Estimates by the Chamber of Commerce of Furniture Manufacturers indicate that furniture sales in Poland in 2006 will reach zl.12.64 billion. This is more than each of the last three years. Compared with 2005, this year's sales of kitchen, apartment, upholstered and bathroom furniture will continue to grow. Institutional clients buying office furniture are also expected to buy more. Despite such optimistic forecasts, nearly 80 percent of Polish-produced furniture will continue to be exported. This is not only the case with apartment furniture, exports of which have remained high for years, but also with office furniture that has been increasingly well received in other European markets. Polish factories have a large production capacity and make use of modern technologies, so they are looking for new markets for their products, mainly in developed countries.

The Polish furniture industry has many strong points that allow it to compete with other countries with longer traditions in this industry, such as Germany, Italy and the Scandinavian countries. These assets include low production costs, as well as good quality, attractive designs and prices, which are lower than for comparable products from other EU countries. Furniture companies have created quality assurance standards and the wood supply is stable. The development of furniture production will also provide a boost to related industries. Demand for furniture from Poland has already resulted in the launching of regular railway connections with clients, mainly in Germany. PKP Cargo transports Polish furniture on the now daily Intermeble Express. The furniture travels by rail not only to Germany, but also to France, Belgium and Switzerland.

Weak points in the industry include the small domestic market (a result of Poles' lower purchasing power vis-á-vis their Western European neighbors), weak prospects for a significant growth of Poles' incomes, and customs taxes in the East that hinder exports.

"The Polish furniture market is very small," said Marek Adamowicz, the director of the Chamber of Commerce of Furniture Manufacturers. Only 20 percent of Polish production can be sold domestically; the rest is exported.

Depending on the economic cycle
Due to the important role of exports, the industry is affected by fluctuating currency exchange rates, mainly because the zloty is not fixed to the euro. Other new EU member states that are further along in their preparations to enter the euro zone, have already fixed their currencies to the euro. Meanwhile, in Poland, the zloty's appreciation against the euro makes the contracts signed many months ago less profitable when they are realized. "If the exchange rate drops by, say, 20 percent, and the zloty strengthens, manufacturers lose 20 percent of their income," said Adamowicz. He added that furniture prices cannot be raised because they are set in the contracts. Also, as a result of the industry's heavy reliance on exports, it is greatly influenced by the economic conditions in the export markets.

Furniture factories, particularly the smaller ones, sometimes have problems with their wood supply. The wood market in Poland is monopolized, and although forests cover as much as 29 percent of Poland, wood is insufficient for the industry's needs. The State Forests only sell as much raw material as the law allows.

The State Forests provide some 30 million cubic meters of wood for the market, while the industry's demand is higher. The raw material is not only used by furniture manufacturers, but also by other sectors of the lumber industry.

In the EU market, Polish furniture producers face stiff competition from German, French and British companies, for example, and on the other hand, have to compete with Asian and Romanian companies that offer good quality furniture at lower prices.

The Polish furniture industry's development opportunities are linked with higher exports and an improvement of domestic economic conditions. In recent years, furniture exports to other EU countries have grown. At the same time, the potential of the eastern markets, such as Russia, Ukraine and Belarus-all interested in importing Polish furniture-has also been increasing. U.S. clients also like Polish furniture.

Niches
With time, the economic upturn in Poland will result in lower unemployment and higher domestc consumption. Poles will increasingly be able to afford the furniture they like. An improvement in residential construction will be the deciding factor. It is estimated that every 10,000 new apartments completed result in a zl.150-200 million increase in the demand for furniture.

"The German market will offer good prospects for Polish-produced furniture," says Łukasz Kalupa, assistant professor at the Faculty of Economic Policy and Development Planning at the Academy of Economics in Poznań. He added that "it is difficult to expect in the short term that any other country, such as Russia, the United States or Japan, will become the main destination for Polish furniture exports." According to him, Polish manufacturers, along with fulfilling German partners' orders, should promote their own brands in the German market, following the example of companies such as Kler, Balma, Nowy Styl and Profim. Kalupa believes that it is possible to increase exports of swivel chairs, metal seating and wooden kitchen furniture to Germany. Many German distributors appreciate the quality of Polish office furniture.

Kalupa is of the opinion that small and medium-sized Polish companies should compete by looking for market niches. They could, for example, introduce customized products and services, from interior design and furniture production to transport, assembly, maintenance, and even recycling.

Not everyone likes traditional middle-class furniture. Young clients on the German market are looking for good new designs. "Maybe the time has come to start promoting Polish design, even as a Polish market niche at the beginning," said Kalupa. These new consumer needs may offer an opportunity to young talented Polish designers who are worth promoting around the world.

The Polish furniture industry, like many other industries, suffers from a lack of transparent and up-to-date statistics that would facilitate both production and investment decisions. The Central Statistical Office studies are only published after lengthy delays, and market research is costly. Companies commission their own reports, but these are often fragmentary studies that do not present an overall picture of the industry. The Chamber of Commerce of Furniture Manufacturers commissioned an extensive study for the first time three years ago, and recently repeated it. The results are currently being analyzed.

It is not yet known exactly how much money foreign investors have put into the Polish furniture industry. The Polish Information and Foreign Investment Agency collects such data but its statistics only include investments over $1 million. Even on the internet, it is difficult to determine the exact number of furniture manufacturers, the volume and value of the furniture industry's annual production, imports and exports.


Source: The Chamber of Commerce of Furniture Manufacturers
The writer used a fragment of Łukasz Kalupa's book Meblarstwo w Polsce Kondycja-Podstawy Sukcesu-Perspektywy.