According to CSIL’s Mauro Spinelli, the furniture hardware business is showing expansion at a global level. In this article, reproduced courtesy of World Furniture Review, Mauro studies the trends visible at various levels of the industry.
Growth in international trade
As with other manufacturing sectors, emerging economies registered better performances than mature markets, but, globally, international trade flows of furniture hardware have registered a 7% average growth since 2005.
China, with US$2.7b, is the largest exporter of furniture fittings, followed by Germany and Italy. The market drop recorded in 2009 has been completely absorbed during a three-year growth period – in particular, China almost doubled its export values over the period 2005-2011, Germany increased by 7% on average, while other major exporters remained approximately at the same level. However, despite lower amounts, the best performance was registered by Turkey, which tripled its export values in the period considered – +25% average yearly growth – and Romania, which increased 35% per year.
On the other hand the US, the world’s largest importer, absorbed US$1.2b worth of furniture fittings, followed by Germany, Poland, France and Italy.
Expansion of large leading groups
The market is dominated by a restricted number of European groups, which employ around 20,000 people in total. These groups include large players like Blum (5500 employees) and Hettich (5900), and smaller companies like Titus (450 employees). These companies concentrate their production activities in Austria, Germany, Italy and Eastern Europe – mainly in Slovakia and the Czech Republic. Almost all relevant markets in Europe and Russia are served by commercial branches and showrooms.
Many leading brands entered the US market at the end of the Seventies. Most of them – Blum, Hettich, Grass and Titus – operate one main production base in the country and have strong agreements with large specialist distributors, providing a widespread presence across different regions of the US and Canada.
“The market is dominated by a restricted number of European groups, which employ around 20,000 people in total”
Over the last 15 years, several factories opened in the Asia-Pacific region. Hettich and Häfele entered the Chinese market in 1996, opening factories in Shanghai and Beijing respectively. More recently, in 2007, the Italian group FGV Formenti & Giovenzana inaugurated a factory in Guangdong, China. The Titus Group has chosen Malaysia and Indonesia for its Asian sourcing. A presence in the area is crucial for supplying the buoyant Chinese furniture industry, and also to easily reach neighbouring markets – especially India.
Hettich India Pvt Ltd (Mumbai) was founded in 2001 following a joint venture between the Hettich Group and the Saroj Poddar Group. Hettich has a pan-Indian presence, with a customer base of over 1500 large and small dealers, furniture and kitchen manufacturers. With six registered offices – in Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad – Hettich is considered a leader in the local market.
Brazil is another important target market. Hettich, FGV, Salice and Blum run their own factories in the country.
Brand strategy and distribution
Marketing strategies from leading companies are increasingly focused on improving brand knowledge. Visibility of hardware brands becomes a synonym of good quality and product durability for furniture manufacturers. For this reason, investments in communication have been increasing over the last three years. Furthermore, leading groups have chosen a strategy of simplification, reducing the number of brands offered with the aim of increasing brand awareness. For example, Mepla Alfit product lines are now marketed under the Grass brand, and the same strategy has been adopted by Titus International converting Lama products under Titus+.
At the same time, furniture fittings manufacturers are becoming more and more independent from furniture producers. Obviously, OEM markets represent a large share of the business. If combined with hardware distributors/wholesalers they represent over 70% of total sales for the majority of the largest groups.
On the other hand, we cannot ignore that some alternative distribution channels are gaining ground. First of all, the DIY segment – which is relevant in the substitution market – followed by e-commerce and, more recently, the contract project business.
Approaching contract business
Among the relevant contract projects carried out in the furniture hardware sector, here are two examples.
Firstly, Häfele in Dubai. In 2010 the Häfele Group supplied hardware products and technology worth 8m Euros for Burj Khalifa in Dubai. The Dubai office of Häfele GCC formed a local joint venture with Dorma Gulf, the international architectural firm Skidmore Owings and Merrill, and project managers Turner International, to provide the specifications.
Häfele could meet the stringent American building codes NFPA for fire protection and ADA barrier-free design. Over 2000 different types of hardware products were included in the programme for this project. Approximately 12,000 doors are now fitted with Häfele’s quality products, including custom-made lever handles, locks, door closers, special hinges and a broad assortment of door accessories, as well as electronic locking systems with up to 12 functions, that meet all security requirements. In addition, Häfele also supplied numerous articles from its furniture fittings assortment.
Second is the case of Hettich in China. More recently, Hettich China entered into a partnership with the local design company CSL in order to fit out the InterContinental Hotel in Suzhou, including 432 rooms and 55 suites. The project, completed in 2012, has been focused on combining contemporary Chinese design with high-tech functionality. InterContinental’s five-star requirements included silently- and soft-closing doors runners and furniture hinges.
Mauro Spinelli is the senior expert of industry and country studies at Milan’s Centre for Industrial Studies (CSIL), an independent research institute specialising in applied economics. Article courtesy of CSIL’s World Furniture Review magazine, March 2013.
