Trade, Industry and Competition Deputy Minister, Nomalungelo Gina, says South Africa’s furniture industry masterplan has the potential to reposition the country in the sector.
Gina made the remarks while delivering a keynote address on Wednesday during the second day of the Buy Local Summit and Exhibition.
The Furniture Industry Master Plan (FIMP) was established to set clear guidelines and targets for the furniture manufacturing industry, as well as guide public sector procurement as part of government’s efforts to support and stimulate the industry.
She noted that the industry in South Africa sits firmly within the manufacturing sector of the national economy. While its contribution was at less than 1% to the GDP when compared to other manufacturing industries, it is a relatively low capital investment requiring job.
“It is one of the most labour intensive industries, with a potential to contribute to the reduction of unemployment, and increase the export and development of small, medium and micro enterprises (SMMES). It contributes to the geographical spread of economic activity, since the products can be developed in rural areas with minimal investment,” Gina said.
“The establishment resources and manufacturing base makes it an attractive sector to capitalise on the available opportunities. It has a potential to grow its contribution to both employment and economic growth, as prescribed by the national industry policy framework and the industrial policy action tool.”
While the global furniture manufacturing industry has grown by an average of 13% between 2004 and 2009, South Africa only achieved a 3% growth rate over the same period. In comparison to the top furniture producing countries that account for 72% of the global product, South Africa’s furniture production only accounts for 0.4% of this.
Gina said global players have positioned themselves between manufacturing low cost or low quality, and high cost to high quality.
“China had eclipsed the traditional world’s largest countries and by 2006, China has been the largest furniture exporter with 20% of global exports, from being the ninth largest in 2000. We have since a huge eclipse,” she said.
The local furniture industry has not kept pace with the world in this regard, she said.
“It has steadily been losing its shares of global furniture manufacturing. The escalation of cheap Asian exports, the declining investment in skills development and technological innovation in significant research and development funding over the last five years has resulted in the declining levels of competitiveness for the industry with the resultant job losses and the reversal from being a net exporter to being a net importer of furniture products,” she said.
She said while the country’s furniture manufacturers have to an extent managed to hold the fort, SMMEs had become the biggest casualties of exports. The Deputy Minister said, however, it was possible to position the local industry as a producer of high-end furniture products that are competitive based on quality and or differentiated designs.
“This requires concerted efforts on the part of public and private sectors to develop programmes that addresses challenges that constrains the industry from reaching growth levels… of competitiveness,” she said.
In this regard, government is working with the private sector to insure that smaller players in the industry are assist to reach full growth potential.
“In our consultation process towards the framing of the furniture industry masterplan, all stakeholders noted the lack of skill in the industry supply chain. These ranged from coders, operators, and maintenance services for critical digital equipment, designers and those with hand skills.”
These issues are included in the masterplan, she said.
“The development of the BBBEE chapter for the furniture industry, under the auspices of the forestry charter, was not fully supported by the industry and suggests that discussions on the way forward is needed by stakeholders.
“Elements of the quote such as enterprise development, skills development and training, procurement from black and female-owned SMMEs are possible alternatives for greater weighting.”
She said the country could use design as a creative instrument to link industry players, creativity and innovation products.
“Designs can also play a significant role in the industry development and beneficiation of raw material. It is possible to position the local industry as a producer of high value products that are based on quality and on differentiated designs,” said the Deputy Minister.
This, she added, will require a concerted effort of all stakeholders to develop programmes that are address challenges that constrain the industry from achieving growth levels that significantly raise levels of competitiveness.