Furniture industry’s inventory down by 63%

Players in the wood and wood products sector were able to reduce inventory of finished goods to N25 million in the second half (H2 2013) of 2013, as against N67. 50 million reported in the first half of the same year (H1 2013). This shows the industry lowered inventory by 63 percent in H2 2013, data from the Manufacturers Association of Nigeria (MAN) have shown.

“Number one reason why manufacturers lowered inventory was the aggressive and increased sales of finished goods,’’ says MAN, in its economic review, as “the other strategy is improved technology.’’

Inventory (stock) of finished goods means manufactured products that are ready for sale. Inventory represents one of the most important assets that most businesses possess, because its turnover is one primary source of revenue generation and subsequent earnings for the company’s shareholders/owners, says Investopedia, an online business dictionary.

The progress made in the wood and wood products sector can be seen from the viewpoint of the fact that the inventory, which was down to N25 million by the end of H2 2013, had stood at N965.45 million by the second half of 2012 (H2 2012). Literally, this means that furniture makers reduced their stocks by 3761 percent within 12 months.

Real Sector Watch’s research has shown that the sales were largely made possible by aggressive housing and infrastructure expansions that went on around the country during the period, some of which required wood and wood products either as inputs or complements. Again, the new home owners within the period needed furniture in their homes as arm chairs, sofas, cupboards, tables, among others. Highlights of a few activities in the cement group, also called the non-metallic products sector, would suffice. This group reduced inventory to N890.23 million in H2 2013, as against N9.48 billion reported in H1 2013, while it made N323.77 billion investments in H1 2013 and N4.93 billion in H2 2013. The non-metallic product sector is led by the cement sub-sector, findings have shown.

Research carried out by A.A Ogunwusi of the Raw Materials Research and Development Council (RMRDC) showed that within the 1960’s and early 1970’s, the country’s exports of wood products and agricultural commodities provided more than 70 percent of the Gross Domestic Product (GDP). The research pointed out that over exploitation of wood, overemphasis on oil, among other factors, combined to stifle this process.

This sector is bedevilled by a number of problems that include: influx of cheaper finished products, incessant export of wood that ought to be used for furniture, difficulties in getting wood and planks from the sawmills, constant felling of trees by businessmen in collaboration with unscrupulous government officials, high prices of these materials, technological deficiencies, among others.

“Deficiencies in technologies and finance, lack of qualified manpower and their rapid turnover are major problems militating against optimal development of this sector. Thus, technical training is a priority to promote production to international standard and customers requirements,’’ Ogunwusi said further.

ODINAKA ANUDU