News

Thoughts on the economic situation of the supplier industries
Lighting - flat laminates - fronts - fittings

Lighting (from Hera’s point of view)
The lighting sector is facing declining OEM business with furniture manufacturers as individuals are cutting back on purchases. In concrete terms, this means declines in sales in single and double figure percentages, compounded by an increasing risk resulting from the critical credit rating of individual customers. Commercial credit insurers are handing out fewer credit notes and warnings from credit agencies are putting a strain on people’s willingness to supply products if there is a long payment period. The risk of non-payment due to bankruptcy is on the rise and the resultant cautiousness is not beneficial to an all-round positive business development. In this vicious circle, cost increases are putting pressure on the market, which is making the situation even worse.

The EU is currently discussing the banning of filament light bulbs and soon, everything that produces heat when it glows or lights up will be a thing of the past. The industry’s new lamp designs are attempting to imitate the light bulb, but this nearly always results in new design concepts. All of this has led to a renaissance in lighting technology, along with consistent use of energy-saving electronic ballasts. LED lighting technology now occupies areas of application which were previously monopolized by halogen lighting technology. But today, LEDs are equal in many ways to halogen lighting in terms of their luminosity and vast improvements are emerging with regard to light colours. Organic LEDs (OLED) are the next step. The industry will have to look into this technology.

Flat laminates (from the Professional Group of Decorative Flat Laminate´s point of view)

The financial and economic crisis is also impacting on the European market for decorative flat laminates. However, the situation is nowhere near as dramatic as for the automotive industry and its suppliers, for example. It is anticipated that 2009 will see a steady development for both the main sales markets – the furniture industry and the construction industry – while 2010 will bring a considerable recovery. The latest billion-euro packages created to stimulate the economy will protect the construction and development industry, which has been paralysed for years, from the worst effects of the recession.

The European market for decorative flat laminates had a total volume of nearly 310 million m² in 2008. Germany is and remains one of the largest and most important individual markets, with around 70 million m². Yet decorative flat laminates are also in great demand in eastern and south-eastern Europe and the Professional Group of Decorative Flat Laminate expects that they will open up new areas in the original European markets. As a material with outstanding surface properties and unique decorative diversity, it is a real alternative for many areas of application.

Fronts (from Neelsen’s point of view)

A whole host of problems are shaping the situation faced by medium-sized supplier companies, including bankruptcy, environmental requirements, cost increases, price reductions and rebate agreements. They put pressure on profitability and hinder reinvestments and thereby improvements in productivity. Tight budgets require creative solutions. Leading manufacturers or refiners in the fronts market are therefore working to the “just in time” principle. In these times it is essential for companies in the supplier industry to manufacture and supply on time. The extended workbench is slowly but surely developing as a standard in companies.  

The old production processes “incoming goods – production – outgoing goods” is no longer sustainable in this form. Now, the order is purchasing and material logistics – QA management – capacity planning, taking into account people and machines. An ERP system is compulsory if processes in a company are to run smoothly. Without modern data technology it is not possible to manufacture and produce “just in time” and companies need to consistently monitor operations. Nothing works without logistics.

Fittings (from Hettich International’s point of view)

In Germany as well as the UK, Spain, Italy and the US, the global economic crisis is leaving devastation in its wake in the fittings sector. Although the slump at the start of 2009 has still not reached a dramatic level, the target figures in the sector are not being met. Additionally, the eastern markets, China and India, can hardly compensate for the downturns in Europe. Nearly all sectors can identify with consumers' purchasing restraint and are affected by the situation in the construction industry. Even the retail sector, which supplies the construction-dependent trades, has come under pressure. One positive point to note is that the fittings industry ended 2008 with a small profit or a slight increase in sales, because the drop in orders will be reflected in the sales for 2009.

Under the current conditions it is simply impossible to give a certain forecast for 2009. The fittings industry must prepare itself so it can react with the highest degree of flexibility to unforeseeable market situations. Nevertheless, activity for the sake of it would be out of place. The entire world is well on its way to learning from the crisis for the first time ever and drawing the correct conclusions. If no major mistakes are made, we could see an upturn before the year is out. But we need to put an end to the slowdown in private investment and bring consumer’s money, stashed in their savings accounts, back into circulation. Let’s hope that the furniture economy and consequently the fittings industry is one of the first sectors to benefit from this.