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Market Developments for Value Added Wood Products

Market Developments for Value Added Wood Products. Jukka Tissari Market Development Officer - Wood Products. Contents. Global trade in Value Added Wood Products (VAWPs) Competitive environment Conclusions. Genev a, September 200 2. UN - ECE T IMBER COMMITTEE: 2002 MARKET DISCUSSION. 2.

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Market Developments for Value Added Wood Products

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  1. Market Developments for ValueAdded Wood Products Jukka Tissari Market Development Officer - Wood Products

  2. Contents • Global trade in Value Added Wood Products (VAWPs) • Competitive environment • Conclusions Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 2

  3. Products covered (SITC) • 248.3/5 Profiled wood • 635.3 Builder’s joinery and carpentry • Ex-821 Wooden furniture Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 3

  4. OECD Imports of three VAWPs Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 4

  5. OECD Imports of Wooden Furniture by Type Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 5

  6. OECD Imports of BJC by Type Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 6

  7. OECD Imports of Wooden Furniture by Major Markets Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 7

  8. OECD Imports of BJC by Major Markets Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 8

  9. OECD Imports of Profiled Wood by Major Markets Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 9

  10. Imports of Wooden Furniture by Origin: USA & Japan Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 10

  11. Imports of Wooden Furniture by Origin: Germany & UK Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 11

  12. Imports of BJC by Origin: USA & Japan Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 12

  13. Imports of BJC by Origin: Germany & UK Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 13

  14. Imports of Profiled Wood by Origin: USA & Japan Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 14

  15. Imports of Profiled Wood by Origin: Germany & UK Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 15

  16. ITTO Consumer Imports of Tropical Wood Products Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 16

  17. Exporter Wooden furniture and parts BJC Other VAWP Cane and bamboo furniture and parts $ million Indonesia 637,652 542,726 243,561 269,021 Malaysia 1,026,330 188,323 77,692 19,368 Thailand 571,843 40,058 223,039 10,826 Brazil 315,858 171,345 96,036 909 Philippines 118,937 75,786 52,805 130,601 Bolivia 10,733 20,213 355 1 Major Tropical VAWP Exporters (1999) Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 17

  18. Changes in ITTO Export Structure Asia-Pacific Latin America-Caribbean Africa Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 18

  19. Competitive environment: drivers 1.Government policies to add value, taxes on primary products, investment incentives 2.Technological developments in the processing of plantation species and lesser-used species 3.Foreign direct investment 4.Wage and cost advantages 5.Falling tariffs under GATT/WTO agreements 6.Rapidly growing domestic/regional markets 7.Improved shipping services 8.Specific export & import promotion programs Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 19

  20. Competitive environment: challenges 1.Growing out-sourcing of semi-finished products 2.Tightening certification and labelling requirements on furniture (e.g. the USA in the next 2-3 years) 3.Substitution pressure from new materials (natural fibres and synthetics) 4.Higher potential supply for more diversified plantation wood products 5.Product standards and design 6.Consolidation of distribution 7. Mounting of non-tariff barriers on trade Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 20

  21. On competition • 50+ US-furniture plants closed by mid-2001 • high-end producers with customisation and rapid deliverywill survive • manufacturers transform into assembly, finishing lines or distributors/marketers • out-sourcing of semi-finished products and components from China, Asia-Pacific, Latin America • still capture most of the value-adding potential in design, distribution and marketing functions Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 21

  22. On competitiveness • from comparative advantage to competitive advantage • In Europe: flexible but efficient production with the highest technological quality, superior design, innovative market promotion, and swift distribution with minimal stock-keeping • In the tropics: moving from original equipment manufacturing (OEM) towards original design manufacturing (ODM) and ultimately to original brand manufacturing (OBM) Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 22

  23. Market access • trade liberalization has reduced tariff escalation (= higher tariffs for value added products) • EU, Japan and USA apply no import tariffs on FPWP from GSP countries, for most other countries 2-6% • eliminate tariffs on wooden furniture completely by 2005 • generally tropical producers retain higher tariffs to protect their industries • regional agreements reduce tariffs Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 23

  24. On End-use markets for VAWPs: • Consumer market (DIY products, household furniture and BJC products) • Commercial and industrial enterprises (building and construction materials, intermediate and finished joinery products, contract furniture) • Institutional buyers (building and construction materials, office & public premises furniture) Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 24

  25. On Certification • In 1st and 2nd segment, the role of intermediaries (sourcing agents, brokers, importers, wholesalers, retailers, etc.) is essential • complex consumer market involves large corporations, who manage supply chains (IKEA, Home Depot, B&Q) and a lot of medium and small-scale operators • on institutional side, many governments in Europe are developing their procurement policies (WTO rules breach?): largest volumes, less certified yet Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 25

  26. Conclusions 1 • International trade of VAWPs has liberalized, increasing export opportunities for DMECs. • Around 40% of all OECD imports originate from developing market economies and China. • Competition will force industrialized countries to transform their manufacturing industries and participate in the supply chains from cost-competitive regions like Asia-Pacific and Latin America. Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 26

  27. Conclusions 2 • The contribution of VAWP to the forest sectors of tropical countries will continue to grow. • Tropical value-added processing (furniture in particular) tends to develop in phases: >>> standardized products >>> originally designed products >>> branded products. • Tightening tropical wood resources call for: • Processing of more plantation woods • Expanded (unconventional) trade flows of primary processed products Geneva, September 2002 UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION 27

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