Saturday, February 16, 2008 Furniture makers hurt by strong peso, eyeing markets outside US
A local group of furniture exporters is feeling the brunt of the strong peso with over 40 of its member companies closing shops in the last two years, rendering at least 5,000 direct workers jobless.
“It’s really getting to be difficult for the exporters,” said Cebu Furniture Industries Foundation, Inc. (CFIF) president Eric Casas.
Casas said most of the companies that closed shop were new players who were directly affected by the volatility of the peso against the US currency when they started participating in the export business.
Because of the “dismal” state of the country’s export industry, some of these furniture exporters have either ventured into other businesses or migrated abroad, he said.
“For the subcontractors, they have a distinct advantage because they can just move about in the industry. So they don’t necessarily close but just reduce the size of their workforce” Casas said in an interview.
Unfortunately, downsizing of personnel is one of the first options for many furniture companies to reduce cost, especially now that majority of exporters are stretching their peso earnings to the limit, he said.
With 35 percent of CFIF member companies closing their business, some 80,000 Filipinos – directly and indirectly employed in the industry — are affected, said Laurie Boquiren, member of the CFIF board of trustees.
Citing CFIF records, Casas said total gross sales generated by the organization last year saw a nine percent drop from $111 million in 2006 to about $101 million in 2007.
This, he attributes to the slow demand of furniture products in the US and the continued appreciation of the peso.
Last year, the Philippine furniture industry recorded total gross sales of $275 million.
Casas said the local furniture industry is growing at a 0.025 percent rate, “which is nearly flat.”
But despite this, he said furniture exporters, especially in Cebu, remain to be upbeat because of the presence of new alternative markets other than the US.
The industry is banking on more demand of furniture from Cebu in countries, like Russia, Italy, Spain and Dubai.
Casas said Philippine exports continue to establish its niche as high-end furniture manufacturer in markets in the Middle East and Europe.
He noted Russia, as a potentially strong market.
“Anything with high prices for them is quality and they love quality items,” he said.
Cebu’s rattan and wood furniture products are among those that are in demand among Russian buyers, Bo-quiren said. MMM
