Furniture sector keeps modest 2010 forecast

CEBU, Philippines - While the export market for furniture have showed signs of recovery in the last quarter of this year, industry players here are still uncertain of a full swing rebound next year.

“The worst had happened this year [2009] in the history of furniture industry. The business climate has changed. We just have to maintain conservative outlook,” said Cebu Furniture Industry Foundation Inc. (CFIF) president Angela Paulin, in a year-end press briefing held Monday.

From experiencing an all-time-low performance in the early part of 2009, Paulin said the industry has seen a slight improvement in the last two quarters of this year, although this is not a sure indication of a fully recovered market.

Record from the National Statistics Office indicating the performance from the Port of Cebu revealed that Cebu furniture exports contributed only $12.5 million in the first quarter of 2009, compared to $31.8 million in the same period of 2008.

However, the industry have seen a single digit growth, in the last few months, as bulk orders specifically from big retail chains in the United States have improved.

“While there has been slight activity- with orders coming in during the last quarter of this year- furniture players are taking a conservative stance. We need to see how the industry will perform after the first quarter of next year before we can conclude how well we will do by 2010,” said Paulin.

She said furniture players believe “the worst has happened for the local furniture industry” during the height of the global financial meltdown started in 2008, where the local industry contracted 30 percent in terms of closures of several companies, retrenchment of workers, and reduced work hours.

CFIF Consultant Ruby Salutan, said that out of 180 CFIF member-companies listed in 2007, this has decreased to only 120 active member-companies this year, where some 60 companies have either closed shop or on temporary closures.

“It was not the way (how the industry) used to be a few years ago, even during the 1997 Asian crisis. Last year’s global financial crisis was the worst so far. We understand that it will take two to three years before things normalize,” said Paulin.

At present, though, she said the last quarter showed “signs of activity” from the industry players where players are slowly keeping inventories for sales and promotions especially during the Holidays.

Orders from international buyers are coming in from retailers and furniture store chains, Paulin reported.

Salutan also observed that there are also few companies that have slowed down their operations are now beginning to rehire more workers.

However, Salutan cautioned though that re-hiring 20 to 30 percent of the displaced workers,“ is not an indicator that the local furniture sector has fully recovered.”

This time, while still feeling the hurt from the depressing market experience, Paulin said the industry is taking efforts to prepare for the full recovery, and sustain its strength amid the strong competition with other countries, especially China and Vietnam.

Through the Transforming Mindsets, Attitude Program, players are expected to be armed with powerful “armor” fighting the tough competition in the fragile and unpredictable battlefield.

This program aimed at encouraging exporters including its employees to maintain a positive outlook of the sector.

“Everyone became insecure of their future. The program was meant to transform their mindset that the industry will be in an upswing performance next year. We encouraged them to re-invent and retool their strategies,” Paulin said.

She added that “the crisis has taught us to be stronger for the challenges ahead by becoming more creative and innovative.” —Ehda M. Dagooc