OPINION:SA's furniture industry clawing its way back to its former glory
Opinion / 23 July 2019, 12:00pm / Eustace Mashimbye
Last week we held one of our most successful industry-specific engagements to date.
Around 200 stakeholders from the furniture sector - manufacturers, raw material suppliers, corporate buyers and retailers - came together toconfront the challenges facing the sector and map a way forward.
With the support of the Department of Trade and Industry (dti), the SA Furniture Initiative (Safi) and sponsored by PG Bison, the event saw the industry commit to pulling together to find a way out of the steady decline that their industry has been experiencing in the past few years.
Some issues were raised, one underlined tariffs, about which we wrote here last week. Tariffs can help - or hinder - an entire industry and Safi made a case for the combating of cheap furniture imports through a collaborative effort in presenting a compelling argument for revised tariffs and taking it to the International Trade Administration Commission, much the same as the poultry sector has done. PG Bison, one of Africa's largest manufacturers of particleboard, medium-density fibreboard and decorative wood-based panel products, raised the issue of quality.
Ninety-five percent of their raw materials are sourced within South Africa from responsibly and sustainably managed resources, and their products, which they quality control themselves as well as through independent verification agencies, are distributed throughout southern and eastern Africa and as far as Australia.
Sales and marketing director of PG Bison, Justin Berry, proposed that as a country we can apply these same local high standards of quality to all products and items that are imported, thus eliminating cheap, sub-standard imports. They have experience of this as exporters to Kenya, which has applied this measure on all imports coming into that country. Without complying to their standards, it is impossible to get your products into that country.
But this solution assumes stringent border and customs control, which is currently a major challenge in South Africa. We have also written here about illicit imports, the under-reporting of the value of imported consignments and misrepresentation of products to secure the lowest applicable tariffs, which is something from which this sector suffers. Without the capacity to manage our borders, quality checks against pre-determined local standards are inconceivable.
One of our action points, as Proudly South African, was to promote access to market for local furniture manufacturers that are weathering the current storm. We have appealed to the private sector, focusing on privately-owned school groups, hospitality groups (mostly hotels) banks and insurance companies, through direct contact and a social media campaign, to procure desks, chairs, cupboards, beds, etc, from local suppliers.
At the same time, we are appealing to local retailers, both chains and independent stores, to give more floor space to local furniture items. This is in support of efforts in the public sector, where furniture has been designated for procurement by all spheres of government from local manufacturers.
We then heard from a chair manufacturer, whose local input content is 97 percent and who was supplying to one prominent local retailer. The retailer then took his chair to China and has had it replicated and is now importing it at a lower price. Much like another retailer who took a baby carrier, also to China, and brought it back at a fraction of the local company’s price (never having stocked the original local item at all) - this is reprehensible and is directly contributing to the loss of jobs and the decimation of an entire local industry.
Tomorrow we are hosting a localisation retail consultative workshop in conjunction with the Manufacturing Circle, the dti and the Consumer Goods Council of SA, and this immoral behaviour will be one of the issues on which we will engage retailers, something we will address. Our work as the advocates of local procurement is of no value when we are campaigning for consumers to source local goods and services and then they cannot find what they are looking for in our own shops.
On a positive note, we drafted a local procurement pledge that we took to the furniture event and secured a commitment from Absa to increase their levels of local procurement for furniture as well as from retailers including Lewis and Coricraft, both of whom already have locally manufactured products in their stores.
Other retailers who do not, are urged to follow in their footsteps and put more local items on their showroom floors. The furniture manufacturing industry currently represents 1percent of gross domestic product and is the third largest labour-intensive manufacturing activity.
It is a sector that used to support around 50000 direct employees with many more in its value chain, but today it's down to 26000.
Let’s bring that number back up Higher and Higher, so sang Brenda Fassie, and create jobs once again in a sector that needs both consumer and skills support.
Eustace Mashimbye is the chief executive of Proudly South African.