The European furniture and wood industry must adapt to the Industry 4.0 transformation. There are many challenges that the industry must face such as competitive, innovative and environmental solutions. Nevertheless, the sector trends that tend toward the products’ customization and the development of ICTs within companies are similar to other manufacturing sectors.
Wooden products are durable, resistant, and do not require much maintenance. Additionally, wood is sustainable since it is renewable, lasts in time,the production process does not create much waste and, when it is produced locally there are minimal transportation needs.
Wood increasingly being used as a source of renewable energy, almost a quarter (23 %) of the EU-27’s roundwood production in 2019 was used as fuelwood. Regarding its origin,: In 2019, there were up to 159 million hectares of forests in the European Union which represent one of Europe’s most important renewable resources: 43% of European land are covered by forests that are slowly increasing.
The wood and furniture industry seems to be a sustainable sector that will require fewer efforts to comply with the European Green Deal and to attain a succesfuldigital transformatione. However, the truth is that the industry is facing many challenges to remain competitive in the European market…
The multiple challenges of a vital industry for Europe
Across the EU-27 in 2018, there were some 397 000 enterprises active in wood-based industries representing almost 20% of the manufacturing enterprises and employing 3.1 million people with a gross value added of EUR 139 billion. However, due to the high competitiveness in the wood and furniture industry, the market sector has to deal with some difficulties. According to the Forest industries intelligence report, the EU wood furniture market has been sliding before the pandemic. One of the reasons mentioned by the consultancy is the loss of internal EU market share in 2019 in aid of overseas producers: “In 2019, 86.4% of all wood furniture sales in the EU27+UK market comprised products manufactured within the EU27+UK, a marginally lower percentage than the previous year (87.6%).” Other relevant data about the industry that helps to understand the global state of the market is the important increasing of the EU27+UK imports of wood furniture from non-EU countries, up to 10% or €6.7 billion in 2019 with China, been the largest external supplier, (up to €3.34 billion in 2019) and the imports from tropical countries increased 11% overall to €1.87 billion.
Apart from that global observing, within the industry, there are four sub-sectors that have to tackle different challenges: Pulp and paper, printing, furniture, and the woodworking industry. The competition with countries with low production costs is a common issue for all of them and although exports are growing, taxes and export duties do not help to remain competitive nor does the rise of the European energy prices.
In the case of the pulp and paper industry, the digitalization has participated in the reduction of the graphic paper consumption. However, this decrease is counterbalanced, according to the EU, by growth in packaging and hygiene papers. The demand for domestic wood is also increasing, which involves the need fora better optimization of the use of raw material supply. This particular issue is also shared with the woodworking industry.
Regarding the decline of the printing industry since the 2008 crisis, the change of habits and the web-based media and e-solutions significantly have reduced the sector’s revenue. The “perfect storm” that the printing industry is living is a combination of political, economic, social, and technological issues, according to the future of the European print industry report. The building of a successful future, says the report, could lay for instance on adopting the customer perspective, focusing on the development of external relationships but also upskilling the workers.
The digital skills needs are also important for the industry since there are specialised and non-transferable skills. In addition, the ageing workforce and the difficulties to attract young workers in the furniture and the woodworking industry is quite a challenge: “It can be noted that in 2014 about 38% of employees were between 25 and 39, while in 2005 it was 45%. In 2005 only 9% of the workforce exceeded 55 years, while in 2014 this figure increased by almost 15%.” (Digit-Fur, 2019).
The forest in Europe: illegal deforestation and legal framework issues
In terms of the environment, the EU frameworks are very strict and, under the European Green Deal, the Commission has announced a new EU forest strategy: “The strategy will aim to ensure healthy and resilient forests that contribute to biodiversity, climate goals and secure livelihoods, and that support a circular bioeconomy. It will focus on EU forest protection, restoration and sustainable management, and on world forests where not already covered”
However, last year, Earthsightexposed evidence of felling during the silent periods in the spring and early summer from 2018 to 2020 in Ukraine by taking advantage of loopholes that is allowed for “sanitary felling”; “it is hard to judge how much felling is really needed, and whether the harvesting is taking place under strict controls” (The Guardian, 2020). The non-profit organisation puts under the spotlights, companies supplying IKEA. Although Sweden furniture company denied the accusation by arguing forestry specialists’ audits. Forest Stewardship Council (FSC) that certified wood sustainable sources origin has also been accused by the UK based organisation. For what the FSC said that the law of the country is not enough clear.
The failure in the protection of the forest is the same reason that the European Commission has decided to pursue legal action against Romanian authorities in 2020. Last December, another investigation of Earthsight revealed that more than 100,000 tonnes of lumber linked to one of Russia’s largest illegal logging scandals has entered in Europe: “Buyers include suppliers of leading European DIY chains like Leroy Merlin, Mr Bricolage and Castorama”. More recently, a Brazillian company supplying the US and Europe market has also been accused of illegal practices which has not helped to stop the importation.
Looking for alternatives to wood: is it really a solution?
Would it be easier to use other material instead of wood? A range of alternatives have been considered and studied. One of the most innovating subsitutes comes from American scientists who plan to “grow” wood in laboratory by using a 3D-printed gel to mould plant cells into the desired shape. While the research is still on-going, the WWF organisation proposes diversifying approaches to creating everyday products by asking the followed question: What if we used something other than newly-harvested trees to create these products? The answer is easy why do not use the wood that is reclaimed, materials categorized as waste or recycled paper. Another alternative could be the use of plants like bamboo or other trees that are not used frequently like lyptus or Ipe.
The furniture and wood industry, composed majoritarian of SMEs, has a lot of challenges to cover in order to really respond to the exigent demand of the European Green New Deal. Innovation has to cross all sectors of the industry and upskilling must be implemented urgently. The competition with countries with lower production costs and may be less closely looking at the forest protection legislation is also difficult to tackle without strong legal frameworks.
Article by Marjorie Grassler – In-House Consultant at Mobile World Capital Barcelona
