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The UK Wood and Furniture Sector
‐March.02, 2002／

The upholstered segment of production (+12% growth at current values in 2000), is extremely concentrated: the two leading producers (Christie Tyler and Wade Group) control 43% of the British market.

Kitchen furniture production, which in 2000 recorded an increase of 6% at current prices, too is extremely concentrated: the top three companies control roughly half of the market, whereas craftsmen's production accounts for about 2% of the market.

Prices

Production prices for furniture in the UK fell by 0.5% in 2000. The reduction in inflationary dynamics, which affected the manufacturing sector as a whole, continued in 1999 when the rate was 0.7%. The principal cause of this trend was a reduction in the prices of physical input, especially of those imported materials, due to the strength of sterling.

Demand

The United Kingdom is ranked the third European country in terms of apparent domestic consumption accounting for 13% of total EU consumption. To a large extent the driving force in the sector is still domestic demand. Domestic consumption of furniture followed a positive trend in 2000, growing at 11% at current rates to reach a value of Euro 9,599 million.

Foreign trade

On the international trade front the strength of sterling in recent years has brought about a deterioration in the terms of trade in the furniture sector. In fact, compared to the modest increase in the exports of British furniture of 9% in 2000, in the same year there was a much greater increase in imports which, exploiting the competitive gains from the rate of exchange, recorded growth of 26% bringing them up to Euro 3,401 million.

British exports are largely destined for the European Union (56% of the total) and North America (25%). Exports to North America have increased, with the quota rising from 16.5% in 1996 to 24% in 2000. The second largest customer is neighbouring Ireland which claims 16% of total exports.

Imports were worth Euro 3,401 million in 2000 and a large part of these came from other European Union countries (51.5% of the total). Italy is by far the largest supplier, providing 18% of total imports, whereas the major extra-European suppliers was China, with a quota of 9% and a worth of Euro 311 million (+69% compared to 1999).

Furniture Association News

Consumers ignore downturn fears

Despite fears of an economic downturn in the UK, furniture retailers have maintained pre-Christmas sales levels. With some surprise, sales have been at least as good as last year, with higher order values especially for cabinet furniture. The general impression is that, despite all the economic indicators being weak or negative, the consumer has gone on spending.

Flat market for bathroom segment.

The British Bathroom Manufacturers Association (BMA) held its first conference last October. Attended by senior directors from 16 of the 17 members of the association, the meeting represented 60% of the manufacturing industry in the UK and encompassed the sanitaryware, brass-ware and fitting sectors. Statistical information gathered from members, showed a market that remained flat when compared to the year 2000, with the overall market being 1.8% down on the same period last year.

Birmingham Furniture Show

The Furniture Show, incorporating Furnishing Accessories, is the UK's largest trade exhibition for traditional to modern domestic furniture for every room in the house and garden.

Over 700 exhibitors take part and products on show include beds, upholstery, cabinet, living, dining, occasional furniture and accessories. An audience of over 36,000 retailers, interior designers, wholesalers and distributors, developers, hoteliers and restaurateurs, importers and exporters, agents and architects visit the show each year with the major aim of sourcing new products for their stores.

Some are of the opinion that this year the standard of display and merchandising on many stands was the best ever seen at the show, with considerable attention to detail being the key.

In expert opinion, stimul;ating a change from traditional styles to contemporary styles was always going to be difficult in the UK furniture market. However, the UK manufacturing industry seemed to have got it right at the furniture show. Designers introduced models which brought with them a freshness of style, flexibility of usage and a right combination of materials.

Nowhere was this more evident than in beds, embracing the new mood of Continental influences combined with the UK's love of the divan. This does not mean that traditional furniture is on its knees. The fair saw in fact many examples of beautifully made traditional pieces of furniture, but the move was firmly towards "UK modern".


Prices in the UK

West African Log Prices in UK

UK Sawnwood Prices

Plywood and MDF in the UK

All measures of service sector activity, except jobs, showed improvement last month according to the latest purchasing and supply index. Overall business activity rose from an idex of 49.4 to 51.4, prices went from index 49.8 to 51.1 and business sentiment went up to 73.3 from 68.9. The employment index fell from 47.6 to 46.8.

The Wood for Good promotion campaign continues but the emphasis, with the amalgamation with Nordic First, will continue to be on softwood. The main plank of the campaign is sustainability and tropical wood is getting little or no publicity.

The UK building insulation standards are being revised but the last time this was done complaints from the brick and block manufacturers caused a rethink.

The plywood market is described by the trade as in a mess because of the failure of forwarding agent Harrison Logistics of Tilbury. A lien has been placed on all cargoes under their control for non-payment of stevedoring bills. The trade says that this may be a blessing in disguise as stocks are considered too high.

For more information on the trends in the UK market please see www.worldwidewood.com