Gary Evans
Furniture exports slow down
SAO PAULO, Brazil – Imagine what would happen if your product cost a third more than it did a year ago. And you didn’t know if things were going to get worse or better.
That’s the situation that Brazilian furniture exporters are facing because of the strength of their country’s currency, the real.
In the past two years, the Brazilian real has gained strength, moving from 3.2 to the U.S. dollar to the current 2.1.
This change has brought a screeching slowdown to furniture export growth – shipments from Brazil to all other countries rose 42.2% from 2003 to 2004, but just 5.9% in 2012. Exports to the United States have grown at about the same pace.
With the real gaining strength almost weekly, no letup appears in sight.
This was the backdrop for the recent furniture show staged here by ABIMAD, the Brazilian High-End Furniture Manufacturers Assn., which footed the bill to bring in retailers and distributors from 43 countries, including about 20 people from the U.S. and Canada.
Even for Brazilian companies with established export programs, the fluctuating currency is hurting business.
 Luiz Henrique Toniato, who owns Stone Design, a maker of stylish high-end contemporary dining and occasional furniture, said his company isn’t able to make a profit on most exports until the currency declines to at least 2.6 reais to the dollar.
Toniato, also vice president of ABIMAD, said that with the fluctuating currency, it’s impossible for his company to come up with an accurate price list. For now, Toniato said Stone Design is absorbing the extra cost to hold on to established customers – and hoping things will get better.
“I see people from the United States, and I see in their eyes they like the products. But they just can’t buy them.” He adds with a laugh, “Sometimes I think I should just close the factory and go on vacation.”
The hope among exporters here is that the government of President Luiz Inacio Lulu will be voted out this year and a government more favorable to foreign trade will be elected.
Meanwhile, factories here rely on the domestic market and soldier on, laying out their wares to importers attending the association’s third annual show at the Imigrantes Convention Center. Bringing foreign buyers here is part of the country’s long-range plan to increase furniture-related exports from last year’s levels of almost $1 billion in finished goods and another $2 billion in raw materials and components.
ABIMAD represents 95% of Brazil’s high-end manufacturers, and the United States is important to its members who want to export.
The U.S. is Brazil’s leading trading partner in furniture, with a little over 40% of exports going there. Other big customers: France, which buys 11% of exports; the United Kingdom, 10%; and Germany, 4.4%. (By comparison, 32% of Brazil’s furniture imports come from Germany, 14% from France and 9.2% from the United States.)
In addition to its International Buyers Project, ABIMAD has set up Ineo, a consortium of manufacturers that the association screens, prepares and supports in exporting to the United States and Canada. ABIMAD also has an established group of Brazilian vendors that show at U.S. furniture markets in High Point and Las Vegas, as well as other foreign markets.
“Our big challenge now is to get owners to go not only to the trade shows, but to see the (retail) stores and what kinds of products they are selling, especially the price,” said Rafael Molon, who heads international relations for ABIMAD.
Addressing on of the biggest criticisms – that the design of Brazilian furniture misses its mark with American consumers – Molon said, “The manufacturers need to know what’s going on.”
But an even bigger challenge for ABIMAD, Molon said, is distinguishing Brazilian furniture from other countries’, especially China’s, which easily undercuts Brazil in price, and Italy, which is much better known for design among U.S. buyers.
And since styles at the show here are overwhelmingly contemporary, the possibility of appealing to a broad, traditional-minded American market is limited.
The Brazilians know that beating China’s prices is impossible, even though Brazil’s proximity to the United States means shipping costs as little as half as much as from China. And the mantra from a year ago of taking market share from Italy and other European countries seemed all but forgotten at the market here recently.
Despite all the obstacles, several exhibitors here said their goal is to increase exports considerably. Several, like Paulo Allemand, president of contemporary case goods company Formanova and ABIMAD’s president, would like to move his export business from 15% of total sales to 50%.
Century, a contemporary upholstery company unrelated to the U.S. Century Furniture, recently hired Rafael Oliveria, a former ABIMAD staffer, to boost its exports from the current 15% of total sales.
“That’s not so much,” Oliveria said. “But by the middle of the year it will go up.”
