Memorandum submitted by the British Furniture
Confederation
1. THE BRITISH
FURNITURE CONFEDERATION
AND UK FURNITURE
INDUSTRY
1.1 The British Furniture Confederation
The British Furniture Confederation (BFC) is
the single voice for the UK furniture and bed making industries.
Formed in May 2006 the BFC brings together key trade associations
and representative bodies, including the British Contract Furnishers
Association/ Office Furniture Manufacturers Association (BCFA/OFFMA);
the Association of British Furniture Manufacturers (BFM); the
Furniture Industry Research Association (FIRA); the National Bed
Federation (NBF); the Worshipful Company of Furniture Makers (WCFM);
the Association of Master Upholsterers & Soft Furnishers (AMUSF);
ProSkills; and the General & Municipal Boilermakers Union
(GMB).
1.2 The UK furniture industry
Annual output from UK furniture manufacturing
is currently worth nearly £10 billion at factory gate prices.
The industry directly employs around 132,000 people within 7,500
enterprises and makes a significant, but often unsung, contribution
to the UK economy. In addition the industry supports (and is supported
by) a large supply chain, with its associated wealth and employment
creation comprising materials suppliers, component manufacturers,
designers, distributors, contractors and retailers.
The industry is divided between small companies
and relatively large concerns. It is estimated that 67% of all
furniture manufacturing concerns employ less than nine people,
but also that the largest 300 companies account for 45% of the
total employment.
1.3 Global trends in furniture manufacturing
On a global scale furniture manufacturing is
big business: it is estimated to be worth around US$240bn at factory
gate prices. At the macro level there are three major trends affecting
global production:
A. Consumption is growing in real terms
in all major markets and is expected to continue to grow into
the future. This is primarily due to improvements in standards
of living in emerging countries and increased disposable income
in developed. The markets exhibiting the highest growth rates
are the new EU members and much of Asia (including China).
B. Globalisation is increasing and an international
trade emerging. On a global scale, measuring imports as a percentage
of consumption shows a doubling from a fairly low 15% in 1995
to 31% today.
C. Production is shifting from major industrial
economies to emerging nations. Even more dramatic is the fall
in the proportion of exports that emanate from developed countries,
with a consequent rise from emerging countries—particularly
Poland and China which have seen significant investment in new
plants designed specifically for exports.
2. THE BRITISH
FURNITURE CONFEDERATION
AND RDAS
2.1 The effectiveness of RDAs and their role
in adding value
To help the UK furniture industry adapt to these
trends and protect its future viability a certain degree of structural
readjustment is required in order to support the adaptation and
modernisation of education, professional training and employment.
Financial support for this readjustment should be available from
EU Structural Funds, but the BFC is concerned about the role that
Regional Development Agencies play in the UK when it comes to
distributing such monies.
At present the Government believes that the
best way to overcome regional disparities is to allow each RDA
the autonomy to pursue its own priorities. In order to gain ease
of access to Structural Funding however an industry must be designated
as a Priority Status Sector by one such body. RDAs tend to select
their four priority sectors from the industries that are dominant
in their region and so as the furniture industry does not have
a geographic heartland, no RDA has so far designated the industry
as a Priority Status Sector (see below appendix for breakdown
of employment).
2.2 The consequences of expanding RDA remit
to include the delivery of EU funding
Without Priority Sector Status the members of
the BFC are at a significant disadvantage when applying for EU
Structural Fund monies compared to their competitors in Europe.
The effectiveness of RDAs and their role in adding value to UK
industry is therefore, in the opinion of the BFC, greatly compromised.
This is especially disappointing when one considers that the EU
Commission appears to recognise the relevance of the furniture
industry and specifically targets it for access to such funding.
In 2005 the commission issued Communication 1314/05 which stated:
It is essential that EU level industrial initiatives
are fully integrated with the use of Structural Funds and the
policy instruments of individual Member States. The screening
process has indentified the following industries for which potential
structural adjustment is an issue—textile; leather; furniture;
footwear; ceramics ... etc. The Commission intends to ensure that
better anticipation and positive management of economic restructuring
are included in the new Structural Funds programmes. In line with
the Community Strategic Guidelines for Cohesion 2007-13, support
for programmes aimed at modernisation of labour markets needs
to be included in the new Structural Fund's work.
The Commission highlights the furniture industry
as a sector that should receive Structural Funds, and yet the
role of Regional Development Agencies in distributing such funding
is proving a significant obstacle.
2.3 The need for a level of policy delivery
between central and local government
The furniture industry is no longer designated
by the UK government as a priority sector, meaning that in other
EU states the competitors of British companies are tapping into
structural funds within the Cohesion for Growth and Employment
Directive. Foreign competitors therefore have an advantage over
UK firms in terms of improving and developing the skills of employed
people.
3. SUMMARY
UK furniture manufacturing is a large and often
unsung industry that employs a significant amount of people and
makes a considerable contribution to the UK economy. It has typically
been a traditional and rather static industry, but is now undergoing
dramatic change driven by a growth in low cost imports.
Nevertheless, it would be rash to dismiss UK
furniture manufacturing as a twilight industry that cannot compete
with the products from emerging economies. A UK furniture manufacturing
base provides many advantages that simply cannot be replicated
in a remote location. However, although UK industry needs to change
and develop if it is to compete, there is a persuasive argument
that furniture manufacturing can and should be encouraged to rise
to the challenge.
The industry needs targeted support and assistance
at the macro level in order to bring it up to world class levels
of performance. The current regional approach to funding favoured
by BERR is simply not working, because not only is the industry
geographically spread, but so is the entire supply chain. The
BFC would like to see a re-evaluation of the role that RDAs play
and an end the overtly rationalistic funding policy that is failing
many small to medium sized businesses and sectors that lack a
geographic heartland.
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