Furniture firms shifting operations to local setup

CEBU, Philippines - Sensing the sustained strength of the domestic market, furniture companies in Cebu are now doing a major adjustment in their operational setup to suit the preference of Filipino clientele.

Cebu Furniture Industries Foundation Inc., (CFIF) past president Michael Basubas said that furniture plants now are shifting from producing elaborate or grandiose designs to simpler designs with cheaper raw material costs, to appeal to the distinct preference of the Filipino market.

According to Basubas, although the export market is still there, most companies are just maintaining part of their operations for exports instead put their focus on the lucrative domestic market.

"The local market is quite big," said Basubas, who owns the Diamond Cane Inc., one of the pioneering furniture plants in Cebu.

In fact, he added that while other furniture firms have folded up since the 2008 market downturn, some are reviving their operations to cater to the local market.

Basubas admitted that aside from the weakening global market due to back-to-back financial turmoil in the United States and Europe, the Philippines furniture exports is badly affected by competition.

From the manufacturer's point of view, the Philippines is losing its edge in cost of doing business, particularly in power and labor costs.

He mentioned that in Vietnam for instance, cost of electricity is pegged at an average cost of .04 dollar to .11 dollar  per kilowatt-hour, compared to Philippine's .14 dollar to .17 dollar per kilowatt-hour.

The same goes to labor cost, Vietnam only give an average of $107 to $156 per month, while Philippines' monthly minimum wage is at least $195.

If the furniture sector in particular solely depended its business on exports, it long been collapsed.

Basubas said furniture manufacturers are resolved that the local market will stay strong, or even promises growth, as long as the housing and real estate sectors are there. (FREEMAN)