South Africa’s furniture manufacturing sector is being exposed to increasing global competition, and with it comes increased risks.
It is, therefore, hoped greater collaboration between the sector and government, following the recent inaugural Furniture Sector Forum in Joburg, will help navigate these challenges.
The forum was hosted by the South African Furniture Initiative (Safi), Proudly South African (PSA), PG Bison and the Department of Trade and Industry (DTI), and brought together role players from across the industry and other industrial sectors.
“With such wide representation and an open discussion among manufacturers, government, buyers and industry experts, we quickly found the solution to many challenges is available in our midst,” says Penwell Lunga, Safi chairman.
The furniture manufacturing industry employs more than 26000 and last year accounted for R3.9 billion in export earnings and 1% of the country’s gross domestic product. It faces many of the same challenges as other manufacturing sectors, such as competing with cheap imports, investing in new technologies and accessing global markets, but in some ways, Lunga says, it faces more risks.
“This sector is, by its nature, more exposed to global competition and low economic growth than other manufacturing sectors, and we have seen employment drop from around 80000 in 1995 to fewer than than 27000 today. In the last 20 years, the number of manufacturing facilities has dropped from 3500 plants to just more than 2200 plants.”
At the forum, the DTI shared information on its industry incentive schemes, including the Agro Processing Support Scheme which has identified the furniture manufacturing sector as a core sector for future growth and support.
The DTI and PSA also shared their efforts to encourage local procurement initiatives. This includes efforts to enforce compliance with new government rules on local-only procurement of furniture and equipment by government departments and related sectors.
By channelling government expenditure on furniture and equipment to local manufacturers, many producing world-class furniture, Bernadette Isaacs, Safi chief operating officer, says the sector can be boosted by R5bn to R8bn a year.
Safi and PSA have extended the call for local procurement to the private sector and have received commitment from several large corporations and industrial sectors.
Forum attendees also shared solutions and ideas to benefit other manufacturers, including ideas for the co-ownership and operation of complex new machinery, ways in which the growing informal sector could be mentored and made part of the formal manufacturing sector, and ideas for entering new markets.
“The furniture manufacturing sector is perhaps the most diverse of all manufacturing sectors, with an average employment per manufacturer of 13 people per facility. While this makes it ideal for regional expansion and rapid employment growth, it also means many smaller manufacturers feel isolated,” Isaacs says.
“With forums like this, we are able to share best practices, ideas and detailed information about government support and industry incentives which will boost large and small manufacturers.”
One initiative shared at the forum was the benefits of becoming a PSA manufacturer. Recent changes to the PSA membership structure means manufacturers can become members for as little as R500, which gives them access to forums, local and global marketing events, a buy-local procurement platform and the innovative new www.RSAMade.co.za online store that is exclusively for locally-made products.
Lunga says: “PSA has made sure buying locally produced goods and supporting local employment and economic growth are firmly on the national agenda. The furniture manufacturing sector is poised to benefit.”
Safi, PSA and the DTI jointly committed to the completion of the Furniture Sector Master Plan by the end of this year.