Coronavirus: Croatian Wood Industry to Become More Competitive?

Lauren Simmonds

In predicting the market scenario after the coronavirus pandemic, that is, changes in the system of globalisation as we’ve now known for so long, yet another opportunity for the Croatian furniture industry to make a huge leap forward in its development can be found.

As Poslovni Dnevnik/Juraj Loncaric writes on the 20th of April, 2020, the Croatian economy, as well as the manufacturing and construction industries are being forced to co-exist with the coronavirus pandemic for a longer period of time. Finding the optimal balance between health, economic and social priorities is the key to successfully managing in these trying times.

Strict restrictive measures in most EU countries and indeed across the world have more or less restricted production, which has a knock-on effect on sales and consumption. However, export-oriented wood processing and furniture production expect the EU’s stringent restrictions to be eased, as many businesses in the field have temporarily or even permanently lost both foreign and domestic orders.

A modern, technologically and commercially organised, globally competitive European furniture industry (115,000 entities, with 1.1 million employees in total) purchases raw materials and supplies from around the world. Imports of these materials from the Far East have significantly increased over the last 30 years and the continuity of these deliveries has, owing to these unprecedented circumstances, been called into question.

The coronavirus crisis is forcing EU importers, wholesalers, retailers and furniture manufacturers to reconsider their own sources and supply chains, depending on market demand. The self-sufficiency of industrial production is one of the topics to dominate early 2020, and this could mark a major turning point for the international exchange of goods and services.

Reduced purchasing power has become the uncomfortable norm thanks to the pandemic.

The ”start date” of the resumption of production activities and the gradual normalisation of furniture demand will certainly be very different across various EU countries. During the second half of April, a number of countries with advanced furniture and wood processing industries in the EU have been spending time considering a decision on dates for May, such as the mitigation of restrictive measures, and the resumption of production and the opening of specialised retail stores and other department stores. Production has been continuing in the Far East, most notably in China, which is well known as the world’s largest exporter of furniture.

The good news is that wood processing and furniture production are on the list of many governments’ priorities for the easing of anti-epidemic measures. The production of clothing and textiles is at the very forefront. The coronavirus pandemic has seen some extremely strategic management decisions be put at stake for the furniture and wood industries in both Croatia and the EU.

The purchasing and need for furniture, and therefore the demand for primary wood processing products, depends on the needs and desires of consumers and their purchasing power, and this has been further reduced. The question of when this trend might come to an end is still up in the air.

Industrial companies have been applying strict safety measures at work, and these are now being supplemented significantly to protect against the spread of the new coronavirus (COVID-19). In an environment threatened by something as menacing as a global pandemic, the preservation of personal health and common material interests is very much in the interests of both employers and employees.

Medium and small sized furniture factories are complex and changeable organisms, with numerous business relationships existing in the sales/export and supply/import chains. Any interruption of the production process in a single factory for several days causes a material and logistical damage. The interruption of industrial production in a country for several months causes a level of material and social damage that is difficult to measure, and the problems being experienced by many small and micro furniture manufacturers in this crisis are particularly complex.

For the Republic of Croatia, the coronavirus pandemic can be a challenge, but also presents with a golden opportunity to support the development of the manufacturing industry, whose share in GDP is low, more than ever before.

It is time for those who design Croatia’s economic policy, as well as professional institutions and associations who also deal with that, to immediately prepare a debate and propose some decisions in regard to the national industrial strategy for the 2021-2027 period. The need to propose measures that will encourage exports, small and medium-sized manufacturing businesses, the use of information technology, and online sales, domestic consumption and more, are required now more than ever.

Croatian design is being sought.

The wood industry, furniture production and final wood processing are strategic activities for the Republic of Croatia. Compared to the business of its competitors from EU countries, the development of finalising valuable Croatian raw materials has not been sufficiently dynamic, nor has it been all that cost-effective.

In predicting the market scenario after the coronavirus pandemic subsides, or more precisely the structural changes in the globalisation system that are likely to come, lies another opportunity for the Croatian production of furniture to make a step forward in its general development.

The competitiveness of the Croatian timber industry has been confirmed by exports, which account for 60 percent of the total production value. It also accounts for 10 percent of total merchandise exports, and 90 percent of those raw materials and parts are of Croatian origin. Domestic raw materials will become more competitive than ever before in the changed conditions of international trade, ie, limited globalisation, following the end of the pandemic. The quality of products and branches of Croatian industry is very well recognised on the international market, and Croatian furniture design is a sought-after and very much desired product.

Make sure to follow Made in Croatia for more on Croatian companies, products and services. Follow our dedicated section for all you need to know about coronavirus in relation to Croatia.


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