Current Issue

AUSTRALIA : BUOYANT AND MARKED PROGRESS

By Khaw Chia Hui
with excerpts from furnituretrend 2009, an industry report produced for furnishing industry association of australia

The world’s smallest continent has whipped up an appetite for furniture

ONCE KNOWN AS terra australis incognita (unknown land of the south) by ancient Romans, Australia is now a country with a booming economy and stable political climate. Australia’s population is just over 22 million. Most manufacturing is located around the major population centres in the coastal areas of Sydney, Melbourne, Brisbane, Adelaide, and Perth.

According to a report published in Wood & Wood Products in 2002, industry shipments for wood and upholstered furniture total about USUS$1.8 billion in Australia and even though the industry is small, the woodworkers in Australia boast that their total employment is greater than that of the automobile industry and in fact represents about 4.5% of all manufacturing industry employment.

According to the Furnishings Industry Association of Australia (FIAAFIAAFIAAFIAA) then, there were a thousand fewer manufacturers 10 years ago. In the early 1990s a number of larger Australian furniture manufacturers went out of business. This has resulted in the emergence of small entrepreneurs to fill the demand left by these companies.

Fast forward to the present, furniture imports went up 11 percent despite its retail turnover going down five percent. As expected, its furniture export development is stagnant. However, FURNITURETREND reported that consumer and business confidence are rising while population growth and improving economic conditions point to an outlook of cautious optimism. After all, the entire industry is valued at USUS$25 billion and retail turnover tagged at USUS$8.3 billion.

Industry at a Glance

Furniture imports continued to grow in 2008/09 notwithstanding the economic downturn. Wooden and upholstered furniture imports from China continue to be the industry class that has been hardest hit. More than half of all furniture imports originate from China. The average cost per unit of wooden framed upholstered seating from China and other Asian countries remains considerably lower than traditional countries of origin such as Italy. Imports most impact the retail sector where about two thirds of furniture turnover is comprised of imported products.

Industry exports development has failed to materialise and remains a minor part of local production output. New Zealand is the only export market of any significance with about 40 percent of exports (valued at USUS$52 million) shipped to NZNZ in the last year.

In constant prices, retail turnover fell five percent in 2008/09 on the prior year. Almost certainly this downturn would have been more severe were it not for government economic stimulus measures and historically low interest rates. These factors were offset by lower new housing activity which makes up more than half of retail furniture turnover. The decline was most severe in Victoria (-12.8%) and Queensland (-9.1%). Surprisingly, NSWNSWNSW defied the trend with modest growth on the previous year. The number of specialist furniture retail establishments is slowly rationalising. Imports share of retail turnover grew in a scenario that saw softer retail sales volumes with no abatement in imports volume entering the country.


Whilst niche markets exist, the wholesale furniture sector has been static for an extended period in a climate in which retailers largely bypass wholesalers to source supplies directly from manufacturers and from overseas. Similarly wholesale transactions in the commercial furniture sector are limited by manufacturers absorbing the wholesale function to improve margins.

The drop in furniture and furnishings retail turnover has been about the same as floor coverings but sharper than electrical appliances and retail turnover as a whole. At the same time furniture and furnishings prices have not risen to any extent in five years other than a small lift in the most recent year. Rising timber costs and other raw materials have added further pressure to industry profitability.

In an improving and resilient economy with rising consumer and business confidence, steady population growth and the prospect of a resumption of growth in new housing activity, the industry seems to have ‘weathered the storm’ for an outlook that is more optimistic than at any time in the economic crisis of the last two years. A full recovery will take time as the impact of commercial and domestic building activity and other key indicators invariably lag behind the general economy.