Germans, Italians vie for woodworking mkt pie

Competition is heating up in the fight to dominate the Indian woodworking machinery market with Italy and Germany, both among the leading manufacturers of woodworking technologies, redrawing their strategies to step-up their exports.

With the Indian economy continuing to register a phenomenal growth, Italy and Germany have begun to run neck and neck in their effort to garner market shares.

While Italian companies prepare to set up production units in the country, German manufacturers promise better price-performance ratio on their machinery. A testimony to the battle is the ongoing Indiawood-2008 exhibition in Bangalore which has seen the participation of 50 Italian and 51 German companies.

But the poser is, why have these countries made India the battleground? Explained Franz Josef Buetfering, president of European Federation of Woodworking Machinery Manufacturers (Eumabois): "The demand for new housing units and office space continues to rise in India. While the urban population is expected to rise from the present 28 per cent to 40 per cent by 2020, the need for extra office space in the next five years is estimated to be 55 million square metre. The hospitality sector will also be on the expansion mode as there is more thrust on tourism. All these factors will push up quality furniture production. As the European companies are known for their woodworking technology, India presents a tremendous market to us."

India had imported woodworking machinery worth ¤49.8 million in 2006, as against ¤36.9 million in 2005, registering a growth of 35 per cent. The demand for woodworking machinery was from the country's furniture manufacturing sector, sawmills and producers of wood-based panels.

Dario A Corbetta, marketing manager of Acimall (Italian woodworking machinery and tools manufacturers' association), told Business Standard: "India furniture industry is one of the fast growing sectors. We had exported machinery worth ¤14 million in 2006 and ¤20 million in 2007 to India. We are lining up new products to meet the increasing demand for the latest technologies."

The Italians are eyeing the panel woodworking segment, which they maintain is the future of the industry. Nearly 80 per cent of the wood is used to produce panels, Corbetta said and added: "Our strength lies in customising our products to suit the users' need."

The Italian Trade Commission, which has set up the Advanced Woodworking Training Centre in Bangalore, plans to upgrade the teaching modules to ensure the easy availability of skilled manpower to service products manufactured by Italian companies.

"We are training 600 persons every year at the centre. An efficient after sales service is what we are offering the Indian customer,'' said Italian Trade Commissioner Vittorio Mecozzi.

The Germans, however, appear to be more aggressive and they are targeting the growing retail and hospitality sector. According to Ingo Bette of Verband Deutscher Maschinenund Anglagenbau (VDMA), the German tool working manufacturers association, the number of shopping malls in India have increased from 100 in 2005 to 315 in 2007 and is expected to double by 2010. The hospitality sector is also changing as international players are looking at expanding their chain.

"For every one rupee spent on building a hotel, Rs 3 is spent on furnishing it. The furniture market in India is growing at 30 per cent per annum and we are looking at tapping it.'' Bette said.

VDMA has planned to ride high in the Indian market by drumming about its original technology and environmental concerns. VDMA (India) managing director Rajesh Nath said: "Our technology is geared at optimising the use of wood and achieving a healthy cost-performance ratio." Not just exporting machinery, the VDMA members like Hafele and Kessebohmer are also eyeing the kitchen accessories' market in India. These companies plan to popularise the use of lightweight panels for a variety of applications in kitchens.

This apart, VDMA is also drawing up plans to aid India in upping its exports of constructed furniture. India had produced furniture worth $2.9 billion in 2006 and a major chunk of it was consumed domestically.