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The struggling furniture business

Published:Sunday | February 6, 2011 | 12:00 AM
Gerald Thomas prepares furniture at his woodwork shop on Portland Road in east Kingston last Friday. Thomas has been in the furniture business for more than 27 years. - Norman Grindley/Chief Photographer

Mortimer McPherson, Contributor

The production and sale of furniture is among the worst hit and inactive consumer goods industries in Jamaica. Not only has the global recession damaged the potential for export, but the importation of furniture and wood products from foreign manufacturers has stymied the growth of what was once a vibrant sector.

The sector can potentially offer many locally manufactured products as well as a quality international selection. In 2008, annual wood products and furniture imports reached J$7 billion. In order to protect domestic manufacturers, there is the need to impose new import duties on imported furniture and wood products. Although, on average, consumer purchasing power in Jamaica is still very low, the continued decline of the Jamaican economy for the third consecutive year, as well as recent shifts in pound/dollar and USD-JMD exchange rates are creating some interesting opportunities for foreign exporters.

Imported furniture occupies about 75 per cent of the furniture market. The remaining 25 per cent of the furniture sold in Jamaica is produced by domestic manufacturers. The quality of domestically produced furniture is fairly high and oftentimes higher than that of imported furniture. Much of the furniture produced locally is copied from European and American designs, thereby, exposing the need for the industry to be design-led with a close connection to standards and ingenuity. In general, most furniture on the local market falls under three categories - low end, Jamaican/foreign made; medium-priced furniture assembled in Jamaica from imported components classified as RTA (ready to assemble); and high-end, high-priced, imported and locally made furniture.

According to sector publications (CARICOM Private Sector Trade Note 2008), the availability of foreign and locally produced furniture is totally unbalanced with a greater amount of imported furniture dominating the Jamaican market. This trend has been steadily growing over the last six years, giving rise to the closure of many Jamaican-owned furniture and wooden-products manufacturers. This has, in effect, led to the decline of the sector and the subsequent growth in unemployment and the reduction of GDP.

It is important to note that leading local manufacturers can successfully compete with foreign suppliers on quality, especially in the segments of office and kitchen furniture. However, a majority of sector experts believe that obsolete manufacturing equipment and the lack of modern technologies are major problems faced by local furniture manufacturers. There is also the view that many of our local manufacturers have only basic education, some not having gone beyond high school, and with not much in academic qualifications.

problems

Analysis found that the most important problems facing these woodwork factories owned by MSMEs came from manufacturing and technology, followed by management, marketing, human resources, and finance and accounting, respectively. A management system for most factories is absent. There is a definite lack of direction and competition policy; reporting or information system, lack of data collecting for analysis purposes; lack of unity, poor coordination; and an internal management system is not in place.

On the manufacturing side, we are plagued with the following problems: high defect rate in manufacturing process and inability to reduce it, fluctuations in quality; high manufacturing costs; and often times, major delays in delivery; absence of manufacturing planning and control; waste in work process, leading to low production effectiveness; and improper stock management.

With all this information, there is now the need for Government to identify competitiveness development as one of its crucial strategies to create economic expansion and prosperity, improve people's livelihood and promote sustainable development in the country. Development of groups of enterprises in the form of clusters would, therefore, be an important tool to increase competitiveness in both wood products and furniture manufacturing sector. It also directly contributes to the country's competitiveness in international market.

Though business development through the cluster approach is possible in any type of enterprise, the Government should focus on small and medium enterprises to improve their competitiveness. Coordination is best done by associations or neutral individuals who would not cause conflict of interest, and a leader or manager to push through activities in which the cluster members share their goals. This would also mean that the Government's proposed policy to allow for factory space for start-up manufacturers should, therefore, be shifted to established businesses to assist them in consolidating and growing their potential, as they would already have had some form of structure on which to build.

The components market also offers good opportunities for foreign suppliers, as not many components are locally produced. Because of a lack of modern technologies, many essential items are not produced in Jamaica at all. This includes almost all types of finishing materials, glues and adhesives. Overall, 45 per cent of all the materials used in furniture manufacturing are imported. Jamaican manufactures are forced to import accessories and auxiliary parts such as hardware, hinges and fastening elements, and the majority of coating and facing materials, and even where the components and finishes are produced locally, the costs are very high because most, if not all, raw materials are imported. Some market insiders believe that because of the high cost of imported components, locally manufactured furniture is quite often more expensive than imported, and local manufacturers are facing strong competition from imports.

Another difficulty is the profile of Jamaica's otherwise low wood supply. Our forests provide some mahogany and cedar, as well as pine and mahoe. Our forests are deficient in the hardwoods oak, ash, poplar and teak, which are needed for quality furniture production by Jamaican manufacturers.

Mortimer McPherson is the president of the Jamaica Wood Products & Furniture Association. See Part Two in next Sunday's In Focus. Email feedback to columns@gleanerjm.com.