The Malaysian Straits Times newspaper carried an interesting article today; “Foxconn eyes US, Indonesia”. Foxconn is a Taiwanese company with huge production facilities in China and THE leading supplier of Apple iPhones and iPads. The article claims that the rising costs and labour unrest in China are main reasons for Foxconn to relocate production by building high-tech factories in Indonesia and the USA. So does this also apply to the woodworking industry in China? I partly think so; our industry is low tech and is difficult to automate so it will always rely on low cost labour. One does already see a move of production from China to lower labour cost countries such as Indonesia. And yes it would be logical that some of the production moves to the USA especially if it concerns products using US sourced timber. However the USA timber industry is already facing a labour shortage so this would only work for that type of production which can be automated such as panel furniture, flooring etc. but probably less for solid furniture. Lastly I do find it recommendable that Asian manufacturers are willing to invest in the USA whereas many American seems to have lost the spirit of entrepreneurship.
The sentiment in Europe about the crisis is pretty optimistic and most Europeans I speak to believe “the worst is over” yet I dare to disagree.
Many of our overseas suppliers ask us regularly about our business is in Asia. The first few months were pretty good and certainly better than the last few months in 2012. But I am worried for the 2nd half this year.
We sell our imported timber to manufacturers of a wide range of furniture, doors, flooring and other products and our sales teams meet these customers on weekly basis so, I guess, we do have a pretty good idea about their current export orders. Furniture exports to the USA are steadily improving but are declining to Europe. Most furniture manufacturers complain that the orders taken from European buyers during the various exhibitions earlier this year were disappointing. Exports of doors and flooring (both mainly engineered) to Europe are the worst hit and some Asian manufacturers have taken the unusual step to reduce or even cancel program orders with us.
Another factor is China which is slowing down much faster than expected and this will seriously affect imports from Europe and South East Asia. For example Germany in the past depended very much on technology export to China which will reduce fast.
Based on what we encounter in Asia I believe the crisis is far from over but might have hit rock-bottom but no positive reversal is to be expected soon. Unfortunately it might take another one to two years for Europe to start recovering and imports of Asian made timber products increase a lot.
I just finished writing an article for the Indonesian trade magazine “woodmag” about an European company called “Bolefloor” which manufactures solid and engineered flooring produced in the same shape as the original unedged timber boards. This product is very creative and completely different from the traditional flooring available in the market. The other unique service is that this company is capable designing each floor based on the actual space where the floor has to be installed. So the customer can submit his floor plan and they will design the floor according to the layout of the room. Each flooring board will come with a number for easy installation. For sure such floor will not be cheap but it is truly unique and rest assure that customers are willing to pay the price for such product.
This type of product and service innovation is seldom seen here in Asia. Sadly to say most of our Asian customers mostly to to “innovate” cutting production costs and fail to innovate their products and, equally important, their customer service. Have a look for yourself at www.bolefloor.com, maybe it encourages you to be bold and innovate too; “Life is not a straight line”.