71199 MÃbel och trÃindustri

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Furniture Industry in Lithuania: 

Furniture Industry in Lithuania

Lithuania is wealthy in forest resources: 

Forest land Forest land Percentage of land area Gross standing volume Average volume per ha Gross mature stock Average volume per ha Annual growth of forests Average growth per ha 1,978,000 ha 1,888,000 ha 30.3% 348 mln. m3 186 m3 5.3 mln. m3 244 m3 11.8 mln. m3 6.3 m3 Lithuania is wealthy in forest resources Forest stands area by dominant trees Source: Lithuanian Statistical Yearbook of Forestry, published by Center of Forest Economics Timber Felling

Forests available for wood supply cover 1,888,000 ha: 

Forests available for wood supply cover 1,888,000 ha Lithuanian forests are divided into 4 groups according to their protection level by the State: 1) strict nature reserves: any felling is forbidden 2) special purpose forests (ecosystem preserving and recreational): only stand formation and reconstruction felling is allowed when trees achieve the age of natural maturity 3) protective 4) commercial forests Commercial forests make about 77%.. Management activities in these forests have comparably small restrictions, however, general silvicultural and ecological requirements should be followed All silvicultural measures are aimed at the promotion of productive and resistant species as well as protection of biological and genetic diversity in forests. While carrying out reforestation, planting is successfully combined with natural forest regeneration. About 1/3 of cut areas is left to natural regeneration The quality of pinewood allows using it for various purposes, including furniture and sawn timber. Spruce is processed into sawn timber or used for firewood. Birch is used predominantly for pulpwood, plywood, and glued board production The structure of felling is not favourable for timber processing sector. Approximately 50% of total cut are firewood and pulpwood that cannot be processed domestically due to the lack of pulp mills. Unproductive round wood is used for energy generation, and pulpwood is being exported forests available for wood supply Timber Felling

About 5 million m3 round-wood is cut every year: 

About 5 million m3 round-wood is cut every year Annual round-wood removals stabilized at at about 5 million m3 in 1997-2000. According to the latest estimates of Forest Inventory and Management Institute, potential annual cut of 6.2 million m3 could be maintained for ten up-coming years. Industrial round-wood makes about 3.2 million m3 per year. Annual round-wood cut in Lithuania million m3 Timber Felling * Note: - cut for 2002-2026 is based on estimations of Center of Forest Economics Source: Lithuanian Statistical Yearbook of Forestry, published by Center of Forest Economics

Production and sales of wood products kept increasing in 2001: 

Production and sales of wood products kept increasing in 2001 Reasons Modernization of production lines resulted in higher production quality suitable for Western customers Local producers changed main export direction from Russian to Western markets Improving Russian economy In 2000 the production and sales of wood products noticeably increased. Total turnover of wood industry was 2.211 million LTL, with an increase of 30% in comparison to 1999 (1.796 million LTL). In 2001 the production and sales kept increasing. From Jan-Nov 2001 production of furniture grew by 13%, paper industry - by 52% and wood products - by 41%.

Lithuanian furniture producers are export oriented: 

Lithuanian furniture producers are export oriented Lithuanian furniture manufacturers are perceived as reliable partners by West European companies In 2001 exports of furniture amounted to 27.8% of total wood industry output Lithuanian furniture manufacturers cooperate with companies from Germany, Austria and Scandinavia Lithuania is the largest supplier of furniture to IKEA Trading Ltd. in Baltic countries Largest companies are actively investing in product line modernization, new technologies and equipment In 2001 export of all wooden products amounted for 534 million EUR, which is higher by 12 % than in 2000. In 2001 export of furniture surged by 32% and export of timber by 20% The main export countries for wood products in 2001: Germany ( 24%), Sweden ( 10%), UK (9%), USA ( 7%), Denmark ( 7%) Major furniture producers Turnover,MUSD Export share, % Vilniaus Baldu Kombinatas 15.6 92.9 Klaipedos baldai 15.6 73.0 Silutes baldai 8.8 88.2 Narbutas ir Ko 7.7 46.0 Kauno Baldai 6 53.6 Venta 4.85 98.4 Baldai Jums 3.8 96.2 Furniture industry Source: Association Lietuvos Mediena

Local furniture dominates the market: 

Local furniture dominates the market More than 1000 companies identify themselves as involved in furniture production, however vast majority of them can be characterized as workshops only, with rather fragmented production of joinery units and wooden articles, including furniture. According to Association of Lithuanian Woodworking Industries Lietuvos Mediena, there are 156 companies involved in the production of furniture as the core business activity Concentration of Lithuanian furniture market is rather high: 15 largest producers make about 51% of total sales Imported furniture is mainly oriented towards higher income level clients, while local furniture producers target low to medium income level segment Furniture market in Lithuania by sales in 2001 Furniture industry

Germany is the main export country for Lithuanian furniture producers: 

Germany is the main export country for Lithuanian furniture producers Furniture industry According to the commodity groups, all the furniture production is distributed as following: Sedentary furniture - 19,2% Office furniture - 12,4% Tables for newspapers and TV sets - 9% Kitchen furniture - 8,8% Living and dining-room furniture - 5,4% Other - 28% The main export countries for Lithuanian furniture producers Germany - 27% France- 20% Sweden - 12% UK - 9% Denmark- 9%

Business opportunities in the furniture market: 

Business opportunities in the furniture market Subcontracting Lithuanian companies for production or assembly of furniture from imported and locally produced components. Better access to distribution channels and low labor costs are key advantages of local companies Sales: the lack of specialization of Lithuanian furniture manufacturers creates an opportunity for foreign companies to find a niche and compete successfully in the market, especially in a higher income customer segment In the long term, partnership with Lithuanian companies can help gaining access to Russian, Ukrainian, and other former Soviet Union countries. Knowledge and experience of Lithuanian partners would help to utilize the market potential of Eastern markets. Supply: Rapid development of furniture industry has increased demand for high quality, environment friendly materials as well as new technologies

Furniture industry SWOT analysis - strengths: 

Politically and economically active region with stable fundamentals of state and society and established market economy. Lithuania is opened to cooperation with all countries. Availability of good quality forest resources. Relatively well developed furniture and production. Relatively low operating overhead, especially labor costs. High efficiency in manufacturing accurately specified types of products. Flexibility of local producers in terms of product variety and deliveries. Geographic location - Baltic's are home market for Swedish companies. Experience and knowledge of potential markets in C.I.S. countries No significant trade barriers for EU countries. Furniture industry SWOT analysis - strengths SWOT

Furniture industry SWOT analysis - weaknesses: 

Furniture industry SWOT analysis - weaknesses Lack of marketing and management skills. Small domestic market together with low domestic purchasing power. Limited access to capital and investments needed to finance new enterprises. Relatively low productivity level. Absence of advanced technologies in most of the sectors. Predominance of low value added products in industrial output and exports. SWOT

Furniture industry SWOT analysis - opportunities: 

Subcontracting and investment opportunities: Foreign companies can improve competitiveness of their products, utilizing key advantages of Lithuanian market: experience, low costs and well developed infrastructure. Development of supply/ production chain from cost competitive regions (Belarus, Russia, Ukraine) (long-term perspective). Supply of consumer and industrial goods: Recovering economy increases the demand for semi-processed industrial goods. Currently, possibilities of local industry to satisfy such needs are rather limited. Growing competition in Lithuania and neighboring countries would shift Lithuanian wood processing industries to more technologically advanced level, thus demand for various type of equipment will grow. General economy recovery stipulates demand for consumer goods. Scandinavian brands are well perceived and favored by local customers - key advantage in competition with other imported production. Furniture industry SWOT analysis - opportunities SWOT

Furniture industry SWOT analysis - threats: 

Emerging industry clusters and groups. Increasing competition from neighboring countries. Limited possibilities for large companies to compete on an equal basis with large number of private individuals: their activities are not rated by corporate tax. Concentration of companies. Furniture industry SWOT analysis - threats SWOT


“We make it easier for Swedish companies to make business in Lithuania” Exportrådet Vilnius Vokieciu 26 2001 VILNIUS Litauen tel.: +370 5 212 61 55 fax: +370 5 212 66 97 e-mail: litauen@swedishtrade.se http://www.swedishtrade.se

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