market developments for value added wood products

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


UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION3

OECD Imports of three VAWPs


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



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%



OECD Imports of Wooden Furniture by Major Markets



-

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



-

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



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



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



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%



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%



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%



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%



ITTO Consumer Imports of Tropical Wood Products



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



Changes in ITTO Export Structure



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



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



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



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)



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


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)



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



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.



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



market developments for value added wood products

Documents

market discussion

unece timber committee

market developments

oecd imports of profiled

oecd imports of bjc

wooden furniture geneva

usa japan geneva

germany uk geneva