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EDITOR’S NOTE: New directions required

Posted in Australia on Friday, 01 April 2011. Print

Australian furniture manufacturing has been radically reformed since tariffs on imported furniture were reduced (though not eliminated entirely).

EDITOR’S NOTE: New directions required

Before tariff reductions the industry curve indicated a concentration in the mid-range section of the market. Now the importation of cheaper, acceptable quality goods from low labour-cost nations such as China has seen the number of mid-range companies rapidly decrease. Today the curve indicates an increase in high-quality, high-value furniture manufacture, and a decline in the mid-range and low-range industry sectors.

One consequence of this shift has been a fragmentation in the identity of the industry itself. We live in a world of highly Balkanized furniture associations. Manufacturers in a specific geographical region or who deal with a specific kind of furniture find it difficult to create common cause with manufacturers who are from elsewhere or who make different products. This surface fragmentation partially masks, I believe, a deeper split in the industry.

Though it is not quite an entirely fair characterization, we could call this a split between a “blue collar” approach, and a “white collar” approach.

Blue collar manufacturing is largely focused on the craft and process of manufacturing itself. These companies typically attempt to compete with imports through advanced machinery and clever use of source materials. White collar manufacturing accepts that Australian costs will remain higher than those for imported goods, at least for the next 10 years. These companies invest in innovative design and the use of “green” products to create a point of difference with imports.

What both groups share to some extent is something of a disconnect from where the Australian furniture market is heading. With property prices increasing, the future is likely to see something of a shift towards smaller, urban spaces. Perhaps this need to reconnect with consumers will eventually help to meld the disparate groups in the industry together.

 

 

Tags: Economy

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