The Workers in Wood Furniture Industry of Isabela A Sector Profile MELODY E. LIM I. Introduction The wood furniture processing industry is by far the most prevalent manufacturing activity in Region 02 in terms of number of firms operating. This is explained by the fact that the region is one of the few regions in the country with the biggest forest area consisting of 1. 72 million hectares, 91. 27% of which are classified as public forest.
From the seventies up to the eighties, commercial logging operation was at its peak which in turn fast tracked the denudation of the forest resources and subsequently resulted to the banning of commercial logging in the region as a whole. Logically, as a result of this, big-time wood processing plants particularly sawmill and plywood plants also closed – shop. What was left of the wood processing industry were the small-time furniture manufacturing plants scattered all over the region.
The subsequent government actions from selective to total ban greatly affected the development of the industry. In 1997-1998, the effect of this posture was most evident as not only was there a sharp decrease in the number of firms setting up but also, there was virtual stagnation and even shops closing. That situation persisted and still continues to persist until the present time. On the mean end of everything, what were significantly affected of this downward scenario are the wood workers whose means of living wholly depends on the wood industry.
As of 2000, DTI-R02 reported that 2,703 household families in the region sourced their income from the wood furniture industry. Despite all these developments, the Regional Development Council (RDC II) and DTI for that matter continue to pin its hopes on the wood furniture industry for much needed industrial output and job generation in the region because of the belief that this industry has a strong comparative advantage in terms of the region’s resource endowments to back up its full development. II. The Wooden Furniture Industry: An Overview v Industry Background
Furniture production in the Philippines was pioneered by rattan pole and wicker exports suppliers of the 1960s, who ventured forward into producing rattan furniture parts and later established facilities for making rattan furniture in the 1970s. Building on the successes of these items, manufacturers in 1980’s invested heavily in improving their product design and development, boosting the competitiveness of local furniture in the global market. When Indonesia banned the exports of rattan poles to global clients in 1986, local furniture manufacturers and designers were spurred to explore both indigenous and imported materials.
This eventually led to the development of various products from wood, metal, indigenous materials and mixed media furniture using natural materials. v Product Coverage The Philippine furniture industry offers a diverse range of products which vary according to function, material, size and utility. Home furniture is the most popular functional category among manufacturers. This product line includes dining, kitchen, living room, bedroom, patio, den, home entertainment centers, home offices, garden/outdoor furniture, among others.
Most furniture items products may also be classified as leg items such as beds, tables and chairs; case goods including cabinets and chests of drawers or building and home fittings. Many firms produce furniture for institutional clients such as hotels, resorts, restaurants and offices. Some also provide products for retailers such as shelves, accessories for display windows, and other visual merchandising equipments. Local furniture is made from variety of materials. Wood is the most common material utilized in the industry as wooden furniture makes up around half of total Philippine furniture exports.
Other materials include metal or rattan, bamboo, coconut and others. Some of the larger furniture manufacturer exporters rely on imported materials for their needs. Medium to large-sized manufacturers usually import their raw material from wood suppliers in North America, Brazil, Malaysia and other preferred sources of sustainable wood species. Most smaller firms leverage on the abundant variety of natural indigenous materials in the Philippines – rattan, metal, bamboo, buri, stone, upholstery, leather, plastic, molden resin, etc. – singly or in combination. Enterprises – concentration, ownership and performance Wood furniture production is a resource-based, labor intensive industry, with low entry barriers in trade. The industry in the country is fragmented, with only few large firms and numerous small manufacturing producers. Based on DTI estimates few years ago, some 15, 000 firms comprised the local furniture industry, which employs a total of about 481, 500 direct workers and 300,000 subcontractors. Only 2% of the total companies in the industry are considered large ventures; the remaining 98% are micro, small and medium-sized firms.
Region 02 is considered as one of the two wood corridors in the country with 1. 72 million hectares of forest area 91. 27% of which is classified as public forest. There is existence of common hardwood and gmelina plantations under the IFMA program covering an aggregate area of 555,759. 88 hectares. Up to the end of 1999 (DTI-R02, 1999), the wood industry in Region 02 is composed of 961 registered firms, Cagayan province being on top with 367 followed by Isabela with 296 firms. Based from the same data source, an estimated 5,000 direct workers are employed by the industry.
DTI Registered Furniture Firms Region 02, 1995-1999 |Province |No. of Firms |% of Total | |Batanes |2 |0. 21% | |Cagayan |367 |38. 19% | |Isabela |296 |30. 80% | |Nueva Vicaya |76 |7. 91% | |Quirino |220 |22. 9% | |Regional Total |961 |100% | Source: DTI-RO2, 1995-1999 Report Considering the large number of firms existing in the industry, the amount of investment poured into is considerably of big amount, especially from the cottage and small firms. Investment figures presented showed an increasing trend of 14% from 1999-2000. Investment actions were additional or expansion investments, which dipped sharply on 1997-1998 as this is the time of the ASEAN financial crisis coupled also by the total log ban imposed in the region.
The market for wood furniture posted a steady growth in export even surpassing that of rattan in 1997 and consistently led other types of furniture exports such as rattan, bamboo, etc. Comparing it with the region’s export performance, only . 87% is being shared by region 02 in year 2000. Hence, it can be seen as big prospect to increase its share in supplying large demand of wood furniture in the foreign market. Compared to other leading wood furniture producers like Cebu and Pampanga, Region 02 has vast forest area while Cebu and Pampanga still import their wood materials from other regions.
Hence, the region’s edge is really on the availability of sustainable raw materials. Percentage Share of Regional Exports Performance to National Exports, 1996-2000 |Year |1996 |1997 |1998 |1999 |2000 | |Region 02 (in million $) |1. 306 |0. 673 |1. 33 |1. 56 |1. 25 | |National (in million $) |100. 73 |116. 53 |128. 33 |132. 67 |143. 29 | |Percentage Share |1. 29% |0. 76% |1. 4% |1. 17% |0. 87% | III. The Wood Furniture Industry in Ilagan, Isabela Isabela is the most populous province in Region 02 with a total population of 1,287,485 as of 2000 census. Its population is 45. 77% of the 2,813,159 regional population in 2000. Of the 35 municipalities and 2 cities of the province, three (3) already reached 100 thousandth mark population in 2000 Census. These were the capital town of Ilagan with a population of 119,990; Santiago City with a population of 110,531; and Cauayan City with 103,952 population.
The labor force of the population consists of 15 years old over that is either gainfully employed or unemployed and seeking work (included those persons who are not currently seeking work such as students, housewives, retirees, the physically handicapped, etc. ) Of the total population of 15 years old and over in 2003, about 613,000 or 71. 9 percent were in the labor force and 239,000 fall outside the labor force. Under employment by sector for the same year, 62. 80 percent were engaged in agriculture, 28. 40 percent were in service while 8. 0 percent were in the industry sector. The Labor Force Participation Rate (LFPR) for the same year was 71. 90 percent while the employment rate recorded a high rate of 84. 60 percent. The unemployment rate on the other hand was around 15. 40 percent while the underemployment was recorded at 13. 70 percent. Latest available record (2000) showed that the annual average income (at current prices) in the province was recorded at P113,405. 00 while the annual average family expenditures was registered at P90,924. 00 leaving an average family savings of more than P22,481. 0. Isabela is one of the most progressive province in the country. It is dubbed the Rice Granary of the country having been adjudged as the Most Outstanding Province in Food Security in the Gawad Sapat Ani Award in the year 2000 and consistent top grain producer for both rice and corn in the country today. On the other hand, Isabela has been renowned to its distinct contribution in domestic production in furniture sector having recorded the highest domestic sales and investment in the region in the year 2000. Bottomline Accomplishments Per Province, Year 2000
Furniture Sector |Province |Exports |Domestic Sales |Investments |Employment | |Batanes |- |P 0. 134 M |P0. 20 |9 | |Cagayan |$ 1. 13 | 14. 10 M |3. 58 M |345 | |Isabela |0. 015 M |284. 170 M |69. 62 M |2,025 | |Nueva Vicaya |0. 007 M |8. 90 M |10. 65 M |174 | |Quirino |0. 10 M |18. 81 M |8. 1385 M |150 | |Regional Total |$ 1. 25 M |P 326. 11 M |P 92. 20 M |2,703 | Data Source: Bottomline Accomplishment on Directly Impacted Activities, DTI-R02, Year 2000. Ilagan, its capital town, is considered as prime mover in the wood industry in the province. Several furniture shops, located along the National Highway in Barangays Alinguigan 2nd & 3rd, manufacture and sell furniture made of quality narra wood.
These barangays comprise the so-called Butaka City of Ilagan, where the Guinness Book of Records’ entry for the biggest armchair in the world, the Butaka, was manufactured. References: ? Philippine Furniture. 2007 State of the Sector Report. Bureau of Micro, Small and Medium Enterprise Development. Department of Trade and Industry. 2008 ? Provincial Profile of Isabela. Provincial Planning and Development Office, Provincial Capitol, Ilagan, Isabela 2005. ? Wood Furniture Industry Cluster Program, Region 02. Economic Development Council.
Department of Trade and Industry-R02. 2000. ? Accomplishment Report. Municipality of Ilagan, Isabela. 2008 |Population |1,287,485 | |Labor Force |613,000 (71. 9%) | |Agriculture |62. 8% | |Services |28. 4% | |Industry |8. 8% | |Unemployment Rate |15. 4% | |Underemployment Rate |13. 70% |