ICT and e-Business Impact in the Furniture Industry - empirica

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ICT and e-business impact in the furniture industry2.2 Industry backgroundTurnover, number of firms and employmentThe EU-27 furniture industry is an economically important sector, providing employmentto 1.4 million people and generating a turnover of 118 billion Euros in 2004. In most of theEuropean countries, furniture represents between 2 and 4% of the production value of theoverall manufacturing sector.Exhibit 2.2-2: Furniture industry structural profile, EU 27 in 2004Number offirmsEmployment Value added Turnover(million euros)Furniture 143.8 1,381,500 35,467 117,860Source: UEA, Eurostat (SBS) 2006The breakdown between small, medium-sized and large enterprises varies in the differentcountries. In Germany, a majority of the enterprises employed more than 20 employees.The average number of persons employed in a German firm was 78. In Italy, where therewere 35,800 enterprises employing 211,000 persons, the average number in oneenterprise was 6. In France the average number of persons in one enterprise was 11.Italy had the largest share of employment (15.1% out of the total EU-27 employment),followed by Poland and Germany with 12% and 11.9% respectively. Estonia is thecountry where the furniture industry accounts for the highest share of non-financialbusiness economy. In the period 1999-2003, the former EU15 furniture industry hascontinuously lost jobs. This trend is due both to the delocalisation of production activitiesin low labour cost countries and to the increasing automation of production processes.Exhibit 2.2-3: Share in EU27 employment in furniture manufacturing of the top five MemberStates, 2004Rank Country Share in EU-27 employment in furniture manufacturing1 Italy 15.12 Poland 12.03 Germany 11.94 Spain 10.35 UK 9.1Source: Eurostat (SBS)Exhibit 2.2-4: Employment specialisation ratio in furniture manufacturing (EU27=100), 2004Rank Country Furniture manufacturing employment in nationalindustrial employment1 Estonia 268.22 Lithuania 231.33 Romania 230.14 Slovenia 206.55 Poland 201.1Source: Eurostat (SBS)21
ICT and e-business impact in the furniture industryProduction costs and productivityOn the EU level, purchases of materials and of services account on average for about64% of the production value (respectively 49% for materials for manufacturing and 15%for services for manufacturing, development of products, distribution). Out of the cost formaterial, the highest incidence is for woods and panels, followed by components, i.e.semi-finished products, which account for about 17%.In 2004, apparent labour productivity 18 was 25,700 euros per person employed in the EU27 furniture manufacturing sector, well below the industrial average (40,900 euros). 19Average personnel costs per employee were also relatively low, at 20.600 euros.The gross operating rates provide information on the ratio of the gross operating surplusto turnover, which was 8.3% for the manufacture of furniture in 2004. This is 2.7% belowthe EU-27’s average for the non-financial sectors (i.e. manufacturing and other services).Exhibit 2.2-5: Productivity and profitability in furniture manufacturing, 2004Apparent labourproductivity(1,000 Euros)Average personnelcost(1,000 Euros)Gross operating rate(%)Furniture 25.7 20.6 8.3Office and shopfurnituren.a. 28.0 8.2Kitchen furniture 35.0 26.0 10.6Other furniture 20.5 16.0 10.1Source: Eurostat (SBS)InvestmentsOn average, in the furniture industry investments represented 4% of the production valueor 10% of the value added in 2004. Investments are higher in the office furniture industrythan in the rest of the furniture industry. In general, investments are made in the followingareas:Automation of production processes. About half of the total investments are fornew machinery, in order to automate production processes, through theintroduction, e.g., of Computer Assisted Manufacturing (CAM) solutions andComputerised Numerical Control (CNC) machines. Important investments are madein this area by the medium-sized and large enterprises to optimise production tocreate synergy between different lines or sites of production and to reacheconomies of scale.Design and creation of new models made within the enterprise or by externaldesigners and experts, changes in appearance, in the use of materials (combinationof different types of materials), in ergonomy, in ecology (recyclable furniture).1819Value added per person employed.Source Eurostat (SBS).22
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