Wood Products Trade Update
by Harold Zassenhaus, Zassenhaus Export Management Group, zemg@erols.com

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Wood Furniture Imports Slip
Probably to the surprise of few, wood furniture imports retreated from its all time high of $16.4 billion in 2006 to $15.7 billion in 2007, a decrease of 4 percent. I estimate the total U.S. wood furniture market at around $23 billion at best, around 68 percent of which is met by imports. The estimate is based on the U.S. Department of Commerce 2006 domestic shipments estimate of $8.6 billion, adjusted for a 10 percent decrease in 2007 plus 2007 imports.

The ranking of country suppliers has not materially changed over the past year and the trends noted in prior articles continue. In brief:

• China continues as the dominant supplier, as the U.S. imported almost $7.6 billion of wooden furniture or 48 percent from China. Even though imports decreased, they decreased at a lower rate than the total and by 2009 China will probably account for the majority of imported furniture. This is despite the troubles China is facing including: higher labor wages; higher health and pension costs; reduced Chinese government incentives to produce and export; buyer and supplier decisions to diversify supply and; its appreciating currency vs. the U.S. dollar. More on this last point in the sidebar to this column.
• Vietnam continues to make bedroom suites for the U.S. market and is capturing market share for other wood furniture products as well. Imports from Vietnam increased 34 percent! It shipped $1.1 billion of furniture and has solidified its place as our 3rd largest supplier nation. While bedroom furniture is its forte (thanks to Chinese owners moving production) it is increasingly becoming a player in other furniture products such as parts, seats and cabinets.
• Supplies are moving East and North --- Europe, that is. East Europe and Scandinavia are taking market share from others as the table below indicates. Of the significant suppliers of wood furniture to the U.S. (i.e., shipping in excess of $20 million) many of the fastest growing are coming from East and Northern Europe. There is little reason for this to change over the next one to two years pointing to decent markets for WMMA members. 

U.S. Imports of Wood Furniture
Fast Growing Suppliers
Millions of U.S. Dollars
January – December
				% Change
Country	2005	2006	2007	- 07/06  -
Vietnam	664.261	856.2156	1150.086	34.32
France	95.14824	112.5276	132.3652	17.63
Germany	101.4385	109.199	129.1984	18.31
Poland	122.8034	85.97948	117.5858	36.76
Sweden	45.54769	31.83405	37.78153	18.68
Lithuania	25.5746	25.09344	34.29885	36.68
Czech Republic	28.38001	20.92562	25.31341	20.97
Bulgaria	23.91031	22.69385	25.07858	10.51
Norway	20.77344	20.5647	24.06149	17

• Canada’s influence continues to fade. Canada continues to be the second largest supplier to the U.S. shipping $2.2 billion in wood furniture. However, it shipped almost $300 million less in 2007 than in 2006 and its share continues to drop --- now at 14 percent.

 

Wood Furniture Exports Grow
U.S. wood furniture producers are becoming increasingly competitive as exports increased at a greater rate than the exchange rate shift. Although more than 50 percent of exports were made to Canada, shipments to Central and South America increased as did exports to some parts of the Middle East.

It is probably too soon to tell whether the increase in exports is a solid trend as petro/energy dollars probably accounted for a decent portion of the shipment increase.

U.S. Exports of Wood Furniture
January – December
	Millions of U.S. Dollars			% Change
Description	2005	2006	2007	07/06
Wooden furniture of a kind used in offices	94.7	105.5	115.6	9.6
Wooden cabinet, for use in the kitchen	62.3	63.6	113.8	78.9
Wooden furniture used in kitchen, excl. cabinet	15.0	20.0	23.1	15.6
Wooden furniture of a kind used in the bedroom	125.8	128.1	147.9	15.4
Wooden furniture, nesoi	455.2	507.6	565.4	11.4
Furniture parts of wood	117.2	153.3	180.2	17.6
Total	870.2	978.1	1,146.1	17.2
Source of data: U.S. Dept. of Commerce, Bureau of Census

 

Other Wood Products
Imports of other wood products (excluding logs, engineered wood panels and veneers) faired much worse in 2007 than did wood furniture, no doubt an immediate reaction to the construction slowdown. As the table below indicates imports of wood products other than furniture decreased 17 percent to about $13 billion.

United States Imports of Wood Products
January – December
		Millions of Dollars			% Change
HS	Description	2005	2006	2007	07/06
various	Wooden Bedroom Furniture	3,161.8	3,213.3	3,070.9	-4.4
various	Wood Frame Upholstered Furniture	2,478.9	2,817.1	2,932.3	4.1
various	Wooden Chairs	1,106.9	1,084.4	1,023.2	-5.7
various	Wooden Kitchen Furniture, excl. Cabinets	269.1	294.4	266.0	-9.7
various	Wooden Office Furniture	850.2	967.1	967.2	0.0
various	Wooden Furniture Parts	913.7	1,030.8	1,106.7	7.4
various	Wooden Kitchen Cabinets	795.9	849.7	827.0	-2.7
various	Wood Chair Parts	164.2	154.3	149.4	-3.1
various	Other Wood Furniture	5,558.8	5,805.2	5,370.9	-7.5
various	Furniture & Parts of Rattan, Cane, Bamboo, etc.	219.2	189.8	11.2	-94.1
various	Wood Furniture for Vehicles	0.3	0.6	1.3	106.3
	Subtotal, Wood Furniture	15,518.9	16,406.7	15,726.2	-4.2
4403	Wood In The Rough, Stripped Or Not Of Sapwood Etc	347.9	346.6	266.0	-23.2
4407	Wood Sawn Or Chipped Length, Sliced Etc, Over 6mm Thick	8,989.8	8,333.8	6,497.6	-22.0
4409	Wood, Continuously Shaped (Tongued, Grooved Etc.)	1,581.0	1,732.0	1,341.4	-22.6
4414	Wooden Frames Paintings, Photographs, Mirrors, Etc	405.4	445.3	439.1	-1.4
4415	Packings Etc, Wood; Pallets, Collars Etc, Of Wood	185.1	167.8	154.7	-7.8
4416	Casks, Barrels, Vats, Etc. And Parts, Of Wood	149.9	186.7	215.6	15.5
4417	Tools/Tool & Broom Bodies Etc Shoe Last/Trees Wood	55.9	47.5	51.4	8.1
4418	Builders' Joinery And Carpentry Of Wood	2,681.9	2,837.9	2,468.3	-13.0
4419	Tableware And Kitchenware, Of Wood	114.7	125.4	130.7	4.2
4420	Wood Marquetry Etc; Jewel Case Etc & Wd Furn. Nesoi	520.0	550.6	571.4	3.8
4421	Articles Of Wood, Nesoi	1,292.0	1,286.3	1,204.9	-6.3
	Total, Wood Products Other Than Furniture	16,323.7	16,060.0	13,341.1	-16.9
	Total, All Wood Products	31,842.6	32,466.7	29,067.3	-10.5
Source of data: U.S. Dept. of Commerce, Bureau of Census

Is China’s escalating yuan making a dent on its affect on the U.S. wood products market?
China started to float the yuan in July 2005 under some significant constraints. Nonetheless, since 2005 China’s currency has appreciated some 16 percent against the U.S. dollar (not taking account China's growing price inflation). However, a few more facts to put the appreciation into context:

• China’s GDP has increased 51 percent through the first quarter 2008;
• China’s trade surplus with the US has grown by 29 percent over the 2 ¾ year period;
• China’s foreign exchange reserves have grown by 137 percent (valued in U.S. dollars) since July 2005;
• China is amassing foreign exchange reserves at a rate of $44 billion a month, NET of foreign/ U.S. asset purchases which have dramatically increased over the period;
• The U.S. imported $322 billion from China in 2007, up 11 percent year on year;
• Furniture (whether made of wood or other materials) and their parts totaled $14.5 billion in 2007 and;
• The U.S. fourth largest import from China is ---- you guessed it --- furniture --- behind computers and peripherals; cell phones and other telephony equipment and; TV’s and monitors;
• Among all other nations, China ranks:
• First in shipments of wood furniture to the U.S.;
• Second in shipments of flooring and mouldings (HS 4409);
• First in shipments of wood frames (HS 4414);
• Second in shipments of builders joinery(HS 4418);
• First in shipments of wood marquetry (HS 4420) and;
• First in shipments of all other types of wood products (HS 4421)

So, it seems the nominal appreciation of the yuan has not yet appreciably slowed China's economic growth nor brought any balance to U.S.-China trade. Nor the currency appreciation affected its sales of wood products to the U.S. (and probably to third markets as well). It also seems the nominal appreciation of the yuan to date is grossly inadequate.

Moreover, China’s delay in making a meaningful start at a substantial revaluation in real terms means that it ultimately will have to make a much larger adjustment to bring better balance to its trade and payments flows, i.e. to fulfill its obligations under the IMF Articles.

A final note: S.796 (The Fair Currency Act of 2007), referred to as the Bunning-Stabenow-Bayh bill, seeks to address foreign government currency manipulation. Although it has picked up the endorsements of Clinton and Obama it is doubtful this piece of legislation or its House version will go anywhere this year. Free trade is always to be supported and protected. But, when it is not fair, it hurts us all.

Business Development

IWF News

All Three Buildings at GWCC Open

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All three buildings of the Georgia World Congress Center were officially opened after just 42 days of construction following the tornado of March 14. The Distributive Clubs of America (DECA) International Career Development Conference, with over 15,000 attendees, was the first major event to occupy Building A since it reopened on April 21.  

While portions of Building B have been used since the tornado, the International Reading Association 53rd Annual Convention will be the first major event to utilize the meeting rooms as well as Hall B3, the hall which received the most damage from the storm. International Reading Association will be in Halls B2-5 and meeting rooms in Buildings B and C on May 4-8, with an expected attendance of 20,000.

“We are so delighted to be able to announce that all of our facilities are once again open for business,” said Dan Graveline, Executive Director of the Georgia World Congress Center Authority. “Looking at the damage following March 14, we had no idea how long it might take before we could reopen. And here we are a short 42 days later fully operational. It is truly amazing.”

Since the tornado, the GWCC has hosted many events utilizing space as it became available. These events include the International Window Coverings Expo, National Propane Gas Association, Arbonne International and the FIRST Robotics Championship, the AJC International Auto Show and other ballroom and meeting room events.

During the reconstruction, many upgrades have been made throughout Buildings A and B. All of the concourse areas for the two buildings have new, modern ceiling tiles. These tiles are more energy efficient, create better lighting because of their reflectivity and provide better acoustics. Building A will have safety glass that is more energy efficient and is also safer in the case of inclement weather. New fabric wall panels in the concourses will provide better acoustics. The Lower A/B Connector will have new energy efficient lighting. Over 30 escalators will be refurbished or replaced for greater efficiency. The new roofs over Buildings A, B and C Concourses will meet new energy codes which will enhance energy efficiency. New overhead doors have been installed throughout the building.

The following photos will provide an overview of the progress.

Building B - Before	Building B - After

Main Lobby - Before	Main Lobby - After

 

 

 

 

 

 

 

 

U.S. Technology & Demonstration Center – A WMMA Community Project

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Exciting things are planned for the 2008 IWF Show. The UST&DC Project, an Association and Member collaboration, will demonstrate an innovative “cell integration” approach to the fabrication of wood cabinets. In addition, every effort will be made to keep this a “green” project. Read the April Press Release for complete details by clicking here.

At the U.S. Technology & Demonstration Center, WMMA will host a breakfast for the domestic and international trade press.

Press Breakfast at the U.S. Technology & Demonstration Center

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A press breakfast for the domestic and international trade press will be held on Wednesday, August 20, from 8:00 a.m. to 9:30 a.m.

Aside from the obvious opportunity to showcase the center, this breakfast event also will promote WMMA members who truly have a new product or service, supporting the theme of U.S. technology. Of particular interest would be those products or services involving non-wood applications. WMMA manufacturers need to demonstrate that they are involved in products beyond wood applications.

If your product or service concept is truly new or improved, the WMMA staff will help you build exposure during this unique event.

Please send your new and/or improved product or service concept to Stella Sytnik. The deadline for submitting your documentation to our headquarters is June 30, 2008. A final determination on whether to include your company’s new product or service will be made no later than July 15. Those selected are expected to participate in the breakfast and provide a five-minute overview.

Stay tuned for more updates and developments in this exciting community project.