background

2. 1 background • Globalisation has necessitated the need for companies to continuously innovate and employ skilled personnel in order to remain globally competitive. This has resulted in the increased use of capital (modern machinery and methods of production) in manufacturing at the expense of unskilled and semi-skilled labour. • The above has impacted negatively on developing countries like South Africa in terms of employment and job creation and retention. The resulting effect is that employment figures in the South African furniture manufacturing sector for instance, have declined from a high of 44 536 in 1995 to 37131 in 2006. • Most companies in the furniture industry have been impacted negatively from the increased competition from cheap imported goods in addition to the current recession that implies that people are spending less on durable goods such as furniture.

3. 2 background cont. • This implies that without major intervention, this trend will continue. The furniture industry can play a significant role on impacting on employment and job creation as it has the capacity to absorb abundant unskilled labour. • Though, the furniture industry, like any industry in the manufacturing sector in South Africa, has been impacted by the effects of globalisation, it has experienced a fairly strong demand in recent years especially from low and middle income households and the construction sector. With the right interventions, the furniture industry can become a major contributor to the economic growth and job creation especially in the Western Cape. • The strategic priority is competitiveness, not job creation. Job creation/retention in the Western Cape Furniture Manufacturers sector will be the indirect consequence of (WCFI) Western Cape Furniture Initiative success. • The purpose of this WCFI business plan is to communicate the strategic intent, development approach, the programme interventions that will achieve the required improvements, organisation of roles and the resources required to build a more competitive sector.

4. 3 Strengths, Weaknesses, Threats & Opportunities This strategic plan addresses the following key strengths, weaknesses, threats and opportunities for Western Cape Furniture Initiative: • Strengths • Government support • Basis for strong management team • Key first major programmes launched and completed • Initial business offering/concept can evolve into range of offerings for the Industry • Have the support of all major role players in the Industry • Members of the board is representative of most organisations that deal with the industry • Very focused management

5. 4 Strengths, Weaknesses, Threats & Opportunities This strategic plan addresses the following key strengths, weaknesses, threats and opportunities for Western Cape Furniture Initiative: • Weaknesses • Over dependent on grants from government - Insufficient cash resources • Lack of awareness/motivation amongst existing factory owners • Need more marketing awareness • Need to establish an up to date database • Need to obtain buy in from factory owners • Poor relationship of stakeholders in the value chain of the industry

6. 5 Strengths, Weaknesses, Threats & Opportunities This strategic plan addresses the following key strengths, weaknesses, threats and opportunities for Western Cape Furniture Initiative: • Threats • Funding from Government could be reduced or completely cancelled • Factory owners could not be persuaded to share the vision • Economic slowdown could reduce the amount of factories in the Western Cape • Retailers could move their buying power to another region • Labour and skills shortages may affect the future growth potential of the cluster • Looming wood shortages

7. 6 Strengths, Weaknesses, Threats & Opportunities This strategic plan addresses the following key strengths, weaknesses, threats and opportunities for Western Cape Furniture Initiative: • Opportunities • Establish a Cape furniture brand that is globally associated with quality and craftsmanship • Export markets offer great potential • Retail channels seeking new local products • Scope to support and educate factory owners on business management and furniture manufacturing principles • The success of the Furniture Initiative in the Western Cape will depend largely on the ability of its factories to adapt to the external forces shaping the sector, namely globalization, deregulation and consolidation, technology • Implement programmes that will stimulate creativity, design and innovation eg. Furniture Competition

8. 7 • Strategy Concept • Vision • Develop and grow the furniture industry in a sustainable manner and to implement programmes and interventions that will improve the skills and making the furniture industry globally competitive. • Purpose • For the furniture and solid wood industry to reposition itself within the global environment by achieving greater efficiency and competitiveness, various interventions are required for moving up the value chain. • To deliver high quality programmes that provides strategic value to our members. Fostering a partnership with all role players that will assist our members to operate profitably, with sustainable and world class furniture factories and to attract recruit and retain smart and talented employees.

9. 8 • Strategic goals • To attract, retain and create high-value jobs and people in the province. • Improve productivity across the furniture industry. • Improve creativity and innovation through design. • Facilitate access to technology. • Provide access to international markets and exhibitions. • Rebuild the industry by supporting training in high quality skills. • Networking and strengthening relationships within the value chain of the furniture industry. • Building a Western Cape furniture brand with high design content.

10. 9 Approach WCFI will pursue the strategic goals above by strengthening the ability of the stakeholders in the Furniture Manufacturers Sector to work together to understand and shape the factors determining their success in future markets. The WCFI role is not the implementation of improvement initiatives but instead to act as catalyst to identify and leverage the best intellectual capital and resource opportunities available in the private sector and public sector, relevant to a particular improvement initiative. The implementation role of WCFI is strategically defined as an initiator of change (putting deals together) and subsequent programme management.

11. 9 • Scope of work included • Introduce WCFI processes • Secure involvement of key players • Understand furniture industry culture • Review the value chain of the industry. • Build platform for interaction between stakeholders on strategic interventions. • Understanding the Furniture Industry context, issues, competitiveness, dynamics and potentials. • Identifying appropriate economic development approaches, tools and methods. • Facilitation of participatory planning e.g. workshops to determine priorities for improvement. • Programme management of implementation, including outsourcing of as much work as possible to both private and public sector, to keep WCFI lean and efficient, and to avoid displacement. • Filling temporary gaps in implementation capacity until the market takes over. • Securing additional funding streams.

12. 10 Scope of work excluded Work that: • can be done more effectively and efficiently by the private sector, or by other public sector bodies. • is not to the benefit of the WCFI. • is not agreed as WCFI priorities.

13. 11 Strategic Plan: Programmes and Activities 2009 – 2010 1

14. 12 Strategic Plan: Programmes and Activities 2009 – 2010 2

15. 13 Strategic Plan: Programmes and Activities 2009 – 2010 3

16. 14 Strategic Plan: Programmes and Activities 2009 – 2010 4

17. 15 Strategic Plan: Programmes and Activities 2009 – 2010 5

18. 16 Strategic Plan: Programmes and Activities 2009 – 2010 6

19. 17 1 Administration, Finance, HR and Corporate Governance

20. 18 1 Administration, Finance, HR and Corporate Governance CONTINUED

21. 19 1 Administration, Finance, HR and Corporate Governance CONTINUED

22. 20 2 Communications and Sector Promotions Establishment of leadership groups in the industry. Keeping momentum by facilitating networking opportunities, relationship building, supporting multiple levels of collaboration and also very important is a significant 1 on 1 stakeholder contact…in order to establish this close unity of confidence, communication is the building block! By facilitating opportunities to interact in a meaningful and productive way the programme manager must use every opportunity to create an environment where communication can take place.

23. 21 2 Communications and Sector Promotions CONTINUED

24. 22 3 Networking and Partnerships Employers and employees are not alone! As part of a network, they’ll learn about each others' experiences, share their own, and gain support. It's also more informative to work through processes in a workshop and do “mind mapping” than in individual sessions. The aim of the workshops is to establish mutual understanding of different problems and gain confidence in expressing their challenges. The outcome will be to facilitate collaboration between organizations. The workshops will offer everyone involved enough time to learn, experience, and execute new concepts adequately. The workshops will provide for more hands-on and self-diagnosis so that people no longer have to be dependent on outside consultants.

25. 23 3 Networking and Partnerships CONTINUED

26. 24 4 Skills Development The Western Cape’s furniture and solid wood sector is not homogenous and consists of different sub-sectors and is characterized by technological unevenness, skewed development in terms of utilizing labour, different kinds of firms of varying sizes, organized as well as unorganized segments, formal and informal, factory based and home based. The Western Cape possesses a rich skills pool, networks and infrastructure etc. that could assist in creatively engaging the challenge of repositioning itself both locally and globally as a producer of high value adding and quality furniture and solid wood products. However, the industry is characterized by a systematic under-investment in human resources for all but a privileged few, which has resulted in a labour force with a racially skewed distribution of crafts skills, career opportunities, and workplace experience. The WCFI aims to engage in programmes that will provide a solution to the skill shortage that is threatening the industry through the lost of artisans leaving the industry due to retirement. There exist a whole generation of “unskilled” artisan that did not obtained a formal qualification, and various initiative will be implemented to address this irregularity. Most of the industry is small family run businesses. The owner himself or one of his sons usually performs managerial practices without factory production background. However, some of them neither have the experience to manage or the formal training to run the business in a sustainable profitable manner. The majority of those depend heavily on gained and inherited life experience and on the technical skills from the senior artisans, which could find some success in the past, but according to the dynamic changes in the global aspects of trade and competition, that will be a very old fashioned.

27. 25 4 Skills Development

28. 26 4 Skills Development CONTINUED

29. 27 5 Design and Innovation Increased competition from both domestic and foreign sources has increased pressure on furniture manufacturers to more efficiently target their promotional mix aimed at their various marketing channels. This increased efficiency is necessary given that the overwhelming majority of consumers are looking for variety. More efficient targeting of promotions can be gained in part through an understanding of the purchase decisions.

30. 28 5 Design and Innovation CONTINUED

31. 29 6 6. Transform the furniture sector through SMME and BEE Enterprise Development Smaller manufacturers with limited administrative resources need to operate in a more user-friendly and supportive environment to allow them more time to run their businesses and less time to spend with overcoming the burden of onerous statutory and other obligations.

32. the end – thank you viewing our presentation