Secondary Processed Wood Products Markets in ECE countries

Secondary Processed Wood Products Markets in ECE countries P-M. DESCLOS Forest Products Consultants UN/ECE Timber Committee Rome, Oct. 2000 1

Highlights Ø Trade of secondary processed wood products (SPWPs) is smaller but growing faster than that of primary products in both temperate and tropical species. Ø The United States and the EU are the world’s major producers, importers and exporters of SPWPs. Ø Furniture is the most traded SPWP in the ECE region and overall the region is a net importer. Ø Volumes of SPWPs traded are difficult to assess from trade and production statistics. 2

Introduction The volumes traded of secondary processed wood products (SPWPs) are still small compared to primary-processed wood products, but they are growing faster than that of primary products in both temperate and tropical species. Sources: FAO, 2000; and Comtrade, 2000 3

Introduction This trend is not specific to ECE member countries. ITTO trade analysis report similar and even more accentuated evolution. ITTO Consumer Imports of Primary and Secondary Tropical Timber Products 4

Drivers This evolution is driven by several factors: Ø the development of consumption in various economic areas of the globe; Ø a revision of the structure of manufacturing industries, focusing on corecompetence, opting for less vertical integration and consequently more out-sourcing ; Ø the differential of manpower costs between developing and developed nations; Ø the governmental incentives of many developing countries aiming at adding value locally and the resultant investments; Ø improved and competitive delivery logistics. 5

Products Tracking SPWPs is not always an easy thing. The identification and definition of SPWPs at any intermediate steps of a given manufacturing process, as semi-finished components or as finished parts, are at some stages uncertain. It is also worth noting that finished, and even semi-finished products, are rarely made only of wood. This should be remembered when analysing and/or comparing the value of various groups of products. The complexity of analysing all these factors partly explains why the headings “Other products” are frequently so big. Trade figures can differ vastly from production. This is often the case for packaging. All the following data refer to ECE member countries. We will explore the main characteristics of the trade of SPWPs through selected examples. 6

Furniture: a separate sector In value, the wood furniture sector alone is twice as big as all the other SPWPs together. 7

Furniture The main furniture sub-sectors identified in international statistics are: upholstered seats, bedroom, kitchen and office furniture and chairs. All others are included in the large “Other Wooden Furniture” heading. Imports and exports of wood furniture by ECE countries, 1998 Source: Comtrade, 2000 8

Furniture is a product with a high value-added ratio. In some types of furniture, the wood material used is the very core of the value of the piece of furniture, in others, like some upholstered chairs, the proportion of wood, in value and volume, is minimal. 9

Furniture trade: Imports The United States is the world’s main importer of furniture (30% of the total import of ECE countries), followed by Germany and France Source: Comtrade, 2000 10

Furniture trade: Exports from ECE Members Italy is the leading exporter with 26% of the total exported Source: Comtrade, 2000 11

Other wood products traded in the ECE To avoid a confusion we will call “Wood Products” all SPWPs other than furniture. countries Wood Products traded by ECE countries, 1998 Within the wood products sector, the value of trade in joinery and carpentry is the highest. “Joinery and carpentry” includes a wide range of products such as windows, doors, assembled flooring, concrete forms, shingles and shakes. 12

Wood Products trade: Imports of ECE Countries Source: Comtrade, 2000 13

Market profile: EU Since the negative results of 1993 -1994, the EU 15 balance of trade of SPWPs has been positive. Source: COMEXT, 1999 14

Market profile: EU EU’s exports of SPWP are in steady increase Source: COMEXT, 1999 15

Market profile: EU In 1997, individually, only two products had a positive balance: coopers’ products (barrels) and furniture, while wood mouldings, pallets and cases and joinery and carpentry were negative. The contribution of the furniture and seating (mainly Italian) is out of proportion with the other headings and has the major weight on the positive side. Source: COMEXT, 1999 16

Market profile: EU France and USA make up 90 % of the total ECE coopers’ products export (France 66%, USA 14%). In 1997, the French production represented more than 500. 000 barrels. EU 15 trade of cooper’s products (million ECU) Source: Comext, 1999 17

Market profile: USA As shown before, the United States is the largest importer of SPWPs, including furniture, and the second largest exporter behind Canada. Since 1991, both imports and exports have been in constant growth, with a negative balance of trade for all SPWPs. USA trade of SPWPs, excluding furniture Source: Comtrade, 2000 18

Market profile: USA In the wood products sector, the two groups with the highest trade value are profiled wood (mouldings), joinery and carpentry, they account for around 60% of imports and exports. USA imports of SPWPs, excluding furniture Source: Comtrade, 2000 19

Market profile: USA US imports of profiled wood were multiplied by 2. 2 between 1991 and 1998. Canada is the main supplier. USA imports of profiled wood 1991 - 1998 Source: Comtrade, 2000 20

Market profile: USA The breakdown of US imports of profiled wood changed substantially during the last 10 years. The shares of Canada and Mexico were reduced while Chile had a spectacular growth and Argentina started supplying in 1995. USA imports of profiled wood 1991 - 1998 Source: Comtrade, 2000 21

Market profile: USA Exports of joinery and carpentry products from the USA are much smaller than imports. Two countries (Canada and Japan) make up 76% of the total export. USA trade of joinery and carpentry products Source: Comtrade, 2000 22

Conclusion In the ECE region the trade in SPWPs is growing faster than the trade in primary products. Many major forest products producers are seeking to maximize value-added processing and minimize exports of primary products. This trend is particularly evident in South-East Asian countries. The increasing importance of secondary processing merits attention because focus on only primary-processed products gives too narrow a view on wood products production, consumption and trade in the ECE region. The statistics on primary processing, e. g. sawnwood production, only give a partial picture of reality. Trade and especially production of SPWPs are difficult to measure due to imprecisions in identifying the contribution of wood, in value or volume, in semi-finished or final products. 23