market developments for value added wood products
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Market Developments for Value Added Wood Products
Jukka Tissari
Market Development Officer - Wood Products
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION2
• Global trade in Value Added Wood Products (VAWPs)
• Competitive environment
• Conclusions
Contents
Products covered (SITC)
• 248.3/5 Profiled wood
• 635.3 Builder’s joinery and carpentry
• Ex-821 Wooden furniture
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION3
OECD Imports of three VAWPs
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 4
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
mill
ion
$
Profiled wood 2,198.82 2,255.67 2,606.31
BJC 4,653.35 4,990.25 5,617.91
Furniture 19,708.06 21,507.06 25,481.02
1996 1998 2000
26,6 bill.
28,4 bill.
33,7 bill.
OECD Imports of Wooden Furniture by Type
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 5
Seats of wood26%
Seats of cane, osier,
bamboo2%
Furniture n.e.s.69%
Furnit. of other
material like
bamboo3%
OECD Imports of BJC by TypeWindows
and frames11%
Doors and
frames25%
Shingles and
shakes5%
Other builders' wood-work59%
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 6
OECD Imports of Wooden Furniture by Major Markets
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 7
-
5,000
10,000
15,000
20,000
25,000
30,000
millio
n $
CANADA 462.69 579.24 709.21
NETHERLANDS 1002.48 941.94 1004.52
BELGIUM-LUX. 1007.85 1029.45 991.52
JAPAN 1588.6 1145.23 1580.38
UK 1031.47 1407.56 1790.58
FRANCE 1807.19 1798.26 1901.73
GERMANY 3619.11 3357.25 2788.58
USA 4549.76 6325.68 9469.18
OECD Total 19708.06 21507.06 25481.02
1996 1998 2000
OECD Imports of BJC by Major Markets
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 8
-
1,000
2,000
3,000
4,000
5,000
6,000
mill
ion
$
SWITZ.-LIECHT. 217.81 189.27 172.42
ITALY 125.05 143.18 195.22
AUSTRIA 257.49 229.1 204.7
FRANCE 162.04 167.45 224.52
UK 278.67 344.32 412.46
JAPAN 573.17 310.62 529.92
GERMANY 1205.47 1123.65 819.91
USA 695.13 1211.67 1653.82
OECD Total 4653.35 4990.25 5617.91
1996 1998 2000
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 9
OECD Imports of Profiled Wood by Major Markets
-
500
1,000
1,500
2,000
2,500
3,000
millio
n $
Netherlands 82.47 61.24 77.9
Belgium-Lux. 89.56 91.95 118.59
Germany 168.66 177.54 126.22
Italy 143.29 156.5 151.27
UK 124.13 144.79 155.75
Canada 129.54 156.56 195.02
Japan 345.59 198.39 291.8
USA 500 694.73 880.83
OECD Total 2198.82 2255.67 2606.31
1996 1998 2000
Imports of Wooden Furniture by Origin: USA & Japan
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 10
USA
Asia47.0%
North Am.
23.8%
Dev.d Europe18.4%
Latin Am.8.5%E.Eur./
Rus1.4%
Others1.1%
Japan
Asia79.6%
North Am.4.7%
Dev.d Europe14.7%
Ocea-nia
0.3%
E.Eur./Rus0.5% Others
0.2%
Imports of Wooden Furniture by Origin: Germany & UK
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 11
UK
Asia31.4%
North Am.3.6%
Others5.6%
E.Eur./Rus8.7%
Latin Am.3.6%
Dev.d Europe47.1%
Germany
Asia9.2%
Dev.d Europe45.4%
North Am.0.4%
Latin Am.1.5%
E.Eur./Rus
41.2%
Others2.4%
Imports of BJC by Origin: USA & Japan
USA
North Am.
68.2%
Asia12.2%
Others0.4%
Africa0.6%
E.Eur./Rus0.5%
Latin Am.
12.1%
Dev.d Europe5.9%
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 12
Japan
Dev.d Europe35.0%
Ocea-nia
5.9%E.Eur./ Rus2.1%
Others0.3%
Asia30.3%
North Am.
26.4%
Imports of BJC by Origin: Germany & UK
Germany
Dev.d Europe49.8%
Asia12.9%
Others7.1%
E.Eur./ Rus
29.4%
Latin Am.0.3% North
Am.0.5%
UK
North Am.7.1%
Asia21.4%
Dev.d Europe50.0%
Latin Am.6.8%
E.Eur./ Rus6.3%
Africa8.2%
Others0.1%
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 13
Imports of Profiled Wood by Origin: USA & Japan
USA
Dev.d Europe4.1%
Latin Am.
43.0%
E.Eur./ Rus0.6%
Ocea-nia
5.4%
Others0.2%
Asia18.0%
North Am.
28.7%
Japan
Asia70.3%
Others0.03%
Latin Am.0.8%
Ocea-nia
2.1%Dev.d Europe10.5%
North Am.
16.3%
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 14
Imports of Profiled Wood by Origin: Germany & UK
Germany
Asia11.3%
Dev.d Europe60.9%
Others3.1%
E.Eur./Rus
22.7%
Latin Am.0.6%
North Am.1.5%
UK
Asia25.1%
North Am.
15.8%
Dev.d Europe53.5%
Latin Am.2.1%E.Eur./
Rus1.8%
Others1.5%
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 15
ITTO Consumer Imports of Tropical Wood Products
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 16
0
2
4
6
8
10
12
14
1991 1993 1995 1997 1999 2001
Bill$
Primary Secondary
Note: 2000 - 2001 is an estimate. Source: UN COMTRADE, 2002.
Major Tropical VAWP Exporters (1999)
Exporter
Wooden furniture and parts BJC
Other
VAWP
Cane and bamboo furniture and parts
$ million
Indonesia 637,652 542,726 243,561 269,021
Malaysia
1,026,330 188,323 77,692 19,368
Thailand 571,843 40,058 223,039 10,826
Brazil 315,858 171,345 96,036 909
Philippines 118,937 75,786 52,805 130,601
Bolivia 10,733 20,213 355 1
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 17
Changes in ITTO Export Structure
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 18
1998
11%
66%
23%Profiledwood
Builders'joinery
Furnitureand parts
1989
44%
17%
39%
1998
11%
60%29% Profiled
wood
Builders'joinery
Furnitureand parts
1989
8%
44% 48%
1989
72%
18%
10%
199813%
23%
64%Profiledwood
Builders'joinery
Furnitureand parts
Asia-Pacific
Latin America-Caribbean
Africa
Competitive environment: drivers
1. Government policies to add value, taxes on primary products, investment incentives
2. Technological developments in the processing of plantation species and lesser-used species
3. Foreign direct investment4. Wage and cost advantages5. Falling tariffs under GATT/WTO agreements6. Rapidly growing domestic/regional markets7. Improved shipping services8. Specific export & import promotion programs
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 19
Competitive environment: challenges1. Growing out-sourcing of semi-finished products2. Tightening certification and labelling
requirements on furniture (e.g. the USA in the next 2-3 years)
3. Substitution pressure from new materials (natural fibres and synthetics)4. Higher potential supply for more diversified
plantation wood products5. Product standards and design6. Consolidation of distribution7. Mounting of non-tariff barriers on trade
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 20
On competition• 50+ US-furniture plants closed by mid-2001
• high-end producers with customisation and rapid delivery will survive
• manufacturers transform into assembly, finishing lines or distributors/marketers
• out-sourcing of semi-finished products and components from China, Asia-Pacific, Latin America
• still capture most of the value-adding potential in design, distribution and marketing functions
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 21
On competitiveness
• from comparative advantage to competitive advantage
• In Europe: flexible but efficient production with the highest technological quality, superior design, innovative market promotion, and swift distribution with minimal stock-keeping
• In the tropics: moving from original equipment manufacturing (OEM) towards original design manufacturing (ODM) and ultimately to original brand manufacturing (OBM)
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 22
Market access• trade liberalization has reduced tariff
escalation (= higher tariffs for value added products)
• EU, Japan and USA apply no import tariffs on FPWP from GSP countries, for most other countries 2-6%
• eliminate tariffs on wooden furniture completely by 2005
• generally tropical producers retain higher tariffs to protect their industries
• regional agreements reduce tariffsGeneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 23
On End-use markets for VAWPs:
1. Consumer market (DIY products, household furniture and BJC products)
2. Commercial and industrial enterprises (building and construction materials, intermediate and finished joinery products, contract furniture)
3. Institutional buyers (building and construction materials, office & public premises furniture)
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 24
On Certification
• In 1st and 2nd segment, the role of intermediaries (sourcing agents, brokers, importers, wholesalers, retailers, etc.) is essential
• complex consumer market involves large corporations, who manage supply chains (IKEA, Home Depot, B&Q) and a lot of medium and small-scale operators
• on institutional side, many governments in Europe are developing their procurement policies (WTO rules breach?): largest volumes, less certified yet
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 25
Conclusions 1
• International trade of VAWPs has liberalized, increasing export opportunities for DMECs.
• Around 40% of all OECD imports originate from developing market economies and China.
• Competition will force industrialized countries to transform their manufacturing industries and participate in the supply chains from cost-competitive regions like Asia-Pacific and Latin America.
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 26
Conclusions 2
• The contribution of VAWP to the forest sectors of tropical countries will continue to grow.
• Tropical value-added processing (furniture in particular) tends to develop in phases: >>> standardized products >>> originally designed products >>> branded products.
• Tightening tropical wood resources call for: 1. Processing of more plantation woods
2. Expanded (unconventional) trade flows of primary processed products
Geneva, September 2002
UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 27
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