furniture/cabinet making/joinery industry forum 9 th april, 2014 presented by: ron scott the way...

FURNITURE/CABINET MAKING/JOINERYFURNITURE/CABINET MAKING/JOINERYINDUSTRY FORUM 9INDUSTRY FORUM 9thth APRIL, 2014 APRIL, 2014

Presented by: Ron Scott

FCJ Industry

THE WAY FORWARDTHE WAY FORWARD

TODAY’S NEWSTODAY’S NEWS

Slow growthSlow growth

Pressure on anti-dumping policiesPressure on anti-dumping policies

Poor skills in manufacturingPoor skills in manufacturing

Trade deals - CHALLENGE – big Trade deals - CHALLENGE – big picture v small businessespicture v small businesses

FCJ Industry AllianceFCJ Industry Alliance

Moving Forward,Moving Forward,

Not reactingNot reacting

in an in an

uncertain worlduncertain world


Understanding the past,Understanding the past,

But planning for the futureBut planning for the future

with a knowledge of the future with a knowledge of the future

Understanding how people will live,Understanding how people will live,

Demographic trends and housing Demographic trends and housing stylesstyles

FCJ IndustryFCJ Industry

Before looking at the future,Before looking at the future,

let’s look at how FCJ started.let’s look at how FCJ started.

Set up by a group of like minded and Set up by a group of like minded and visionary associations, all recognised visionary associations, all recognised the importance of collaboration and the importance of collaboration and

speaking with “one voice” speaking with “one voice”


The following is an abbreviated The following is an abbreviated presentation delivered at the inaugral presentation delivered at the inaugral

meeting of interested associations meeting of interested associations and other interested bodies in and other interested bodies in

February 2011 February 2011


Although the statistics primarily Although the statistics primarily reflect on the furniture industry, this reflect on the furniture industry, this is only due to the fact of the initial is only due to the fact of the initial

founding bodies being the FIAA and founding bodies being the FIAA and AWISA.AWISA.

As other major bodies such as AWA, As other major bodies such as AWA, CMDA and ASOFIA became major CMDA and ASOFIA became major participants, the overall numbers participants, the overall numbers

became even greater. became even greater.


FURNITURE/CABINET MAKING/JOINERYFURNITURE/CABINET MAKING/JOINERYINDUSTRY CONFERENCE 2011INDUSTRY CONFERENCE 2011

Presented by: Ron Scott

FCJ Industry

THE WAY FORWARDTHE WAY FORWARD

Industry Value by SectorIndustry Value by Sector(In final prices to end users)(In final prices to end users)

NOTE: Value estimates inclusive of domestic manufacturing costs and margins, imports, distribution costs, NOTE: Value estimates inclusive of domestic manufacturing costs and margins, imports, distribution costs, government taxes and duties and profit margins at all distribution chain levels.government taxes and duties and profit margins at all distribution chain levels.

KEY POINT: The combined industry is immense and a vital KEY POINT: The combined industry is immense and a vital component of the Australian economy. component of the Australian economy.

The Australian Furniture & Related IndustriesThe Australian Furniture & Related Industries

The furniture, cabinet making and joinery The furniture, cabinet making and joinery industries are closely linked.industries are closely linked.

Closely related industries - such as window and Closely related industries - such as window and door manufacturing - face identical issues and door manufacturing - face identical issues and challengeschallenges

At present no forum exists At present no forum exists representative of the representative of the common interestcommon interest

Furniture Industry Employment Estimate by TradeFurniture Industry Employment Estimate by Trade

Trade Employees

Carpenters 26,000

Carpenters & joiners 3,200

Joiners 2,000

Cabinetmakers 18,000

Wood machinists & turners 1,100

Upholsterers 2,300

Other trades & occupations 49,400

Total employees 102,000

Basis: ABS 2006 Census of population & housingBasis: ABS 2006 Census of population & housing

KEY POINTS:KEY POINTS:

1.1. The furniture manufacturing industry is a major manufacturing employer. Direct The furniture manufacturing industry is a major manufacturing employer. Direct manufacturing alone accounts for an estimated 100,000 jobs.manufacturing alone accounts for an estimated 100,000 jobs.

2.2.Thousands of other jobs in upstream and downstream industries are directly or Thousands of other jobs in upstream and downstream industries are directly or indirectly dependent on furniture manufacturing . indirectly dependent on furniture manufacturing .

Industry Manufacturing Revenue Industry Manufacturing Revenue & Employment Comparisons& Employment Comparisons

IndustryRevenue

$MEmployees

(No.)

Motor Vehicle mfg. 11,900 18,755

Household Appliance mfg. 2,400 7,845

Telecommunications equipment mfg 1,900 5,621

TCF Industries mfg. 9,100 40,900

Furniture/furnishings & assoc. industries

16,250 102,000

Note: ‘TCF’ is comprised of 10 different industries. In speaking with ‘one Note: ‘TCF’ is comprised of 10 different industries. In speaking with ‘one voice’ considerable government support has successfully been secured voice’ considerable government support has successfully been secured

Source: IBISWorld 2009/10 industry reportsSource: IBISWorld 2009/10 industry reports

The Australian Furniture IndustryThe Australian Furniture Industry

1.1. KEY POINT: Combined sector manufacturing revenue has KEY POINT: Combined sector manufacturing revenue has weakened considerably since the GFC.weakened considerably since the GFC.

2.2. Imports - the overriding impediment to future growth.Imports - the overriding impediment to future growth.

Australian production share of domestic Australian production share of domestic free standing furniture retail turnover since free standing furniture retail turnover since

the reduction of tariff ratesthe reduction of tariff rates

KEY POINT: The sharp decline of Australian production share of the KEY POINT: The sharp decline of Australian production share of the retail furniture market has fallen below 50% since the reduction of retail furniture market has fallen below 50% since the reduction of import tariffs and the rise of China as a manufacturing powerhouse. import tariffs and the rise of China as a manufacturing powerhouse.

China’s imports share of core industry classesChina’s imports share of core industry classes

KEY POINT: China’s imports share of core industry classes grows exponentially regardless of market and economic conditions.

Asian imports - the dominant current Asian imports - the dominant current and future industry threatand future industry threat

Imports from China loom as the overwhelming threat to survival of remaining Imports from China loom as the overwhelming threat to survival of remaining local manufacturing base most at risklocal manufacturing base most at risk

Why China imports continue to growWhy China imports continue to grow

1.1. Enormous advantages of scaleEnormous advantages of scale

2.2. Improving product quality and designImproving product quality and design

3.3. Improving IT based supply management systemsImproving IT based supply management systems

4.4. Low cost of labourLow cost of labour

5.5. Low taxes/high level government subsidies and supportLow taxes/high level government subsidies and support

6.6. Purchasing power of popular Australian hardwoods limiting Purchasing power of popular Australian hardwoods limiting domestic manufacturers supplydomestic manufacturers supply

7.7. Appreciating $AUD = cheaper importsAppreciating $AUD = cheaper imports

8.8. Artificially undervalued Chinese YuanArtificially undervalued Chinese Yuan

Why Australian manufacturers Why Australian manufacturers struggle to competestruggle to compete

1.1. Disadvantages of scaleDisadvantages of scale

2.2. High labour costsHigh labour costs

3.3. High taxes/ low tariffs/ minimal government supportHigh taxes/ low tariffs/ minimal government support

4.4. Inefficient supply chain managementInefficient supply chain management

5.5. Low profile brandsLow profile brands

6.6. Concentration of retailers squeezing manufacturers marginsConcentration of retailers squeezing manufacturers margins

7.7. Appreciating $AUD = cheaper imports/less competitive exportsAppreciating $AUD = cheaper imports/less competitive exports

8.8. Lack of uniform labelling legislation blurs distinction between Lack of uniform labelling legislation blurs distinction between imports & local products at point of purchaseimports & local products at point of purchase

A.A.D.A.P.TD.A.P.TAAccept ccept that Chinese imports are here to staythat Chinese imports are here to stay

AAcceptccept that direct price competition with imports that direct price competition with imports will not succeedwill not succeed

AAcceptccept that lateral strategies and smarter that lateral strategies and smarter business practices are urgent and essential!business practices are urgent and essential!

The way forwardThe way forward

A.A.DD.A.P.T.A.P.TDDevelop evelop a prestige, premium quality image for a prestige, premium quality image for Australian furnitureAustralian furniture

DDevelopevelop clear consumer preferences for clear consumer preferences for Australian made furniture based on style, Australian made furniture based on style, design, choice, innovation, service and design, choice, innovation, service and reliability .reliability .


A.D.A.D.A.A.P.TP.TAADOPTDOPT a business model based on voluntary a business model based on voluntary manufacturing consolidation and manufacturing consolidation and rationalisation. rationalisation.

AADOPT DOPT a more pragmatic pro-active approach a more pragmatic pro-active approach in the selective use of imported components in in the selective use of imported components in manufacturing when ‘best practice’ own manufacturing when ‘best practice’ own manufacture costs are uncompetitive. manufacture costs are uncompetitive.


A.D.A.A.D.A.P.P.TTPPROMOTEROMOTE the benefits to consumers of buying the benefits to consumers of buying Australian made furnitureAustralian made furniture

PPROMOTE ROMOTE the benefits to retailers of the benefits to retailers of supporting local supplierssupporting local suppliers

PPROMOTE ROMOTE the benefits to government of a the benefits to government of a viable manufacturing industry for the viable manufacturing industry for the preservation and creation of Australian jobspreservation and creation of Australian jobs


A.D.A.P.A.D.A.P.TTTTRAINRAIN manufacturers in acquiring skills in manufacturers in acquiring skills in manufacturing, supply chain management, design manufacturing, supply chain management, design and marketing (with government support).and marketing (with government support).

TTRAIN RAIN manufacturers in the benefits of a business manufacturers in the benefits of a business model based on voluntary manufacturing model based on voluntary manufacturing rationalisation and pooling of assets with an end rationalisation and pooling of assets with an end goal of fewer but more efficiently managed and more goal of fewer but more efficiently managed and more specialised enterprisesspecialised enterprises


The need to ADAPT is clear and The need to ADAPT is clear and time is of the time is of the essenceessence

To merely begin the process - the ‘industry’ To merely begin the process - the ‘industry’ must first must first engage with Government engage with Government

This will not occur until all parts of the This will not occur until all parts of the ‘Furniture/Cabinet Making/Joinery’ industry ‘Furniture/Cabinet Making/Joinery’ industry can speak with ONE VOICEcan speak with ONE VOICE

Achieving this aim is by definition Achieving this aim is by definition the first, the first, most urgent and overriding prioritymost urgent and overriding priority


THE FIRST STEPTHE FIRST STEP

KEY WORDSKEY WORDS

ADAPTADAPT

COLLABORATIONCOLLABORATION

COMMUNITYCOMMUNITY

CONNECTIONCONNECTION

Australian Furniture IndustryAustralian Furniture Industry

CHANGES TO INDUSTRY – ADAPTCHANGES TO INDUSTRY – ADAPT

ALL PARTICIPANTS NEED TO ALL PARTICIPANTS NEED TO CHANGE, TO ADAPTCHANGE, TO ADAPT

TO EMBRACE DESIGN, PROJECT TO EMBRACE DESIGN, PROJECT MANAGERS and LOGISTIC EXPERTS,MANAGERS and LOGISTIC EXPERTS,

NOT MERELY MANUFACTURERSNOT MERELY MANUFACTURERS

Australian Furniture IndustryAustralian Furniture Industry

Formed February, 2011Formed February, 2011

Achived first goal with major Achived first goal with major collaborative partiescollaborative parties

FIAA, AWISA, AFA, AWAFIAA, AWISA, AFA, AWA

CMDA and ASOFIA CMDA and ASOFIA


4 INDUSTRY REFERENCE GROUPS4 INDUSTRY REFERENCE GROUPS

Design and InnovationDesign and Innovation

Skills and TrainingSkills and Training

Regulations and complianceRegulations and compliance

Supply ChainSupply Chain


Collaborative but shared Collaborative but shared responsibilitiesresponsibilities

Some need government involvementSome need government involvement

Others are needing industry Others are needing industry leadershipleadership


Holistic ApproachHolistic Approach

Needs commitment and action on all Needs commitment and action on all fronts, not picking areas of comfort or fronts, not picking areas of comfort or

interestinterest


Changing economic environmentChanging economic environment

GFC – effect still with usGFC – effect still with us

Internet age – buying habits changeInternet age – buying habits change

No foreseeable growth in economyNo foreseeable growth in economy



Baby boomers still dominate Baby boomers still dominate spendingspending

BUT spend less on “things”BUT spend less on “things”

Bigger spend on servicesBigger spend on services



Ageing population – more $ spent on Ageing population – more $ spent on health and aged carehealth and aged care

Younger generation staying at home Younger generation staying at home longerlonger

Baby boomers look to downsizingBaby boomers look to downsizing


STRATEGIC OVERVIEWSTRATEGIC OVERVIEW


furniture/cabinet making/joinery industry forum 9 th april, 2014 presented by: ron scott the way...

Documents

voice fcj industry slide

industry value

combined industry

industry reports

australian furniture

way forward fcj industry

way forward slide

door manufacturing