For years, the Mexican furniture manufacturing industry has been out of step with the leading furniture industries of South America and the developed world in its failure to embrace the clear advantages of manufacturing with MDF and particleboard.
A fragmented business, largely comprised of micro enterprises and carpentry workshops, the sector’s important wood based section has remained reliant on solid wood and plywood, which still account for up to 70% of its raw material.
"That is the opposite of almost every developed country and in [major nations of] Latin America as well," stressed Leo Schlesinger, president of Mexico’s wood panel producers association ANAFATA.
In Brazil, Chile and Argentina, per capita consumption of particleboard and MDF is four to five times higher than in Mexico, pointed out Mr Schlesinger, who is also chief executive of Masisa México, the local branch of leading regional panel maker Masisa group of Chile.
However, within months the picture should begin to change with a substantial boost to local MDF supply and, significantly, the advent of more competitive panel prices for national furniture producers.
In a little over a year’s time, three new 200,000m3/year MDF lines are due to come on stream in the north, centre and south of the country. These will be Mexico’s first world-scale MDF units.
The flood of national fibreboard from 2016 is widely expected to replace much of today’s higher priced imported MDF, coming mainly from Chile, Brazil and the US. The current supply is inefficient and unreliable, as well as "expensive, and subject to currency movement which makes it very risky for the importers," conceded the Masisa executive, whose firm currently imports MDF.
Plywood, also mostly imported, remains a dominant force in Mexican furniture making, setting panel prices across the country. It is plywood that dictates the market price of MDF and in turn, MDF determines pricing for particleboard. Currently, MDF in Mexico is priced about 80% higher than particleboard – "extremely high," commented Mr Schlesinger.
"That means the price point of MDF is almost the price point of plywood, so there’s not been any incentive, or the economics, for MDF to replace plywood in Mexico. But that is going to change in the next 18 months with the production plants starting up in the country," he told WBPI earlier this year. Masisa México is one of the three board makers planning to bring a line on stream by then.
Furniture makers’ dependence on traditional wood materials continues, not only because of a lack of a competitive wood substitute, but also because local carpenters see MDF and particleboard as lesser products. This view took root because of the poor panel quality of some particleboard when the panel was first introduced in Mexico.
Mexican wood panel producers are at the forefront of a campaign to promote the wider use of particularly MDF by the national furniture industry. Leading Mexican panel companies are themselves fibreboard importers, priming what is a big potential market.
They are also adding value by laminating MDF alongside their own particleboard.
The panel makers are also educating Mexico’s furniture designers and manufacturers in the potential and versatility of working with MDF which, with its workability, is the natural substitute for the traditional wood materials.
Masisa México is active in exposing young national designers to its products and their potential. The firm recently joined forces with a local furniture manufacturer, and an international component supplier, to organise an MDF workshop for designers of the future.
Furniture manufacture in Mexico is concentrated in five main regions, primarily in major population and market centres. The big three are the Federal District around the capital, Mexico City, in nearby Mexico state and northwest in Jalisco state, around the city of Guadalajara.
In addition, there are high productivity manufacturing centres in northern Mexico, in states near the US frontier. These include ‘maquiladora’ plants, assembling finished furniture from imported North American components for sale north of the border. They are in the eastern state of Tamaulipas, bordering Texas and Baja California state on the Pacific coast.
Furniture making was hit hard during the worst years of the 2008 global recession and, along with its component supply industries including wood panel production, has suffered almost 120,000 job losses since 2007.
In 2009, Mexico’s furniture industry included almost 27,000 production units representing just over 6% of the country’s total manufacturing sector. Furniture production has grown since then, with the number of manufacturers up 7% by last year, at more than 28,800, according to a recent report.
Among recent trends in the sector is a significant rise in the manufacture of furniture for offices.
Unlike its South American neighbour Brazil, Mexico is not a major furniture exporter, although the huge US market remains its main foreign target. However, Mexico has faced growing Asian competition, in particular from China and Vietnam, both there and in the domestic market, over the past decade.
Even so, the steep rise in Chinese exports to the US has eased in the last five years, partly due to China diversifying its target markets, and to a slowdown in the Chinese economy.
Mexico, which saw its furniture sales into the US rise 22% during 2012, has continued to enjoy increased export business thanks to an improved trade balance since then.
National furniture manufacturers have been hit hard in their domestic market by an influx of Chinese made products and there has been growing substitution of US-made furniture by Asian imports.
In northern Mexico, panel makers continue to benefit from growing cross-border business with the production and sale of flat pack ready to assemble (RTA) furniture. The number of frontier Mexican plants has been growing and many have expanded to take advantage of economic recovery in North America.
One leading Mexican panel producer, well placed to capitalise on the RTA boom is Duraplay de Parral, based in the border state of Chihuahua. Apart from counting several expanding flat pack furniture makers in its customer portfolio, Duraplay is one of the three Mexican firms set to launch its own 200,000m3/ year MDF line in the town of Parral by 2016.
The company was itself once part of the RTA revolution with its own furniture manufacturing plant in the frontier city of Ciudad Juarez, targeting the US market. However, faced with the 2008 global economic recession, Duraplay finally pulled out, preferring to focus on its core wood panel business.
The Ciudad Juarez plant was sold in 2010 to a Canadian Duraplay customer, South Shore Industries, which was keen to get into Mexico. Since then, South Shore has been investing in the facility and is considering doubling its capacity, according to Duraplay’s ceo Emilio Ayub Touché.
"Furniture manufacturers are installing [plants] in the north of Mexico with the intention of supplying the US market, mainly RTA. I think we will see more of that in the future.
"They will, in the end, service Mexico as well as the States. I think that’s a winning strategy as they have better costs than in the US," Mr Ayub told WBPI earlier this year.
The imminent launch of world scale domestic MDF manufacture in Mexico, and the resulting abundant availability of competitively priced board across the country, seems likely to deliver a further boost to local flat pack furniture production.
This, say industry commentators, could help stimulate the development of furniture manufacturing in Mexico and bring plants back ‘onshore’ in North America, from Asia.
The Mexican furniture industry is in the process of developing strategies aimed at improving its competitiveness and efficiency in the face of foreign competitors at home and abroad.
One area where the fragmented sector is seeking to steal an advantage is by operating together through the creation of specialised manufacturing clusters in zones where a high number of producers operate.
There have been a number of such initiatives with the formation of furniture clusters around the country, including notable successes in the important Jalisco region.
Other areas in which the industry is looking to become more competitive is with greater innovation, seeking increased differentiation through design and investment in new technology.
The transformation of a very traditional industry will receive another welcome boost as furniture producers soon start to take advantage of the versatile and user-friendly features of MDF.
