Losses caused 15% of shops in Damietta to shut down
Traders: surge in prices push us toward Turkey and China
The continued increase in dollar exchange rates versus the Egyptian pound in black markets resulted into a surge in wood prices and consequently in furniture. Officials at the chambers of commerce and experts reported that nearly 35 per cent of furniture manufacturers abandoned the profession and turned to trading and importing, while another 35 per cent are still considering quitting the industry, because of shortage in skillful labours and state incentives.
Some buyers and traders avoid high prices by importing furniture from China and Turkey, yet prices in Damietta are the best if compared to others across Egypt. Moreover, 15 per cent of workshop owners and traders have shut down their businesses to avoid severe losses and inability to secure foreign currency to keep the industry going. Those who are still in the business are facing decline in trade volume which made them cut working hours, since they can no longer provide salaries for their employees.
Importing
Mohammed Shabrawy, Chamber of Wood Working & Furniture Industry’s Deputy Chairman, said that furniture prices increased by 20-25 per cent, due to the increase in raw materials, over-supply in the market and a drop in demand. This has driven all labours and traders away from the industry. In addition, nearly 35 per cent of furniture manufacturers abandoned the profession and turned to trading and importing, while another 35 per cent are still considering quitting, because of shortage in skillful labours and state incentives, added Shabrawy.
Mohamed El-Zeiny, MP and Chairman of Chamber of Commerce in Damietta, said that raw materials used in manufacturing local furniture are imported, that’s why it saw a surge in prices after the increase in dollar value. The market is shrinking and facing recess, after prices increased by 25 per cent. This problem won’t end unless the dwindling foreign currency crisis is solved, said El-Zeiny, adding “The government can do nothing about this, it only subsidizes basic commodities”.
China is the best
Ahmed Al-Iraqi, Head of Al-Iraqi Sons Group for Furniture& Wood, referred to the 20-25 per cent increase in wood manufactures, since all materials used in them are imported.
He added that these soaring prices pushed some buyers and traders towards importing from China
and Turkey, yet prices in Damietta are the best if compared to others across Egypt. “15 per cent of workshop owners and traders have shut down their businesses on the back of incurring severe losses and inability to secure foreign currency to keep the industry going. Those who are still in the business are facing decline in trade volume which made them cut working hours, since they can no longer provide salaries for their employees,” he said.
Foreign currency
Mounir Raghib, Head of Wood importers Division at Cairo Chamber of Commerce, said that Egypt normally imports all kinds of wood, but this has retreated now by 30 per cent, due to shortage in foreign currency, and subsequent higher exchange rates in parallel market.
He pointed out that among the types of wood that hiked are beech wood (from EGP 4100 to 4300), and Swedish White Wood (from EGP 2500 to 2800) according to quality and origin. Moreover, the most prominent countries from which Egypt imports wood are Russia, Romania, Sweden, Finland, and Yugoslavia, with a total of $1.4bn. But, these figures are expected to plunge this year, because of the current economic hardships.
Amr Salem, a wood trader, commented that although furniture prices are higher, wood trade is stagnant, for the 50 warehouses located in Greater Cairo, which used to supply small traders, are now closed. In addition, demand on wood dropped, due to high prices and lower purchasing power.
The Middle East Observer Economic experts, say that the only solution is not any longer in the hands of the Government, yet the Government can assist existing traders and producers by providing an African fairs tour, specially that the Egyptian Damietta furniture is in quality and much competitive against Turkish and Chinese products. While barter agreement may also be an option with African markets wood exporters.
