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More optimistic mood in the furniture sector after a difficult period
According to Creditinfo Lithuania data published in October 2024, about one fifth of the companies operating in the furniture sector have recently faced risks such as declining revenues and delays in payments to suppliers. However, most of the country’s furniture sector is now profitable and demand is recovering.
According to Ingrida Grikpėdienė, CEO of VMG Wood Invest, positive trends can be seen in recovering export markets, overall sales volumes and more favourable product prices. Although the recent period has been challenging for the furniture sector, manufacturing companies are gradually returning to their pre-industrial routines and seeing a recovery in demand.
“After a very turbulent year, we have seen prices stabilise and we can start to forecast the cycle of supply chains again. Compared to last year, we are expecting a 3% increase in our group’s sales and a 12% change in annual sales,” says the CEO of VMG Wood Invest.
According to Grikpėdienė, the fastest recovery in export markets is currently observed in France, Romania and the USA. Furniture companies in the region continue to face disproportionately high raw material prices, she said.
Another challenge is the shortage of labour. The most acute shortages in factories are currently of skilled production operators to work on automated edging and drilling lines and wood technologists.
“We work closely with educational institutions and the employment service, and organise transport for workers who live further away from the factories, to ensure we have the right number of employees for the Group’s operations, but challenges remain,” she says.
It is important to note, however, that the company’s initiative to open its industrial sites to the public, which has been in place for the past two years, is also giving a positive impact to recruitment. During the events, potential employees are able to see the industry’s technologies and innovations at first hand and see how they can put their engineering or technological skills into practice. This Open Industry initiative will continue next year.
In terms of market stability, Grikpėdienė highlights that the latest technologies allow companies to improve and expand their services – new product designs or product lines can lead to the creation of new business models and help companies to become a more diversified market player.
The furniture sector is particularly sensitive to consumer activity. If the European Central Bank is expected to take more decisive steps in the direction of interest rate cuts, a recovery of the real estate sector could be expected, which would be a direct impulse for consumers to turn more towards the furniture sector.