2022 was not an easy year from a geo-economic point of view. How have the uncertainties of the context impacted the trend of the furniture and design sector made in Italy? Here the results, with forecasts for 2023.
2022 has just closed and we are now at the gates of 2023 in a climate of uncertainty and concern. 2021 had marked the year of recovery in the furniture sector, it closed with a +11% compared to 2019, for a total turnover value of over 26 billion euros and an active trade balance of 9.3 billion euros in growth of +19.7% on 2020 and +9.3% on 2019 but unfortunately in 2022 the numbers of our Made in Italy will start to drop again. Furniture is a fundamental sector for Italy, specifically Italian exports in this area represent 37% of total turnover with a value of 18 billion euros which confirms France, Germany and the United States among the major importers, until recently the United Kingdom was in fourth place in the ranking but today it records a sharp drop in imports due to the pandemic crisis and the climate of uncertainty caused by the exit from the European Union.
The Causes of The Crisis
The expensive energy, the war, the costs of logistics have undermined the growth of this sector and although the edition of the Salone del Mobile in June has recorded a growing public presence, unfortunately in terms of turnover the design market has suffered a big blow.
The first moment of crisis in this sector was in 2020 due to the pandemic, 2021 had instead represented a moment of recovery but the hope that the trend would continue to grow was crushed by the beginning of the war. One of the problems encountered in 2022 was the increase in prices by companies and producers caused by the increase in the cost of raw materials and energy. This, in addition to representing a strong price increase on final products, has also decreased the mark-up leading to a decrease in net earnings.
The Russian-Ukrainian crisis has led to a major problem in the field of energy supply and this will have heavy economic repercussions also in 2023. Since the first half of 2022 there has been a lower dynamism in exports which has continued to worsen in the second half, the war in Ukraine, with all its consequences, is aggravating an already critical situation.
The increase in prices by our companies means that they are no longer competitive worldwide as before and therefore leads to a decrease in sales and a cooling of demand. Right now the general sentiment towards the future is one of great uncertainty and concern as this war could completely block the recovery phase of the Italian economy leading to a recession.
We are witnessing the blocking of entire production chains due to now unsustainable energy costs and the problem of the availability of raw materials. Half of the Murano glass furnaces had to close as well as the metal foundries and carpentry shops, all the companies that base their work on high energy consumption found themselves without a choice.
Those who managed to keep their doors open had to necessarily raise prices and this resulted in a significant increase in the cost of the final products.
The contract sector of furniture dedicated to hospitality is also in crisis, this sector follows different dynamics compared to domestic furniture and has to deal with the slowdown in tourism, the presence of customers in hotels has in fact decreased, there are around 39 million in less than in 2019 (-10.3%) and the airline activity closed with a decrease in passenger traffic, forecasts expect a return to normal not before 2024.
The Russia
After China, Italy was also the second country in terms of furniture export volumes in Russia with 24.5% of the market shares, having had to interrupt these commercial relations due to the war certainly contributed to worsening the crisis in this sector .
Russia’s weight in the wood-furniture supply chain is equal to 410 million euros per year, in addition to being an export market, Russia was also an important supplier of timber, with the block on sales, the prices of the raw material increased beyond to make procurement difficult, thus risking creating a short circuit in which orders cannot be processed due to lack of material.
This makes the need to implement a change of course towards new markets that can replace the Russian one very urgent.
How Italian Entrepreneurs React
Never before have Italian entrepreneurs been alarmed for the future and for their fate, many companies have had to close especially the smaller ones and not least our precious Italian craftsmen who have suffered the most. the situation is serious, by now producing seems to have become a luxury and fewer and fewer companies can afford to do it in Italy, this leads them to go abroad such as China or other developing countries where labor costs much more low, thus leading to the decentralization of production and the movement of capital abroad.
Unfortunately, despite the requests and the emergency, the Italian state has not yet managed to provide valid help to these companies in difficulty. Responsibility is left in the hands of the individual entrepreneur, who is forced to find a solution on his own so as not to have to close the company.
Our companies have shown in the last two years to be flexible and resilient but by now the “stings” have been too many and the margin for recovery is starting to get thinner and thinner.
What strikes me most about this situation, as I am the designer and founder of an Italian company that deals with furniture, is having witnessed the closure of many artisan companies with which I collaborated in the last two years. The loss is not only at an economic level but it is above all the cultural aspect that is disappearing, it is the “know-how” of Italian craftsmanship, our flagship that has made us recognizable in the world. With the closure of the artisan workshops, the “ancient knowledge” will slowly die out, the manufacturing techniques that allowed the creation of extraordinary objects will soon be forgotten if a solution is not quickly found to support our companies. The realities of this sector that resisted the closure have significantly increased prices and this weighs so much as to make productions on the Italian territory seem impossible. The only thing we can hope for is that this moment of crisis will give us the impetus to rethink our production systems from the ground up, finding alternative sources of clean energy on site, reusing secondary raw materials and receiving economic incentives from the Italian state.
We hope that 2023 will be the beginning of a new, more equitable, peaceful and sustainable era.
This article is originally published on we-wealth.com
