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Report from
Europe
¡°Greta effect¡± evident at European trade shows in
opening weeks of 2020
As usual in January, the IMM furniture fair in Cologne
and the Domotex flooring show in Hamburg were key
events for the European wood trade, providing a signal of
market sentiment and an insight into emerging trends.
Official reports from both shows were typically bullish,
implying a high level of underlying confidence in
sophisticated and innovative European manufacturing
sectors.
IMM Cologne reported 1,233 exhibitors from 53 countries
and over 128,000 visitors, up from 125,000 the year
before, with over 50% of the 82,000 trade visitors from
overseas. Domotex reported 35,000 attendees, 70% of
them from abroad, and over 1,400 exhibitors from more
than 60 different nations.
An emphasis on ¡°sustainability¡± has, of course, been a
common theme running through these and similar shows
in Europe now for several years. However, this year there
was a sense that the environmental issue has become more
urgent, that industry needs to move decisively beyond the
greenwash and that failure to do so voluntarily will almost
certainly lead to imposition of new taxes and regulations.
The intense focus on sustainability at the shows is not so
surprising given the ¡°Greta effect¡±, which is galvanising
EU efforts to meet the goals of the Paris climate
agreement, and the timing of the shows so soon after the
launch of the new ¡°Green Deal¡± by the European
Commission which aims to make the EU climate neutral
by 2050.
This policy initiative and associated design trends towards
more authentic, natural and carbon neutral products,
higher quality items that are more durable and less often
replaced, and increasing interest in furniture that can be
used interchangeably either inside or out of doors, all have
clear and generally positive implications for wood product
suppliers.
To some extent though, the sunny outlook portrayed in the
publicity for these trade shows, flies in the face of
economic and trade data which suggests that the European
trade in both wood furniture and flooring products, which
has never really recovered the dynamism of the years prior
to the financial crises, was cooling again in 2019.
There is intense competition, which is certainly acting to
spur innovation in some sectors, but the concern is always
that wood manufacturers, particularly those dealing with
solid hardwood, are falling behind in the R&D stakes.
There remains an almost overwhelming focus on the oaklook,
a trend which extends even into artificial surfaces,
which is damaging prospects for wider hardwood market
development.
Slowdown in European wooden furniture consumption
in 2019
In the wooden furniture sector, recent trade trends suggest
a slowdown in overall European consumption, although
there is some positive news for external suppliers who
benefited from increased EU market penetration during
2019.
Chart 1, which shows the 12-month rolling total US dollar
value of EU trade in wooden furniture, highlights that
internal EU trade which had been rising strongly in 2018,
fell back sharply in the first quarter of 2019 before
levelling in the in the second half of the year.
Meanwhile EU wooden furniture exports were sliding
consistently throughout 2019 while imports were
beginning to rise. Taken together these trends imply a
slowdown in sales for the EU wooden furniture
manufacturing sector in 2019.
Note: STIX is a joint initiative of The International Tropical Timber
Organisation (ITTO) through the FLEGT Independent Market
Monitoring (IMM) mechanism funded by the EU, and the Global Timber
Forum (GTF).
Chart 2 indicates that the main beneficiaries of growth in
EU wooden furniture imports during 2019 were China and
tropical countries. This is in stark contrast to the 2017-
2018 period when EU wooden furniture import growth
was driven by non-tropical countries other than China,
particularly Turkey, Bosnia, US, Serbia, Ukraine and
Belarus.
One reason for this shift in trade is likely to be the USChina
trade dispute which has encouraged Chinese
manufacturers to redirect export sales from the huge US
market into Europe.
The upturn in EU imports of tropical wooden furniture
products is being driven by a gradual long-term increase in
market penetration by Vietnam and India, combined with a
surge in imports from Indonesia in the second and third
quarters of 2019 (Chart 3).
This last trend may be partly linked to the competitive
advantage for Indonesian furniture in the EU market due
to the FLEGT license which is becoming more of an issue
now that more concerted efforts are being made to enforce
EUTR in the wooden furniture sector.
One indication of this was news in January that a UK
importer, Heartlands Furniture (Wholesale) Ltd, was fined
a total of £13,300 for two EUTR offences dating back to
2017 for failure to undertake adequate due diligence with
respect to a Brazilian pine Corona bed frame from Brazil
and an American oak glass-fronted cabinet from Vietnam.
The recent surge in EU wooden furniture imports from
Indonesia was destined mainly for the Netherlands,
although the UK remains by far the largest destination for
tropical wooden furniture in the EU (Chart 4).
With the UK due to depart from the EU on 31st January,
there are of course profound implications for the overall
EU trade balance in tropical wooden furniture. In the
twelve months to 2019, the UK imported just over
US$800 million of wooden furniture from tropical
countries, nearly 40% of all EU imports from these
countries.
European wood flooring consumption recovers a little
ground in 2019
At the Domotex show, the European parquet floor
association FEP provided a preliminary assessment of the
European wood flooring market in 2019. Drawing on
information from FEP member companies and national
associations, it was estimated that European consumption
was flat overall during the year.
FEP emphasised that this was a first assessment subject to
change in anticipation of the complete data to be
communicated at FEP¡¯s Annual General Assembly due to
be held on 11th and 12th June in Hamburg, Germany.
After a year in 2018 when parquet flooring consumption in
FEP countries fell by 2.3% to 79.9 million m2,
consumption is estimated to have recovered slightly in
2019.
This is mainly due to a moderate upturn in Germany, the
largest European parquet market. Consumption also
improved in Austria, France, Poland and Spain.
However, these positive developments in 2019 were offset
by declining consumption in Italy, Sweden, Switzerland,
and the Nordic Cluster (Denmark, Finland and Norway).
Regarding competition, FEP members emphasised both
the continued rise in market share of products with a
wood-look, especially Luxury Vinyl Tiles (LVT).
They also stressed the uncertainties created by the trade
war between the US and China on global and European
markets.
In contrast, FEP sees the European Green Deal as an
opportunity for the wood flooring industry, particularly
welcoming the strong focus on construction and
renovation.
According to FEP, ¡°the European Parquet Industry is
offering a circular sustainable product which saves carbon
and substitutes energy-intensive and/or fossil-intensive
alternatives¡±.
Further information on FEP¡¯s 64th General Assembly and
45th Parquet Congress to be held in Hamburg in June can
be obtained from Isabelle Brose, FEP Managing Director
(isabelle.brose@parquet.net).
Increased import penetration in EU wood flooring
market
When speaking of competition, it is perhaps surprising that
the FEP report on the Domotex meeting made no mention
of imports. Analysis of EU wood flooring trade trends
shows that imports from outside the EU have been rising
strongly since 2017, a trend only moderating in the third
quarter of last year.
The rise in wood flooring imports from outside the EU
contrasts with the slowing pace of internal EU trade and
EU exports (Chart 5).
Chart 6 shows that the rise in EU wood flooring imports is
almost all due to China and Ukraine. Imports from China
in the 12 months to September were US$400 million, up
from only US$300 million two years before. During the
same period, imports from Ukraine have nearly doubled
from US$50 million to close to US$100 million.
European laminate flooring sales stabilised in 2019
Europe¡¯s globally dominant laminate flooring sector is
another key competitor for parquet flooring in Europe. Of
estimated global laminated flooring production of nearly 1
billion m2, the 18 manufacturers in nine European
countries (including in Russia and Turkey) that are
members of the European laminate flooring association
EPLF accounted for around 50% last year. This compares
to global share of around 25% for Chinese manufacturers
and 8% share for US manufacturers.
According to data presented by EPLF at Domotex,
worldwide laminate flooring sales by EPLF members were
446 million sq.m in 2019, a decline of 2% from 454
million sq.m in 2018.
However, after a significant fall in 2018, laminate flooring
sales in Europe stabilised last year. The decline in sales in
2019 was due to a decline outside Europe, notably in
Turkey, North America, and Asia (Chart 8).
Laminate flooring sales continued to fall in Germany in
2019, by far the largest single market in Europe,
accounting for around 50 million sq.m last year, but the
pace of decline has been slowing. Sales in Germany were
down 4% in 2019 compared to a 9% fall the previous year.
The decline in Germany in 2019 was offset by an 8% rise
in sales in the UK, to 33 million sq.m, a 1% rise in France
to 36.5 million sq.m, and a 3% rise in the Netherlands to
18.6 million sq.m.
A clear upward trend is also evident in Eastern Europe
where 2019 sales of 91.2 million sq.m were 3% more than
the previous year, and Russia, where sales increased 11%
to 44 million sq.m.
Laminate flooring is distributed via two major channels
which have been growing at around the same pace in
recent years; specialist wholesalers which supply most
professional floor installers, and DIY retailers that target
the general public.
Key trends in the flooring sector identified by EPLF at
their press conference at Domotex include:
Natural: flooring aims to look and feel ever more
like real wood;
Oak is still the dominant material in real-wood
floors and look in artificial finishes;
Concrete, granite and raw steel are increasingly
used as contrasting elements to wood;
There is a strong focus on improving the water
resistance of floors; and
The use of renewable wood and low-emission
production supports the sustainability of laminate
flooring.
EU ¡°Green Deal¡± creates new opportunities for timber
The Green Deal, published on 11 December 2019 by the
new European Commission and adopted by the European
Parliament on 15 January 2020, sets out a three-decade
effort to upend just about every policy area in the EU to
make the bloc climate neutral by 2050. In doing so, it has
real potential to create a policy environment very
favourable for the wood industry.
The strategy includes 50 specific policy measures of
which the flagship is a climate law, to be presented by the
Commission before the end of March, which will commit
the bloc to slash emissions to net zero by 2050, and a plan
to increase the 2030 emissions reduction target to at least
50 percent and "towards" 55 percent from the current 40
percent goal.
The Annex to the Green Deal indicates the Commission
will put forward an EU Industrial Strategy in March, as
well as a new Circular Economy Action Plan. The latter
will include a sustainable product policy with
¡°prescriptions on how we make things¡± in order to use less
materials and ensure products can be reused and recycled.
On trade, the Green Deal pledges to make respect of the
Paris Agreement "an essential element for all future
comprehensive trade agreements." Another measure likely
to attract attention ¨C and controversy ¨C is a proposal for a
carbon border tax.
There is also a commitment to building renovation to
improve insulation and reduce energy efficiency. The key
objective there is to ¡°at least double or even triple¡± the
renovation rate of buildings, which currently stands at
around 1%.
On forests, there is a specific objective to promote
products that do not involve deforestation and forest
degradation, to be encouraged through new labelling rules.
There is also recognition that the ¡°EU¡¯s forested area
needs to improve, both in quality and quantity, for the EU
to reach climate neutrality and a healthy environment¡±.
The potential for the strategy to help drive demand for
responsibly sourced wood products is well recognised in
the European wood sector and initiatives are being put in
place to better exploit the opportunities, although there is a
lot of work still to do.
This was highlighted in a recent article for the Timber
Trades Journal by Patrizio Antonicoli, secretary-general of
the European Woodworking Industries Confederation ¨C
CEI Bois. Mr Antonicoli said CEI-Bois has developed
three key assets to underpin the industry¡¯s transition to the
era of the Green Deal.
The CEI-Bois Manifesto for the EU term 2019-2024
illustrates how the European woodworking industry can
help the EU reach key goals, such as reduction of GHG
emissions in line with the Paris Agreement and the
deployment of a circular bio-economy, while ensuring
jobs creation and employment stability.
The Manifesto focuses on six priorities; Wood Availability
and Sustainability, Circular Bioeconomy, Competitiveness
of Wood in Construction, Free but Fair Trade, Research
and Innovation and Industrial Relations & Social Affairs.
The second asset is the wood itself. CEI-Bois¡¯ ¡°Building
the Bioeconomy¡± booklet shows how Europe can reduce
emissions by using low carbon, renewable alternatives,
such as timber, over high carbon materials, such as
concrete, steel and plastic.
With this publication, the European wood-working sector
is calling on policy makers to put wood at the centre of
emission reduction and zero carbon strategies and to
recognise it as a model product for transition towards a
circular economy.
Finally, the Forest-Based Industries vision 2050 focuses
on how forest-based solutions can help achieve five
ambitious targets:
To decarbonise Europe by 2050 by substituting
CO2-intensive raw materials and fossil energy
with forest-based alternatives
Eradicate waste in the circular economy, with a
sector target of 90% material collection and 70%
recycling
Drive resource-efficiency in the forest-based
industries value chain by enhancing productivity
Meet demand for raw materials by maximising
new secondary streams and ensuring primary raw
material supply from sustainably managed forests
Satisfy growing demand for climate-friendly
products by increasing use of wood.
Mr Antonicoli concludes, ¡°we see our sector becoming the
most competitive, sustainable provider of net-zero carbon
solutions through research, break-through technologies,
increased recycling and reuse. Together the European
woodworking industries can ride the Green Deal wave¡±.
Clarification.
In the 1-15 January 2020 report the term litre was coined by our
correspondent to indicate a small unit of per capita timber
consumtion. This was not an error just an attempt to make for
easy reading. 1 ¡®litre¡¯ is equivalent to 0.001 cubic metres.
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