Tuesday , June 22 2021

Crisis in woodworking and furniture industry: What do they want from the sector?

The data comes from the report of the Observatory of the Argentinian Federation of Wood and Allied Industries (FAIMA) based on INDEC's Industrial Production Index (IPI) and its own research showing that In 2018 there was a contraction of 11.5% in the furniture industry and around 9% in the wood and furniture industry.

The explanation for such a scenario stems from the decline in consumption, which shows a deterioration that deepened in the last months of the year. The furniture industry contracted 37.5% yoy in December, while the woodworking and its manufacturers were 16.7%. According to the FAIMA Observatory, the level of production by the sector
closed in 2018 is 12% lower than in 2015.

When the current situation compares with the recession in 2016, there is an alarming figure that highlights the report: The current crisis has a strong impact on employment. 30% of the companies surveyed indicated that their staff had declined. This figure corresponds to the low utilization rate of the installed capacity, which shows the steam in the area, with the resulting sums and redundancies.

Balances and prospects of companies

Final data from the Observatory's annual survey show that 74% of the companies claim their production declined in 2018. 72% say their sales have dropped and 44% expect the situation to worsen in 2019.

According to the Observatory's annual survey 80% of companies in the sector do not believe the situation will improve in 2019.

Measures to overcome the crisis

The sharp rise in costs due to the increase in tariffs added to the fall in domestic consumption left the yield below the minimum thresholdInterest rates are added at record levels and dollarized resources that make the situation of companies even more difficult. In this sense, they are in a state of survival when they eventually liquidate shares to meet short-term financial differences. The situation, which is not sustainable over time and where measures are needed to resolve the emergency scenario.

The measures that FAIMA wants are:

  • Progress in the furniture sector of the tax reform tool, which allows for the possibility of discounting 100% of the tax-free minimum of employers' contributions.
  • Renewal of Production Investment Credit Line (LCIP) for 2007 T
    mitigate the serious problem of SME financing in the current context of. t
    such high interest rates.
  • Adjust the formed invoice, part of the sanctioned law of
    Productive funding so that all sectors have access to it
    financial instrument.
  • In terms of demand credit, revision of program rates
    The Sega 12 model can reduce costs and make available products.
  • Suspension for 180 days of application of the assessment in the AFIP Plans,
    extension of 60 plans for deferred payment of facilities and extension of its validity
    for debts contracted until December 2018.
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