Polish furniture sitting pretty?

Łódź Design Festival, Poland (Polish Ministry of Foreign Affairs, CC BY-NC)

It may surprise some, but Poland's furniture assembly lines have made the country a production powerhouse, the fourth biggest manufacturer of furniture in the world.

So why are so few aware outside Poland about it?

The country after all has a glorious design history. From 1904, it had the Warsaw School of Fine Arts – Poland’s answer to the Bauhaus – and later the Communist government established the Institute of Industrial Design, whose mission was to create collaboration between design and industry. Furniture was art first and foremost.

Today the domestic sector employs approximately 23,500 people. It is highly competitive and largely export-driven. Poland, for example, exported over EUR8bn worth of furniture in 2014, with 90 per cent of Poland’s furniture products sold on global markets. Poland is currently the fourth largest exporter of furniture in the world and tenth manufacturer on a global scale. On a European scale, Poland is the third largest supplier of furniture, after Germany and Italy.

In 2011, Polish furniture reached 160 countries and statistics released by the furniture industry association OIGPM show that at least one of the furniture items in every German, French or English office or home is produced in Poland.

Vitra, Thonet, Fritz Hansen, Kinnarps and BoConcept all use Polish manufacturers. Tesco, John Lewis and Ikea also have products coming out of the country’s factories. Meanwhile a handful of manufacturers including furniture companies Noti and Vox and traditional upholstery brand Iker are trying to raise the standard of design in the country using local talent.

But, and here’s the rub, most of the time these items are marketed under a foreign brand.

This despite success in exports and some lucrative contracts such providing offices desks in Apple Stores or furniture in Palais Elysee in Paris. Moreover 31 per cent of revenue comes from sales of furniture elements. There are only a handful internationally recognized brands like Kler, Forte, Paged, Klose, Nowy Styl or Ludwik Styl.

Size isn’t everything

The furniture sector is one of the most competitive of Poland and generates about 2 per cent of GDP, i.e. more than EUR7.6bn. It contributes relatively more to the Polish economy than it is the case in the rest of the European Union, where the figure is 0.5 per cent of GDP.

Given that 90 per cent of furniture produced in Poland is exported, the industry is essential for Poland’s general economy as well as a key player among Polish exporters. One example illustrating the importance of this industry is the fact that the value of Polish furniture exports in 2011 was higher than all the exports to France put together, according to Central Statistical Office (GUS) data.

The largest recipient of Polish furniture is Germany, buys EUR2.5bn or 39 per cent of the sector’s export value, according to OIGPM. Nine percent of exports go to France, while the rest goes to the Czech Republic, the UK, Sweden and the Netherlands. The highest growth rate of exports has been seen in destinations like Spain, Italy and the USA.

Domestic market weak

Manufacturers producing for the domestic market still get away with selling cheap, low-quality furniture, some believe, although Poland is changing  and there is evidence some Polish manufacturers are starting to adjust. Iker recently commissioned Poland’s young design star Tomek Rygalik. “Some manufacturers are already sensing the new direction the market is taking,” Rygalik says.

Noti, a rival of Iker, is also working with Rygalik because it thinks Poland’s expats will return to the country as more refined consumers, “looking for good design,” says the manufacturer’s sales manager Irena Krzywonos.

The crisis in the global real estate sector, however, has damaged the margins and the results of the Polish furniture industry in various markets.

In the first half of last year, Poland, the ninth largest exporter of furniture to the United States, noted a decrease of 22 per cent of deliveries to the US. As for Italy exports of furniture from Poland fell by 13.8 per cent, down to EUR136m, while imports of Italian furniture in Poland grew by 26.6 per cent.

“There is a disturbing development from the industry’s point of view, which is lower growth rate [of the sector] compared to the broader industry, which results in a lower share of the furniture sector in the total production sold. Between 2008 and 2011, the annual growth rate in furniture sector was on average almost 7 pp lower than in general industry. This phenomenon is on the one hand the consequence of high base effect (Polish furniture export is already a key part of the European furniture market), but on the other it is due to the business model adopted by the companies i.e. one of a subcontractor producer,” Marek Adamowicz, Head of OIGPM, told Puls Biznesu.

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