
Globalisation and the furniture business:
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BY Dr Rosalea Hamilton Sunday, February 09, 2003
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The real meaning of globalisation is being dramatically played out in the furniture industry. Globalisation brings both benefits and burdens. With the reduction of tariffs over the past two decades, consumers have access to a wide range of furniture products at affordable prices.
Significant technological changes yielding, inter alia, wood substitutes have provided consumers with even lower prices. Today, furniture products from anywhere in the world are now at the consumer's fingertips, with Internet shopping making consumer choice as easy as a "click" away. Simultaneously with these benefits are the burdens being faced by local producers, as well as unwitting consumers who end up spending more when they find their imported furniture only last a few months.
Local furniture manufacturers have been unable to compete with the flood of imports that have entered the market over the past few years. Imports of furniture and parts have grown from US$19 million in 1995 to US$30 million in 2000. During the same period, exports of furniture fell steadily from US$3.4 million to US$344,000. Over the past seven years, the domestic production of furniture, wood and cork products have consistently fallen from J$117 million in 1995 to J$84 million in 2001. The available data, however, do not reveal the social ramifications of this decline. With no national plan to assist the industry to adjust to the new realities of globalisation, the adjustment process for many in the industry is to migrate, drive taxi, "buy and sell" or turn to criminal activities when no viable alternative is forthcoming.
The brave who continue to eke out a living from their "backyard" operations often suffer quietly from serious injury they sustain from using old or makeshift machinery and equipment. Further, the men in this male-dominated industry often suffer the humiliation of their incapacity to shoulder their family responsibilities, often leading to divorce, break-ups, domestic violence and even domestic murders. Today, local furniture producers are "bummy" with the knowledge that Rooms To Go, the largest furniture retailer in the US, will be entering the Jamaican market in March this year. With the expectation that the market will be flooded with imports, many see this as the last straw that will break the back of the local industry.
This is now crunch time for the furniture industry! Local furniture producers must now face squarely the realities of globalisation and the new rules of trade. As a signatory to the WTO Agreements, our Government cannot prevent Rooms To Go from entering the Jamaican market due to the fundamental WTO principle, Most Favoured Nation Treatment. Once they enter the market, the Government cannot compel them to buy from local suppliers due to another fundamental WTO principle, National Treatment, as well as the WTO Agreement on Trade Related Investment Measures (TRIMS).
What then are the options? Is the death of the local furniture industry now inevitable? The options facing members of the furniture industry are the same facing all other industries in Jamaica: to fight or not to fight. A decision not to fight predictably leads to the death of the industry, inability to sustain livelihoods and the exacerbation of the socio-economic problems identified above.
The decision to fight is not simply a fight for the survival of the furniture industry. In fact, some segments of the industry will inevitably die due to technological changes. The fight fundamentally entails the transformation of the industry to more viable alternatives in or out of the industry as currently perceived to ensure sustainable livelihoods. In the context of globalisation, sustainable livelihoods will depend on our capacity to produce competitive goods and services. Critically, we must be able to earn the foreign exchange we need to satisfy our demand for imports and to rid ourselves of the debt burden and its related problems. The decision to fight requires careful analysis and strategising by all stakeholders: businesses, Government and consumers. Furniture producers, retailers and their workers are on the front line of this battle. Every effort must be made to improve the efficiency and quality of furniture products in the face of fierce global competition. Without economies of scale advantages, creativity is key. Strategic alliances must be forged by firms within and outside the industry to assist in this process. This includes alliances with foreign firms, like Rooms to Go, if mutually beneficial deals can be struck. Local producers must also form strategic alliances with Government and other institutions, such as the universities, to assist in this battle. The private/public sector alliance is critical. Government strategies to assist the industry need not be conceived as purely financial. It should also include Government procurement decisions biased in favour of local suppliers; a carefully crafted adjustment assistance programme; intervention in ongoing trade negotiations to ensure that trade agreements do not undermine but rather assist in the adjustment strategy for the industry; assistance in the use of trade remedies (such as safeguard measures); improved institutional support from existing institutions or creation of new, more relevant institutions; among other creative strategies and policies. Finally, consumers play a pivotal role in this battle. Ultimately, the battle is won or lost depending on consumer choice. If consumers dominantly buy local, local producers and other stakeholders are likely to win. If consumers dominantly buy imports, local producers and other stakeholders are likely to lose. Consumers must make informed choices that weigh the short-term benefit of the cheap price of imports with the longer term gains of durability and sustainable local jobs and livelihoods. Remember the phrase: Caveat emptor!!! (Buyer beware!!!) Many consumers have had bad experiences with the "white plastic chairs". All that glitters is not gold. As the world contemplates the impending battle in the Middle East, local furniture producers are confronting their own battle for their livelihood in the context of globalisation. While we have little say in the decision and outcome to the battle in the Middle East, we all have a real choice in the decisions and outcome in the globalisation battle for our livelihood. What choice will we make, Jamaica?
Dr Rosalea Hamilton is a director of the Jamaica Wood Products & Furniture Association jawfa@hotmail.com
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