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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

Market Developments for ValueAdded Wood Products

Jukka Tissari

Market Development Officer - Wood Products


Market developments for value added wood products

Contents

  • Global trade in Value Added Wood Products (VAWPs)

  • Competitive environment

  • Conclusions

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

2


Products covered sitc
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

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Market developments for value added wood products

OECD Imports of three VAWPs

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Oecd imports of wooden furniture by type
OECD Imports of Wooden Furniture by Type

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Oecd imports of bjc by type
OECD Imports of BJC by Type

Geneva, September 2002

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Oecd imports of wooden furniture by major markets
OECD Imports of Wooden Furniture by Major Markets

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Market developments for value added wood products

OECD Imports of BJC by Major Markets

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Market developments for value added wood products

OECD Imports of Profiled Wood by Major Markets

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Imports of wooden furniture by origin usa japan
Imports of Wooden Furniture by Origin: USA & Japan

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Market developments for value added wood products

Imports of Wooden Furniture by Origin: Germany & UK

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Market developments for value added wood products

Imports of BJC by Origin: USA & Japan

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

12


Market developments for value added wood products

Imports of BJC by Origin: Germany & UK

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

13


Market developments for value added wood products

Imports of Profiled Wood by Origin: USA & Japan

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Market developments for value added wood products

Imports of Profiled Wood by Origin: Germany & UK

Geneva, September 2002

UN-ECE TIMBER COMMITTEE: 2002 MARKET DISCUSSION

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Itto consumer imports of tropical wood products
ITTO Consumer Imports of Tropical Wood Products

Geneva, September 2002

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Major tropical vawp exporters 1999

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

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Market developments for value added wood products

Changes in ITTO Export Structure

Asia-Pacific

Latin America-Caribbean

Africa

Geneva, September 2002

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Competitive environment drivers
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

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Competitive environment challenges
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

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On competition
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

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On competitiveness
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

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Market access
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

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On end use markets for vawps
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

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On certification
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

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Market developments for value added wood products

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

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Market developments for value added wood products

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

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