Wood and Wooden Furniture Industry

Nowadays, Thai wood and wooden furniture industry is profitable to our country not less than a billion dollars per year in average. There are over 8,000 factories in this industry creating jobs for over 200,000 employees who involve in the industry. Such roles lead to the potential wood and furniture industry and have farther more global opportunities and being categorized as targeted products for export promotion in the future.

1.Production

Production capacity of products in wood and wooden furniture industry in early 2003 has been slightly increased due to the war between the U.S. and Iraq affecting the main trading partners of Thailand to slow down the orders of furniture, along with SARS outbreak leading to some concerns. However, in late 2003, the problems have been improved, causing the increasing production. It is also the upward step of business cycle at the end of year resulting in the improved economic conditions. Moreover, the government has promoted the construction industry and real estate business to strengthen which affects to the consumer purchasing power for furniture resulting in the improving domestic production and distribution of furniture and parts. The order volume from overseas, especially the U.S., has increased. By changing the strategy of most exported products from household products to furniture, the demand volume has increased at the end of year. Based on the information of the Office of Industrial Economics, it has shown that the production volume of furniture has been continuously increased throughout 2003.

Table 1: Wood and Wooden Furniture Production

Unit: Million Pieces

Products / Quarterly
1/44 / 2/44 / 3/44 / 4/44 / 1/45 / 2/45 / 3/45 / 4/45 / 1/46 / 2/46 / 3/46 / 4/46
Wooden Furniture / 7.49 / 6.51 / 8.86 / 8.85 / 8.39 / 8.65 / 8.52 / 6.83 / 6.34 / 6.09 / 7.03 / 7.05
Metal Furniture / 0.27 / 0.26 / 0.24 / 0.23 / 0.22 / 0.24 / 0.21 / 0.23 / 0.24 / 0.27 / 0.24 / 0.23
Total / 7.76 / 6.87 / 9.00 / 9.08 / 8.61 / 8.89 / 8.7 / 7.06 / 6.58 / 6.36 / 7.27 / 7.28

Source: The Office of Industrial Economics

2.Domestic Distribution

As the war in the Middle East and concern of SARS disease in South East Asia and China, it causes local consumer to be more careful of spending and consuming which affects to furniture consumption decreasing in the first 3 quarters of the year. However, at the end of year, the situations have been favorably improved. The 4th quarter of year has been better in line with the improving economic conditions. Many leading furniture manufacturing companies have changed their strategies by price reduction, emphasis on public relations and convincing the consumer, and expansion of distribution channel in order to cover the target groups. These are ameliorating an overall domestic market.

Table 2: Domestic Distribution of Furniture

Unit: Million Pieces

Products / Quarterly
1/44 / 2/44 / 3/44 / 4/44 / 1/45 / 2/45 / 3/45 / 4/45 / 1/46 / 2/46 / 3/46 / 4/46
Wooden Furniture / 2.55 / 1.28 / 2.96 / 3.09 / 3.71 / 2.61 / 2.54 / 2.15 / 2.26 / 1.94 / 1.68 / 2.18
Metal Furniture / 0.17 / 0.17 / 0.18 / 0.18 / 0.17 / 0.17 / 0.20 / 0.19 / 0.28 / 0.24 / 0.20 / 0.21
Total / 2.72 / 1.45 / 3.14 / 3.27 / 3.88 / 2.78 / 2.74 / 2.34 / 2.54 / 2.18 / 1.88 / 2.39

Source: The Office of Industrial Economics

3.Export and Import

3.1Export market; Exported wooden products have been categorized into 3 groups (Table 3) as follows.

1)Wooden furniture and parts have an export value of more than 50% of total export value, consisting of wooden furniture, other furniture, and parts of furniture. The export value in the first ten months of 2003 is US$ 752.6 million, increased by 10.21 % from the same period of last year. Most expanding exported products are furniture parts, other wooden furniture, and wooden furniture, respectively. The main markets are the U.S., Japan, United Kingdom and Canada.

2)Wooden products have an export value of 20 % of total export value of wooden products and furniture, consisting of picture frame, wooden construction materials, wooden appliances, wooden sculpture, and wooden ornaments. The export value in the first ten months of 2003 is US$ 292.1 million equivalent to last year. Most increasing exported products are wooden construction materials with Japan as a main market, and wooden sculpture with the U.S. as a main market.

3)Processinglumber and board have an export value of 20 % of total export value of wooden products and furniture, consisting of lumber, fiber board, plywood and veneer. The export value in the first ten months of 2003 is US$ 304.6 million increased by 12.23 % compared to the same period of last year. The most increasing exported product is lumber, whichChina, Hong Kong and Malaysia are important export markets.

Table 3: Export Value of Wood and Wooden Furniture

Unit: Million Pieces

Item / Year / Growth Rate
2000 / 2001 / 2002 / 2002
(Jan-Oct) / 2003
(Jan-Oct) / 44/45 / 10
45/46
1. Furniture and parts / 776.1 / 739.1 / 826 / 682.9 / 752.6 / 11.76 / 10.21
1.1Wooden furniture* / 543.1 / 505.3 / 560.8 / 466.7 / 484.8 / 10.98 / 3.88
1.2 Other furniture* / 166.1 / 172.3 / 191.1 / 155.2 / 183.3 / 10.91 / 18.11
1.3 Furniture parts / 66.9 / 61.5 / 74.1 / 61 / 84.5 / 20.49 / 38.52
2. Wooden products / 356.8 / 328.5 / 350.3 / 292.1 / 292.1 / 6.64 / 0.00
2.1 Wooden appliances / 112.7 / 103 / 114.6 / 95 / 93.9 / 11.26 / -1.16
2.2 Wooden construction Materials / 115.7 / 106.6 / 102.4 / 85.5 / 89.8 / -3.94 / 5.03
2.3 Wooden picture frame / 105.8 / 93.1 / 102.6 / 85.7 / 78.4 / 10.20 / -8.52
2.4 Wooden sculpture & decoration / 22.6 / 25.8 / 30.7 / 25.9 / 30 / 18.99 / 15.83
3. Lumber and board / 232.7 / 247.6 / 323.1 / 271.4 / 304.6 / 30.49 / 12.23
3.1 Lumber / 55.8 / 54 / 99 / 81.5 / 123.3 / 83.33 / 51.29
3.2 Veneer / 8.5 / 8.4 / 8.2 / 7 / 6.3 / -2.38 / -10.00
3.3 Plywood / 51.7 / 53.9 / 53.9 / 46.4 / 41.8 / 0.00 / -9.91
3.4 Fiber board / 58.8 / 66.1 / 90.5 / 75.6 / 76.8 / 36.91 / 1.59
3.5 Wood and other wooden products / 57.9 / 65.2 / 71.5 / 60.9 / 56.4 / 9.66 / -7.39

Total

/ 1,365.6 / 1,315.2 / 1,499.4 / 1,246.4 / 1,349.3 / 14.00 / 8.25

Source: Department of Trade Negotiations, Ministry of Commerce

3.2Import market; The main imported products are log, lumber and wooden products (Table 4), which have been imported mostly for local construction. The import value in the first ten months of 2003 is US$ 414.3 million increased by 13.63 % from last year due to a recovery of real estate business from war and a relief of SARS disease causing the normal trade condition. High imported products volume are lumber imported from Malaysia, Laos and the U.S.; log imported from Burma, Malaysia and New Zealand; and veneer imported from Indonesia, U.S. and China.

Table 4: Import Value of Wood and Wooden Furniture

Unit: Million Pieces

Item / Year / Growth Rate
2000 / 2001 / 2002 / 2002
(Jan-Oct) / 2003
(Jan-Oct) / 44/45 / 10
45/46
1. Log, lumber, and others / 366.1 / 341.9 / 378.3 / 317.4 / 348.1 / 10.65 / 9.67
2. Wooden products / 44 / 46.7 / 58.3 / 47.2 / 66.2 / 24.84 / 40.25

Total

/ 410.1 / 388.6 / 436.6 / 364.6 / 414.3 / 12.35 / 13.63

Source: Department of Trade Negotiations, Ministry of Commerce

4Summary

Production capacity of furniture and parts in 2003 is approximately 26.51 million pieces decreased by 18.15 % from last year due to a concern of Iraq and Middle East war, including SARS disease that influences the consumption in risky countries, resulting in the wood and furniture production and distribution to be decreased. However, later of 2003, after SARS disease has been relieved, the market and consumption have been improved.

An overall outlook of wooden products and furniture export throughout 2003 has shown a trend of increasing export value by 8.25 % or US$1,500 million in approximately, as well as wood and furniture import increased by 14.0 % with import value of US$ 500 million in line with the expanding economic conditions of the country.

The trend of Thai wood and furniture industry in 2004 is expected to be increased for 7 – 10% in line with the national economy. Construction and real estate businesses would be expanded constantly as well. The promotion by government, increasing export to the U.S. and the moving of furniture industrial bases from Europe to Asian countries, namely Thailand, China and Vietnam, result in the improved trend of wood and furniture industry. However, Thailand still faces with the competitors with lower labor cost such as China and Vietnam. Thus, Thailand needs to improve its strategies by personnel development in designing the new products that would be rapidly launched to the market, including building an alliance network and seeking new markets in order to increase the competitiveness of such industry.