Mercado de Atuação
According to the Brazilian Association of Furniture Manufacturers (ABIMÓVEL), Brazil’s furniture industry is formed by 19,000 companies, 80% of which are concentrated in the country’s South and Southeast regions, led by the state of São Paulo and followed by the states of Rio Grande do Sul, Minas Gerais, Paraná and Santa Catarina. Brazil accounts for 3.7% of world furniture production, with a total of 511.8 million pieces produced in 2013, for sales of R$42.9 billion, which corresponds to 1.9% of the total net revenue of the country’s manufacturing industry.
Brazil’s furniture industry directly and indirectly employs 328,600 workers (2013), which corresponds to 3.3% of all workers in the country’s manufacturing industry.
Brazil’s furniture industry has evolved recently, driven by changes in the domestic economy, which has been significantly impacted by the opening up of the country’s economy to foreign trade in the early 1990s.
During that decade, certain exporting companies invested heavily in acquiring new high-tech equipment, which modernized the industry’s manufacturing base.
The main positive factors that marked the industry’s development include the opening of the economy to foreign trade, the expansion of the domestic market, and new consumers gaining access to the market. The low cost of reforestation wood represents another important competitive advantage.
The policy to overvalue the local currency over the first four years of the economic stability measures known as the Real Plan led to a substantial increase in imports of various products, which included furniture of superior quality at lower prices than those practiced in the Brazilian market.
With growing competition from imported goods, Brazilian furniture manufacturers began investing heavily to improve their production processes to be able to offer higher quality products. To achieve this goal, manufacturers received support from the federal government, which cut import duties on machinery and equipment to zero, and sought better ways to compete in the market.
At the same time as they were restructuring their production processes, some leading Brazilian furniture manufacturers also began to invest in adding value to their products in order to compete with imports.
The concern with training workers and improving product quality began to be shared among the country’s main manufacturers through ABIMÓVEL. In 1997, the association launched a program called “Adding Value to Brazilian Furniture” to advance its cause of improving production quality and services.
The move by the federal government in early 1999 to allow the local currency to depreciate gave a second wind to the furniture industry, which took advantage of the structural and operational changes made in previous years to consolidate its position in the Brazilian market, enabling it to compete more effectively in international markets.
In 2000, with greater stability in the exchange rate and a general recovery in the Brazilian economy, the industry once again began to register solid growth.
Given this growth in exports in recent years, the industry expanded its production capacity and significantly improved the quality of its products, though without a positive impact on its profits to the same degree.
The industry is currently investing in modernizing its technology and adapting its designs to meet the needs of European consumers.
Today Brazilian exports are characterized more as an option to outsource labor and sell raw materials to economically developed countries, where furniture design is client-oriented rather than supplier-oriented. This scenario limits the value added by Brazilian manufacturers, which in turn earn lower returns. Value is generally added through more advanced designs, which is one of the goals of the investments made by the furniture industry in Brazil, as well as by Eucatex, which focuses on manufacturing higher-value products that meet the needs of both domestic and foreign markets.
Eucatex is a leading supplier of wood products to the construction industry, manufacturing hardboard and MDP/T-HDF/MDF panels.
In 1996, sales of wood products to the construction industry remained stable, reversing the downward trend observed since mid-1995. By 1997, the industry recovered, supported by measures taken by the Brazilian government to increase the availability of credit. In 1998, higher interest rates once again curbed demand for construction materials, attesting to the strong correlation between the industry and the performance of the world economy.
During periods of stronger activity in the domestic economy, as observed in 1997, the home improvement industry proved very promising by accounting for a significant portion of the industry’s revenues. The industry is an important one during periods of economic stability and Brazil’s home improvement industry shows excellent growth potential.
Brazil’s industry also enjoys good prospects for generating revenue from wood product exports, mainly to countries in the Mercosul region, given its advantages in terms of scale, labor costs and technology, and its positions as one of the world’s most modern industries with a tradition as an exporter.
The paint and varnish industry comprises the architectural, automotive and industrial lines. This industry directly employs around 19,000 workers, with this figure increasing to 300,000 if indirect workers are included. Although somewhat dependent on the construction industry, the performance of the architectural paint segment tends to differ from the rest of the industry due to the market’s seasonality.
Brazil’s domestic paint industry registered sales of approximately 396 million gallons in 2013 for revenues of over US$4.2 billion, which makes Brazil the world’s fifth largest paint producer. Of the total paint consumed in 2013, more than 317 million gallons were used by the construction industry, which accounted for more than 80% of the Brazil’s paint consumption.