Export of wood, furniture ready to recover, speed up after the pandemic

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Showroom of AA Corporation on the online exhibition platform Hope Fairs - an effective marketing channel for many Vietnamese wood and furniture enterprises. Photo: N.H

High demand from international markets

Speaking at the webinar "Strategy to revive the supply chain of the furniture industry in Vietnam" held over the weekend, Mary Tarnowka, Managing Director of AmCham Vietnam said that there are currently 60% of manufacturers under contract in Vietnam as a partner of the US. The recent period of implementing social distancing to fight the pandemic has been a huge challenge for businesses, including American furniture manufacturers in Vietnam with a large number of orders that have been affected.

The fourth quarter is a very important period for the US market, especially during the Christmas and Thanksgiving holidays, so companies are doing their best to prepare to meet orders for these holidays.

Mary Tarnowka also said the US market's demand for Vietnamese wood and furniture products will continue to grow in 2022 and 2023. However, in the next six months, manufacturers in Vietnam will continue to grow. Vietnam will struggle to recover 100% capacity.

“This will have a negative impact on US buyers, in addition to an increase in freight rates. There are a number of US businesses that have moved orders to China and it will be difficult to call them back to Vietnam. It is important to reopen quickly, resume manufacturing operations, rebuild supply chains and promote sustainability and innovation in the industry,” said Mary Tarnowka.

Sharing the same opinion, Alain Cany, President of EuroCham acknowledged: “The time to implement social distancing is a bad time for European businesses in Vietnam, because this is the time when many orders are received. While orders from Germany, France and the Netherlands are "booming", everything in Vietnam has stopped.”

Accordingly, businesses have lost hundreds of millions of dollars when they lost the opportunity to sign new orders, especially exterior design businesses due to the characteristics of this industry that only have a few months to fulfill orders, while the furniture industry can span 12 months of the year. The positive point is that the old orders remain. However, there are still many difficulties and challenges such as shortage of raw materials, increase in raw material prices, laborers returning home have not returned to the factory, and factory capacity has not been restored. Besides, logistics is also a big challenge when businesses have demand to export goods but cannot find empty containers.

Ready to recover

With the message "Vietnam's wood industry is ready to recover and speed up after the Covid-19 pandemic", Bui Chinh Nghia, Deputy Director of the General Department of Forestry (Ministry of Agriculture and Rural Development) pointed out six key factors supporting the recovery of the timber industry.

Accordingly, 95% of wood workers have been vaccinated against Covid-19 with the 1st dose and 60% have received the 2nd dose. The Ministry of Agriculture and Rural Development is making efforts to coordinate with the Ministry of Health to prepare 136,000 doses of the vaccine for further vaccination of workers to gain immunity.

Local People's Committees also support enterprises in recruiting workers. Along with that, the Government and localities have also implemented solutions to actively support businesses in ensuring supply chains, finding outputs, building operating models, transportation, travel and financial problems for enterprises to restore production.

With these factors, the response and recovery strategy of the timber industry will be divided into three phases. In which, the adaptation phase will take place over three months with maintaining employees, opening factories and retaining customers. The goal of this phase is to restore 70% of the production, with sales estimated at US$900 million to US$1.2 billion per month.

The recovery period will last for 3-6 months to prepare for the new production season with new orders. The goal of this phase is to restore 90% of factories and expect revenue of US$1.2-1.4 billion per month. The acceleration phase is expected to begin in 6 months with investment in opportunities and growth with an expected growth rate of 15% compared to 2021.

Nguyen Hoai Bao, Deputy General Director of Scansia Pacific Company (Dong Nai province), said that Dong Nai province has now allowed workers to live in green areas or have received at least one dose of the Covid-19 vaccine for returning to work. This helps the company have more workers and workers can also return home instead of staying at the factory as before.

"The mentality of workers will be relieved, thereby helping to increase productivity and the production capacity of enterprises will be improved in the near future," Hoai Bao said.

Similarly, Glover James Michael, Director of AA Tay Ninh Architecture Joint Stock Company, also said that with Tay Ninh's permission to reopen, the company has begun to welcome workers back to the factory. Currently, about 90% of workers living near the factory have agreed to return to work. While the company's vaccination rate has reached 40%, Glover James Michael considers the production recovery to be positive.

From the perspective of the association, Do Xuan Lap, Chairman of the Vietnam Wood and Forest Products Association, said that despite difficulties, opportunities for Vietnam's furniture industry are still wide open. Enterprises themselves are aware of the great opportunity, so they have been constantly looking for ways to adapt to new conditions, from retaining workers, finding a stable source of raw materials to applying machinery and modern equipment to reduce dependence on human resources, improve product quality.

“Along with open policies, support from agencies and departments, the support and companionship of associations throughout the country, I believe that Vietnam's wood processing industry will quickly recover, continuing to become the spearhead of the country's economic development," said Do Xuan Lap.

Bui Chinh Nghia, Deputy Director of the General Department of Forestry, said that despite the impact of the pandemic, the wood industry still has high resilience and can recover quickly. By the end of September 2021, Vietnam's export of wood and forest products is estimated at US$11.9 billion. If from now until the end of the year, Vietnam exports US$800 million to US$1 billion each month, the wood industry will be able to fulfill the export target of US$14.5 billion assigned by the Ministry of Agriculture and Rural Development.