THE domestic market for furniture has helped the industry remain afloat amid the weakening of the US market and the dollar, and stiff global competition.
“It (domestic demand) might not be bountiful, but it (acts like) a plug in the hole,” said Eric Casas, president of the Cebu Furniture Industries Foundation (CFIF).
Although domestic demand account for only 25 percent of the industry’s total market, Casas said it has given jobs and businesses to the local furniture manufacturers in Cebu, most of which are export-driven.
“As more and more resorts, hotels and other institutional projects are planned, all these present good opportunities for the furniture industry,” said a press statement prepared by group.
CFIF referred not only to new hotels and resorts in Cebu but also in other parts of the country.
Casas said CFIF is encouraging member-companies to re-focus marketing strategies on the domestic market.
US recession
The United States, which is experiencing a housing slump and whose economy is reported to be in a recession, accounts for about 65 percent of Philippine furniture exports. Aside from the weakening of the US market, Philippine furniture exporters were also hurt by the appreciation of the peso against the dollar.
Although the dollar has “slightly strengthened” against the peso, other market forces continue to affect the Cebu furniture industry, said Casas.
“In the last six months, cost of raw materials increased by 20 percent,” he said. The increased cost of raw materials, which make up 70 percent of an average furniture company’s total production cost, is caused by rising fuel prices.
Casas also said the new minimum wage order and high power rates also affect the industry.
“But the labor sector deserves the increase,” he said.
CFIF executive director Ruby Salutan said that since the furniture industry in Cebu can be flexible in terms of volume deliveries, the US market is still being served. But she admitted that US buyers have lowered the volume of their orders.
Emerging markets
She said the CFIF continues to find ways to keep the industry afloat. Among the efforts taken by the group is to tap new and emerging markets in Eastern Europe.
Last May 27 to June 5, Cebu Gov. Gwendolyn Garcia hosted a business trip to the Balkan and Austria for furniture industry stakeholders.
In a press conference yesterday, Salutan said the business mission has allowed the group to establish contact with buyers in Slovakia, Slovenia, Croatia and Austria.
“The output is extremely encouraging,” she said, adding that the importers and wholesalers in these countries initially had a negative perception of Philippine furniture products.
The exchange of communication between the local businesses and the Balkan buyers is “what’s keeping us busy right now,” said Salutan.
“The Balkans could be our gateway to Eastern Europe,” she added.
Aside from tapping new markets, CFIF is also re-positioning its flagship project in the local and international exhibit markets.
“It will propel Cebu X to new heights since it will be running on its 20th year,” Salutan said of the new concept of the Cebu International Furniture and Furnishings Exhibition (Cebu X) 2009, which is to be unveiled next month.
CFIF also decided that the Cebu X 2009 will continue to become a stand-alone show in Cebu, clarifying reports of a proposed merger with the Chamber of Furniture Industries of the Philippines’ (CFIP) Manila Now show.
Allan Murillo, chairman of Cebu X 2009, said that, at present, CFIF has only collaborated with CFIP in promoting the trade
shows. “But that is all,” he said.
Murillo said Cebu X will still be managed by CFIF as the group has scrapped the option of giving the job to a professional show organizer.
“We have been running the Cebu X for the past 19 years and we believe that we have been doing a good job in managing the show,” he added.
Cebu X is considered as a main tool for the Cebuano players considering that there is a distinct supply chain for the Cebu industry, said Salutan.
CFIF, however, said it still welcomes local and international exhibitors to the Cebu furniture show. (DME)
