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STATUS AND

PROSPECTS

OF'THE FI]RNITTIRE INDUSTRY IN PAMPANGA

. _A

_BUSINESS

_RESEARCH

PRESENTED TO

THE GRADUATE SCHOOL HOLY ANGEL I]NIVERSITY

Angeles

City

IN PARTIAL FULFILLMENT

OF THE REQUIREMENTS FOR THE DEGREE MASTER IN

BUSINESS

MANAGEMENT

:

BY

JIiDrrH p.:fcrcLEs

March 2lr

1998

, ,!]LY ANEELUt'lII/TRSITY LIBRARI'

EXECUTIVE SI]MMARY

This study is

primarily

concemed

with

presenting the status of the furniture industry in Pampanga, at the same time

identifying

its success factors, prospects as

well

as problems that go

with growth.

The descriptive method in research is the one

utilized

in this study using a manufacturer's survey as the main source of

information.

Other sources of data were focused group discussions

involving

key industry players as

well

as

secondary data culled from the

DTI,

BETP, NSO and other government agencies that have been assisting the industry.

The industry's stbtus can be summarized as

follows:

1) there are less number of

firms

for the period under study,- 103 compared

to

240

in1994;

2) though there are less firms, these employ much

-ot"

workers (35-50 workers on the average) compared to 9-15 ten years

ag0;

3) there are much more exporters eaming more foreign exchange for the country than in the past decade; 4) the factories have grown ld$er

with

majority having more than 1,000 square meters area; 5) the firms are better capitalized

with majority falling

under the

'small'

category having business assets between

Pl.5

to

Pl5 million

and only

five

categofuzed as

'micro' with

capit alization of below

Pl50

thousand

only.

i

The factors that may have contributed to the success of the Pampanga furniture industry are the

following: 1)

the

pront"

of the entrepreneurs, their managers and supervisors show a more educated and learned people at the helm of the

furniture

companies; 2) the entry of many manufacturers into the foreign

market

has made them expand and grow into what they are now;

3) the adoption of new technologies through

the

acquisition of machinery and equipment for

production; 4)

the increasing size of the manufacturers' plants

allowing

them to modernize operations; and the continued assistance extended by various government agencies on

all

aspects of operation.

The prospects of the industry, be

it

in the domestic and foreign market seems bright, because of the continuoub demand

for

furniture as more

couples get married and set up families anywhere in the

world.

The

currency crisis in Asia whiclrhas affected the other growing economies has made the

Phililpine

exporters.more sought after by foreign buyers

compared to their competitors in Thailand, Malaysia and Indonesia.

Despite the prospects, they are some problems besetting the industry and the

firms

operating

within,

one of which is the high cost of production particularly wood which has to be imported as the country has no sufficient and

quality

raw material anymore. Another problem is the rising cost

of

other inputs especially finishing materials which has arisen by 25 to 30

1l

percent.

If

^{not properly} addressed, the industry's problems may mean removal of the export winner stamp put on furniture

exports.

There is thus a need

to

further study the proposed strategies that are part of the findings of this study, for the industry players to determine which are feasible to implement in the short term, the medium term, and the long term.

Finding local substitutes for imported wood is a

must.

The suggestion for the manufacturers to try using industrial tree plantation species of wood like ^gemelina,

ipil-ipil

, etc. must be taken seriously. Backward linkages have to be established, like

joint

ventures on forest concessions to be able to plant trees andraltan

for

future raw material requirements.

The industry is one of the major contributors to the province's development,

with

an estimated employment of 9,000 direct workers and 20,000 indirect ones (subcontractors and their workers) and investments

of

around P 1

billion.

Because

it

is one of the indigenous and

world

competitive industry of the province,

it

has to be assisted funher by the govemment.

lll