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Freeman Cebu Business

Hoping for recovery in 2015 Cebu exporters keeping fingers crossed

Ehda Dagooc - The Freeman

CEBU, Philippines – Cebu furniture exporters are once again crossing their fingers that hopefully 2015 will be a turnaround year for the industry and that demand from the global market, specifically from the United States, will finally recover.

"Business should get better in 2015. The economic indicators are showing up," said Cebu Furniture Industries Foundation Inc.,  president Robert A. Booth.

Booth said if the United States economy will stay on the positive growth track, such as the easing of credit for property loans, it would mean the end of the difficult season.

He said exporters who have been in the furniture business for years would understand the cycle of the market and those who have the patience to wait for the rebound are luckier.

This explains why despite the very tough profit draining market drought, serious industry players opted to stand firm and never gave up, although some have streamlined their operations over the last few years.

This year, the industry grew by five to six percent in the last three quarters, which Booth said is a positive development for the industry.

The expected start of recovery in 2015 may not mean a complete turnaround of orders in terms of volume, what is apparent is the upward trend of demand from its major market--the United States.

Department of Trade and Industry (DTI-7) regional director Asteria Caberte said the government, specifically in the region, has never lost hope for the industry. In fact, the furniture sector is one of the priority sectors identified in the region that needs to be given extra attention, along with tourism, creative sector, business process outsourcing, among others.

Caberte said the furniture sector may have suffered the longest crisis in history, but it continued to breathe during the trying times, and 2015 is seen to open the industry again to wider market demand.

In 2012, the country’s total furniture production reached US$538 million, of which total furniture export stood at US$137 million and local sales at US$399 million.

The United States remains the country’s top market for furniture exports, accounting for 62 percent. It is followed by Japan, United Kingdom, Italy and Australia.

According to Booth, although the domestic market acted as the savior of furniture exports over the years, the export market is still the industry's breadwinner.

The expected turnaround of demand starting 2015 may not be as overwhelming as in the 1990s, but what is clear, he said is that the furniture sector "is here to stay."

On the other hand, the highly anticipated recovery does not mean sticking to the same old system in marketing, quality, and design. The entry of a whole new set of buyers will pressure the exporters to develop strategic positioning, and other changes in the way the players do business.

The opening of ASEAN integration next year may entice players to possibly move to countries where labor cost is cheaper, but there is huge possibility that companies will opt to stay here given the strong economic growth of the Philippines.

Chamber of Furniture Industries of the Philippines  president Nicolaas De Lange, said that year 2015 will start the movement for collaboration among companies to make them bigger players as competition turns fatal.

The industry is moving towards working together and pool their resources (budget) to stay ahead of the competition.

De Lange however stressed that positive outlook for furniture exports, cannot stand alone to harness the improving global market, but it direly needs the support from the government--in making the environment conducive for business to flourish.

Overdue problems, like bureaucratic red tape, expensive power and logistic cost, and unfavorable tax and labor laws are just few of concerns that the industry wants the government to fix.

In 2015, Booth said that the industry is hitting the market road again, "slowly, but surely."

ASTERIA CABERTE

CEBU FURNITURE INDUSTRIES FOUNDATION INC

CHAMBER OF FURNITURE INDUSTRIES OF THE PHILIPPINES

DE LANGE

DEPARTMENT OF TRADE AND INDUSTRY

FURNITURE

INDUSTRY

ITALY AND AUSTRALIA

MARKET

NICOLAAS DE LANGE

UNITED STATES

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