Indonesia increasingly important for imports
Thomas Russell -- Furniture Today, October 1, 2012
Elsewhere in this week's issue is part two of our three-part series on Indonesia. Some resources, particularly those selling upper-medium priced to high-end case goods, have been sourcing there for years and understand what the country represents. For those who have yet to visit or see product from Indonesia, here is a quick overview on why it's becoming so important.
As we noted in week one, the country has one of the largest supplies of plantation-grown mahogany, a prized material for solid wood furniture. The island of Java, which is home to most of the furniture production in Indonesia, also has access to ports, roads and airports.
Indonesia has a population of about 240 million, which gives manufacturers a wide selection of workers, both young and experienced. Companies that have sourced there for years say the able-bodied work force is one of the country's prime assets, including those trained in hand carving and finishing. Labor rates also are among the lowest in Asia, particularly when compared to inflation-prone China and Vietnam.
Furniture/Today decided to visit the Indonesia plants after seeing the level of craftsmanship - particularly the application of finishes and high quality veneers - produced and sourced by companies such as Ligna, Hooker, Stanley and Lexington.
During a weeklong visit, we saw 10 plants including Furniture Brands International's new one in central Java. These facilities ranged from a few hundred thousand square feet to more than 2.5 million. All showcased a variety of capabilities and finished product. Most importantly, they show that Indonesia has enormous potential in furniture production.
There are challenges too, particularly in terms of infrastructure. The country still has relatively limited hardware and components suppliers, which means those materials have to be imported from places like China, making them potentially more susceptible to price hikes. And while many plants are close to ports, furniture still has to be shipped to larger port facilities, such as Hong Kong, to be transferred to larger vessels, which can boost shipping costs.
There is also a fear factor, which may have been exacerbated recently in response to recent protests over an anti-Muslim film produced in the U.S. Fortunately, most folks on the ground have said the protests have been relatively tame and nonviolent, thanks to the peaceful nature of most Indonesians. We found them to be very good natured and friendly and would enjoy the chance to return.
We certainly don't advocate anyone going to Indonesia who doesn't feel comfortable doing so. Read the travel advisories and get the shots. Make sure you have people on the ground to get you to the right places. Once you're there, you won't likely regret the opportunities it opens up for your company and your product line.