturers "invading" the
American market. Instead, the cause lies largely with American furniture retailers and
manufacturers who - in a deliberate search for lower priced merchandise - developed new
trade links and supply channels in China and other South East Asian countries. They
brought new technologies and designs to these regions and created joint venture companies
for the specific purpose to satisfy the huge appetite for furniture in North America.
American furniture consumption (expressed at wholesale prices)
advanced from USUS$23,622 mil in 1996 to an estimated USUS$31,552 mil. in 2001. (Demand
fell in 2001 from US$ 33,989 million in 2000). The increase between 1996 and 2001 amounted
to 33.6%.
During the same time period - 1996 to 2001 - American imports of
household furniture more than doubled from US$4,988 million to an estimated US$10,200
million (customs value). As a result of the faster advance of imports, the share of
foreign produced furniture (the so-called import penetration) climbed from 21% in 1996 to
32% in 2001. In other words, last year, almost one-third of all furniture purchased by
American consumers has been produced abroad.
While furniture imports to the USA have been growing at a very fast
pace, American furniture exports are also moving along an upward path. Nevertheless, US
exports represent only a small portion (7%) of the industry's overall sales. Furthermore,
US exports of household furniture - valued at US$1,549 mil. as of 2001 - are very small in
comparison to the US$10,200 mil. worth of imports. The growth in furniture exports is much
slower than the growth of imports. As a result, the United States is creating a ballooning
deficit in its furniture trade balance.
Between 1996 and 2001 exports advanced by only 16%, compared to 104%
for imports. During the same time period the American trade deficit in furniture grew from
US$ 3,662 million to US$ 8,608 million.
Almost half (48% in 2001) of American household furniture imports was composed of wooden
chairs and case-goods such as bedroom furniture, dining room furniture, and similar
products. Foreign produced wooden household furniture as a percentage of overall sales of
such furniture in the USA stands at a staggering 38%.
Metal household furniture is the second largest furniture import
category, with a share of 17% of overall household furniture imports. The import
penetration stands at 47%.
A relatively large share (14.6%) of overall imports is claimed by
parts for furniture and seats. This signifies the growing trend by furniture manufacturers
to outsource some of their manufacturing activities.
Approximately 15% of residential furniture imports is made up of
upholstered furniture, but the import penetration of this products stands only at about
11%. The reason is that upholstery is bulky and does not lend itself well for
containerised shipping.
The geographic composition of furniture imports has changed considerably during the past 5
years. Back in 1996, Canada was the undisputed number one foreign supplier of residential
furniture for the United States, with a share of 18%. China took the second spot with a
share of 15%. China was followed by Taiwan with 14%. Two other important source countries
include Italy (11%) and Mexico (9%). The only other European country within the group of
"top ten" was Denmark. This is quite remarkable in light of the fact that Europe
was one of the most important overseas furniture suppliers to the USA prior to the signing
of the Canada-US Free Trade Agreement in 1989.
Today, China is claiming the top position with a dominating share of
33% (up from 15% in 1996). The second and third positions are held by Canada (18%) and
Italy (11%). Both countries were able to maintain their share constant at the 1996 level.
On the loosing end are Mexico (falling from 9% in 1996 to 7% in
2001) and - above all - Taiwan (falling from 14% in 1996 to 5% in 2001). Taiwan not only
lost market share in relative terms, it even lost in absolute terms. Its exports to the
United States stood at USUS$710 million in 1996 but at only an estimated USUS$ 500 million
as of 2001.
Taiwanese furniture plants are increasingly relocated to mainland China. This explains the
sagging importance of Taiwan as a (direct) furniture exporting nation. Indirectly, a lot
of Taiwanese furniture is still exported via their branch plants in China.
Each foreign country has its own product specialisation. For instance, China is the top
foreign supplier of wooden and metal household furniture. On the other hand, Italy claims
the top spot for upholstered furniture and Canada for wooden office furniture.
The principal destinations of American household furniture exports are its two
neighbouring countries, that is Canada with a share of 48% and Mexico with a share of 12%.
Other important destination countries are the UK, Japan and Saudi Arabia, but all these
countries have a share well below 10% of overall US residential furniture exports. The
American geographical export concentration has intensified during the past 5 years, in
favour of its NAFTA partners (Canada and Mexico), while many other destination countries -
above all Japan - have lost in importance (in relative and absolute terms).
Half of American residential furniture exports are wooden household
furniture (case-goods). An additional 12% refers to upholstery and 8% to metal household
furniture. The remaining 30% is other non-wooden household furniture, furniture parts and
non-classified products.
Recently, the US dollar has entered a weakening phase. Undoubtedly,
this will diminish America's trade deficit in furniture, but it is unlikely that it will
be eliminated in the foreseeable future.
Source:ITTO. |
