Decking boards

	The F-Teak model from Xiamen Yungde of mainland China has a finger-jointed construction and microbevel edge. Its moisture content is 10 ±2 percent

Makers are working around insufficient wood supply and high costs to stay afloat.

Materials procurement difficulties stemming from rising costs and dwindling supply are drastically altering the makeup of the hardwood flooring industries in mainland China and Taiwan. This has forced manufacturers to rethink their operations to remain competitive.

Due to insufficient domestic supply, companies in the mainland purchase the bulk of their requirement overseas. Wood for high-end flooring, for example, is usually sourced from South America, Africa and Southeast Asia.

Heightened environmental awareness and conservation efforts, however, have spurred the implementation of regulations that limit or ban completely the importation of wood from these regions. Material costs, as a consequence, are on the rise, jumping 10 to 20 percent in the past year alone.

In addition, some Europe- and North America-based manufacturers also obtain wood from Africa and South America, squeezing further the already tight supply of materials.

Companies in the mainland do not foresee the situation easing off soon and are exploring options that would allow them to remain active in the industry. These include utilizing the ongoing consolidation to strengthen manufacturing capability.

Over the past several months, the supplier base has shrunk by more than 30 percent. This came as makers, unable to cope with the wood shortage, closed down or shifted to other product lines.

Scant supply is pushing Taiwan manufacturers to shift to OEM business or subcontract production altogether. Compounding suppliers’ difficulties is declining sales, particularly as more environment-friendly alternatives such as engineered wooden floors emerge.

“Some markets consider hardwood models as being contrary to the global movement to conserve natural resources,” said Jennifer Yang, export sales manager of Winner Floor Co. Ltd.

The bulk of Taiwan’s shipments continue to go to Japan, although makers are tapping alternatives such as North, South and Central America, the Middle East and Eastern Europe.

Companies are optimistic about the potential of these markets, but remain cautious about overall sales growth.

With demand declining significantly over the past several years, hardwood floors now account for less than 5 percent of exports at San Shiah Enterprise Co. Ltd.

	Mainland China-based Zhejiang S&F offers the XMX05 model, which is resistant to fire, scratches, UV and moisture.

The consolidation of the mainland’s hardwood flooring industry will continue in the next several years. In fact, the supplier base is expected to decrease to about 500 by 2010 as high material costs drive more small players out of the line.

Featured companies, including Winsun Fashion and Zhejiang Golden Real Estate Co. Ltd, said rising freight costs are adding to the problem.

The coming months will see midsize and large suppliers absorbing the operations of small makers to enhance production.

Upgrade efforts at Shenzhen Longeron Imports & Exports Co. Ltd involve investing in advanced equipment from Germany and Italy. The company has two factories with a combined capacity of 120,000sqm annually. It uses oak, maple, beech, birch, ash, merbau and kempas wood for its products.

Xiamen Yungde Ornament Co. Ltd, which specializes in wooden floors and accessories, uses testing facilities sourced from Taiwan and the US in its ISO 9001:2000-certified factory.

Zhejiang S&F Foreign Trade Co. Ltd plans to form partnerships with some of its material suppliers and construct a plant where most of these providers are located. At present, the trading company procures finished hardwood flooring in 18 subsidiary factories.

Makers in Taiwan are not particularly active in the wooden floors industry since there is no ample supply of materials within the island.

Nonetheless, companies are keeping the product line open, usually purchasing wood from the mainland, Southeast Asia, North America and Africa, and keeping a lookout for new and alternative sources.

Despite its high cost, teak is the most popular option, but Dair Fair Enterprise Co. Ltd has started using pradu and hinoki from Vietnam.

San Shiah sources birch from the mainland, teak from Burma and Vietnam, oak, walnut and maple from North America, and afromosia from Africa. The company, however, currently uses only teak for its line of hardwood floors because buyers have yet to order models in other wood species.

Instead of engaging heavily on OBM business, San Shiah exports most products under OEM contracts. It ships primarily to Japan and is hoping to venture into other markets, including North and South America.

The slowdown in the Japan economy had a significant impact on the company’s sales since shipments there account for 70 to 80 percent of revenue.

Exports at Yosan Inc. are entirely OEM-based. The trading company has no manufacturing capability, outsourcing products to woodworking factories instead. Most of its subcontractors are located in the mainland, although Yosan also uses local plants for small or specialized orders.

The company is looking to tap the markets in France, Italy and Eastern Europe.

A specialist in wooden doors, Kenfu Construction Co. Ltd offers floors as an auxiliary line. The supplier has developed a new coating for doors that it applies on its flooring selection on request. The finish helps improve resistance to abrasion, fire and water.