1st half imports up 11%; China's growth slows
By Brian Carroll -- Furniture Today, October 16, 2005
High Point — U.S. furniture imports rose 11% in this year's first six months, a rate that was nearly triple the 3.9% increase in retail furniture sales during the period.
Some $10.2 billion in furniture was brought into the United States during 2005's first half, up from $9.2 billion in the same period a year before.
Given significant pressures on retail prices and a penchant by consumers to pinch pennies, expect yet more U.S. furniture factories to shutter and for more offshore product to replace that disappearing domestic production. Decisions at Bassett and Lexington last month to close North Carolina plants are evidence the trend is continuing.
However, the trade figures from the U.S. Department of Commerce also indicate that China's explosive growth is cooling off. New U.S. tariffs on wood bedroom and, more significantly, the huge and growing import total for China combine to make the 30%-plus growth rates of the past three years unlikely to continue.
Chinese-made furniture imports for 2005's first half totaled $5.1 billion, a 13% increase over the $4.5 billion brought in during the same period in 2004. That $4.5 billion represented a 45% expansion over 2003.
The retail numbers in part explain what occurred in imports during this year's first two quarters. Because retail sales grew by only 3.9% during this year's first half compared with 6.3% for the same period in 2004, and since unit demand for furniture at retail actually rose, logic suggests that lower-cost goods are winning the day.
According to Amy Glynn, an analyst with Standard & Poor's Equity Research Services, "Vast quantities of imported furniture are being pushed through retail channels, but declining prices are masking it." Consumers "expect to pay less than in the past," Glynn said.
At $5.1 billion, China for the first time accounts for half of every U.S. dollar spent on imported furniture.
China's market share continues to increase, although it no longer is swallowing it in huge chunks. Given Chinese factories' aggressive expansion into more sophisticated upholstery and their efforts to capitalize through public stock offerings, China's number should continue to expand.
Some believe China's market share has already peaked. A report this month from European banking and securities firm UBS estimated that furniture was among the categories of imports in which China has maximized its market share. Other product categories included toys and footwear.
The Top 10 source country list is notable for several reasons other than China. Vietnam, for example, continues to race up the rankings, this time by more than doubling the amount of furniture its manufacturers sent to U.S. customers.
Vietnamese imports grew 136% to $304 million, rising three places to No. 7 on the Top 10. Last year was Vietnam's first time on the elite list.
The Vietnamese government predicts its furniture exports will grow 25% this year, and reported that for the first nine months, the growth rate was on that pace.
Vietnam's rise so far this year is facilitated by comparatively slow growth for Taiwan and a decline in demand for Thai-made furniture. No. 8 Taiwan finished at $279 million, a 2% increase, while No. 10 Thailand slipped 3% to $189 million.
Italy, which finds a growing number of its manufacturers targeted by Chinese plants — or turning to China themselves to make product — saw first-half shipments to the United States drop 10% to $575 million.
It's the second straight year of constriction in U.S. demand for Italian furniture. Chinese upholstery producers continue to erode Italy's longstanding supremacy in the United States in leather furniture. As an import category, cut-and-sew covers from China jumped 53% during this year's first half to $144 million. Meanwhile, Italy's top category, wood-frame upholstery, fell 23% to finish, ironically, at about the same level, $145 million.
Also troubling for Italy are the 40%-plus increases for China in wood-frame upholstered seating and wood-frame upholstered chairs. China's largest category, and by a wide margin, however, still is occasional furniture at $1.1 billion.
Perhaps dented by the tariffs on wood bedroom, that category — China's fourth largest — declined for the first time in at least a decade. The 13% drop left China with a total of $420 million shipped here in the first half. Wood beds, which are broken out as a separate category, also dropped 14% to finish at $202 million.
No. 2 Canada increased its total to $1.2 billion, a 6% increase over the first six months of 2004. By doubling its growth rate compared with a year ago, Canada reverses a trend that had its market share eroding. While still losing out to China in market share, this year Canada held its own vis-à-vis everyone else at roughly 11% of total U.S. imports.
In part a reflection of relative economic and political stability in Malaysia and Indonesia, both countries saw healthy gains this year. No. 5 Malaysia grew its export total to the United States by nearly a fourth to $345.5 million. No. 6 Indonesia saw a 20% increase to $326.6 million after flat growth last year.
Though the United States imports furniture from 58 countries, the Top 10 account for about 90% of imports. The best of the rest was the Philippines, which rebounded from a flat first half in 2004 to a 23% gain this year. Filipino producers sent $125 million in prouduct to the United States in the first half.
If UBS is correct and China's market share has peaked, the ocean carriers are going to have too many containers to fill. According to the Journal of Commerce, these companies, which include Maersk Sealand and Hanjin, are set to introduce dozens of large new container ships into the east-west trade lanes during the next three years.
The global container fleet will increase nearly 15% in 2006 and 2007, according to the trade journal, and another 11% in 2008.
The container business is already exhibiting the characteristics of an oversupplied market. Rates are already falling and carriers are refusing to lock in rates for periods of longer than several months, according to several reports in the Journal of Commerce.
| Imports | |||
|---|---|---|---|
| U.S. furniture imports by major source countries, January–June 2005 | |||
| in millions of dollars | |||
| 2005 | 2004 revised | % change from 2004 | |
| Source: U.S. Customs Service, U.S. Census Bureau, U.S. International Trade Commission. |
|||
| China | $5,142.1 | $4,537.6 | 13% |
| Canada | 1,163.4 | 1,099.9 | 6 |
| Italy | 574.9 | 639.5 | -10 |
| Mexico | 505.1 | 483.5 | 4 |
| Malaysia | 345.5 | 282.0 | 23 |
| Indonesia | 326.6 | 272.5 | 20 |
| Vietnam | 303.6 | 128.4 | 136 |
| Taiwan | 279.0 | 273.7 | 2 |
| Brazil | 238.4 | 199.4 | 20 |
| Thailand | 189.4 | 195.1 | -3 |
| WORLD | $10,206.9 | $9,208.7 | 11% |
| Imports | |||
|---|---|---|---|
| U.S. furniture imports by product category, January–June 2005 | |||
| in millions of dollars | |||
| 2005 | 2004 revised | % change from 2004 | |
| 1. A "seat" is any product for sitting that is not a "chair." Source: U.S. Customs Service, U.S. Census Bureau, U.S. International Trade Commission. |
|||
| Misc. wood furniture | $2,286.3 | $2,083.6 | 10% |
| Wood bedroom furniture | 1,015.8 | 954.9 | 6 |
| Metal furniture & parts | 949.5 | 853.5 | 11 |
| Upholstered seats, wood frame1 | 693.5 | 648.9 | 7 |
| Metal outdoor seats with textile covered cushions1 | 529.5 | 487.6 | 9 |
| Wood beds | 482.4 | 424.4 | 14 |
| Upholstered chairs, wood frame | 463.8 | 346.6 | 34 |
| Wood furniture parts | 422.9 | 370.1 | 14 |
| Wood chairs | 325.1 | 314.9 | 3 |
| Upholstered seats, metal frame1 | 318.1 | 305.3 | 4 |
| WORLD | $10,206.9 | $9,208.7 | 11% |
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1st half imports up 11%; China's growth slows
Oct 18, 2005
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