German Furniture Sector Focus

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Germany is the second leading European producer of furniture, providing 24% of European supply amounting to Euro 17,719 million in year 2000. Production registered a 2.4% growth at current prices with reference to the previous year, despite the drop in residential construction (-2,9%), the volatile confidence climate and the weak business climate. Growth was driven mainly by foreign demand and, thanks to the capacity utilisation in manufacturing, it remained at high levels.

Since 1995, German furniture manufacture was on a downward trend: in 1998 growth of furniture production achieved good results at current prices, while in 1999 production recorded a negative result. The decline affected all segments of the furniture industry except for office furniture which bucked the trend and recorded an increase of over 4% at current prices.

Office furniture (accounting for 16,5% of total supply) was the only segment of the furniture industry that showed considerably vitality even in times of general crisis in the furniture sector.

Prices

An increase in the cost components meant that the rate of inflation in the German furniture sector was higher than average. In 1999 production prices of furniture rose by 1.5% and 2000 recorded 2.1%, compared to increases in the general price index of 1% and -0.4%, respectively.

Demand

Germany provides 27% of European sector consumption and it remains the leading furniture consumer in Europe, with furniture consumption worth Euro 19,481 million, at factory prices, in 2000.

As with production, consumption also recorded a weak growth in 2000 (+1.4%) after the contraction recorded in 1999. In the period between 1996 and 2000 the average annual fall in consumption was -0.1%. Positive influences on the consumption of furniture in 2000 were the augmentation in disposable family income and the decrease in the rate of saving.

But the economic situation is uncertain: energy tax and social programme of the Government reduce real wages and the propensity for purchasing on the part of families.

Foreign trade

Despite the current near crisis experienced by the furniture industry in Germany, foreign trade is still the main driving force in the sector.

In terms of European furniture trade Germany ranks second, as an exporter (behind Italy) and first as an importer. In 2000 the rise in exports confirmed the good results achieved by German companies on foreign markets. Furniture exports were worth Euro 4,588 million, an increase of almost 21% on 1999. The quota of exports on total production rose from 17% in 1996 to 26% in 2000. The leading customers for German furniture are the neighbouring countries, especially the Netherlands, Austria, Switzerland and Belgium. Together these countries account for over 50% of total exports.

Furniture imports in 2000 amounted to Euro 6,350 million, with growth of 11% at current rates compared to the previous year and with Poland and Italy as the leading supplier of furniture to Germany. Over the period 1996-2000 the growth in imports averaged 7%.

Development in furniture industry

In 2001, turnover of the 1,400 largest furniture producers and dealers in Germany fell by 1.5% to EUR 22.4bn, the industry losing ground against the car, holiday and entertainment sectors in the fight for consumers' money. Between 1993 and 1998, the share of income which consumers spent for furniture, fell from 7.8% to 6.9%. Verband der Deutschen Moebelindustrie (VDM), the industry association, is to launch an advertising campaign in spring, aiming, to spend EUR 75mn to improve the image of furniture, over the next three years.

Furniture exports/imports

The German furniture industry exported furniture worth EUR 3.5bn in the period from January to the end of September 2001, registering a increase 7.7% increase. Furniture imports worth EUR 4.7bn in the same period. The import volume was up 2.3%.

Mobelmesse Cologne

"Despite the overall difficult economic situation, the International Furniture Fair has once again fully lived up to its reputation as the leading fair for furniture and furnishings." This was how Dirk-Uwe Klaas, chief executive of the Verband der Deutschen Möbelindustrie, the Association of German Furniture Industry, summed up this year's fair.

Over the course of seven days, 1,459 suppliers from 46 countries displayed the entire spectrum of products and services. Everything from top-class designer furniture to traditional home interiors was on show, with 67 per cent of exhibitors coming from outside Germany. The international nature of the event was also reflected in the significantly higher numbers of foreign visitors. The number of visitors from countries belonging to the EU was 4 per cent up and the number of visitors from outside Europe was up by 26 per cent on the figure for 2001. In contrast, the number of visitors from Germany was down.

The fair was mostly characterized by good business results. The exhibitors unanimously emphasised the quality and decision-making credentials of the visitors as well as their interest in acquiring information. In contrast to the rather subdued expectations prior to the fair, the majority of the exhibitors also showed themselves to be satisfied with the level of ordering activity. The signals suggest that 2002 could represent the beginning of a recovery for both the trade and industry.

Design was the main focus of the fair this year. Some among the most important design and trend signals coming out of this year's fair are:

• furniture is showing a bolder approach to light and colour
  
• the trend towards greater multifunctionality in furniture is continuing.
  
• movement towards clear formal language. Clearer contours for furniture.