Introduction
Furniture, which is derivable from wood, represents a further set of basic needs that our local entrepreneurs can produce in abundance within our shores. In reality, furniture is an extension of housing which is a basic necessity. Both of them go hand in hand. Without housing, furniture may not be that valuable. On the other hand, without furniture, a house that has been put in place will look empty.
As stated in previous write-ups, Nigeria is blessed with rich human and material resources including wood, which are on the other hand obtainable from the luxuriant equatorial forests. So, why had the wealthy among us, until the recent ban on imported furniture, always yearned to furnish their homes with exotic furniture imported from Dubai or China, when we have forest (hard and soft wood) resources around us that we could cultivate and process into our home and office furniture or other needs? Again, the reason is the desire for conspicuous consumption, which points to ‘misplacement of priority’.
Furniture made from hard wood is more valuable and durable than the ones made with soft wood such as plywood. However, the furniture maker can use the facings of the fancy-looking teakwood brand of hard wood on the surface of the plywood while the inside could be composed of cheaper or softer brands. To a large extent, plywood is economical, notwithstanding that it could bend in the middle if it is too long. However, several interesting types of plywood have been discovered, with innovation, and these include flexible plywood that can be easily rolled up or bent, allowing easy application in different household furniture. In order to circumvent the longer process of manufacturing plywood, which is manual and time-consuming, involving the joining of plywood sheets, the machine-assembled MDF or particle board has been further developed.
Prospects of the Furniture Industry in Nigeria
Furniture-making is often a neglected industry in Nigeria. But not so in many developing and developed nations, where the industry creates huge employment opportunities and foreign exchange earnings.
Although the furniture industry is erroneously looked down upon as a business for illiterate people like carpenters, the Centre for Industrial Studies (an independent research and consulting company based in Milan, Italy) rather thinks that the industry in Italy is a very lucrative sector, with an annual growth rate of over 3.5% and market value of about $350 billion, which is approximately 70% of Nigeria’s GDP (estimated at $510 billion)
Domestic records also show that Nigeria’s exports of agricultural commodities including timber products in the 1960s and early 1970s was quite significant, providing more than 70 percent of the Gross Domestic Product (GDP). The timber industry in Nigeria, including the furniture segment, has however suffered a setback as a result of indiscriminate felling of trees by businessmen, leading to difficulties in getting wood and planks from the saw mills.
The recent ban on imported furniture products is a major boost to the future prospects of the domestic furniture industry.
Generally, any proposed furniture venture would do well if it focuses on the manufacture of products that are in regular demand, such as: Household, Schools, Hotels and Office Furniture.
Relative Market Structure and Size of the Nigerian Furniture Industry
The market structure of the Nigerian Furniture industry is made up of about 1000 cottage furniture companies and 20 standard ones. The cottage furniture makers, each has a start-up capital ranging between N5m and N10m on the average; employee strength ranging from 5 to 10 and turnover of less than N20m per annum. On the other hand, the standard, medium to large, furniture companies have staff strength ranging from 100 to 500 persons and command annual average turnover nearing N0.5b. In contrast, a typical Chinese furniture company hires high-calibre employees numbering 1000, each placed on annual of about $30,000 (equivalent of N10.5m and above) per annum.
Annual exports of furniture from China are currently estimated at over $30billion (equivalent of more than N10.5t), ranked first in the world. This is at least about 210 times the size of the Nigerian furniture industry (estimated at N50b). In other words, the size of Nigeria’s furniture market is only about 0.5% of the annual global exports of China.
Analysis of the Production Cost of a typical Furniture factory
The production cost, especially the cost of materials, mainly wood, is perhaps the most important aspect of the entire cost of a furniture business; hence, it may be useful to give a little more attention to its analysis. The calculation of the values of furniture products is highly technical. The cost price, representing the value of a wood product, is determined by the weight (density multiplied by volume) of the wood. The weight of wood varies by the species of wood and the moisture content of the lumber (wood). Fresh wood will weigh significantly more than kiln (industrial furnace) dried boards due to its higher density. To find how much wood weighs, it is instructive to start by finding the density of the wood. Once density of the needed wood is found, the volume of the wood in cubic feet or cubic meters will be determined. The next step is to calculate the board footage. The board footage is determined by multiplying the volume in cubic feet by 12, which is the base factor. A board footage calculator/ base factor can always help to find the volume of the wood in board feet.
When first cut, lumber (wood) board is fresh, with dimensions: 2 inches thick x 4 inches wide; but after drying the board is reduced to 1 1/2 inches thick and 3 1/2 inches wide.
The furniture maker would then order the wood (the core raw material), in board feet. One board foot is a piece of rough lumber that is equal to 1″ thick by 12 inches (1 foot) wide by 12ft long. So, for example, if a cabinetmaker purchases a piece of rough walnut that is 1″ thick by 6ft wide by 10 ft. long, that would be around 5 board feet (bd. ft.), i.e., 60 divided by 12.
Each lumber yard has a chart of prices for every board foot of every species they carry. For an average hard wood, a furniture maker may probably be looking at N1, 000 per board foot. It all depends on the species selected. That is why it will not make sense to make a dining room table out of mahogany or iroko or ebony or tiger-wood which will cost as much as N3, 000 in a piece wood alone. Sitting-room furniture may not be worth that expensive value.
To work around this problem of cost, cabinetmakers generally use a secondary hardwood that is much cheaper; or even veneer-covered ply-woods or veneer-covered particleboard. It’s much cheaper to do it this way, which will guarantee the much needed profit.
It is important to note that about 25% to 30% of the wood purchased for wood-works goes to waste; which happens when sizing the rough lumber down to the actual dimensions required. Most often, it winds up being burnt up.
If plywood is to be used, then it is noteworthy that the sizes of the most commonly used plywood sheets are 4 x 8 feet (1220 x 2440 mm.) The standard size of a sheet of plywood available everywhere is a single ¼ to 1-inch thick, 4-foot wide by 8-foot long piece of plywood. A sheet is about 2, 800; which may be additional material to blend with the wood. However, this cost would not be added because it is merely a replacement for wood which will be saved for other uses.
Machinery and Equipment Costs
This is equally important; hence it would be useful to take a close look at it. The core machinery and equipment for furniture-making include the following:
- Multipurpose Automated woodworking machine (combination of Drop Saw for cutting the Wood; and Band saw for cutting angled or curved shapes): estimated at $3, 500–3,700.00/ Set (equivalent of N1, 260,000 – N1, 332,000/ Set);
- CNC router woodworking engraving machine: costing $8,000.00 – $8,300.00 (equivalent of N1, 988,000 – N2, 060,000)
- Wood Plywood Saw Cutting Machine/ Sliding Table Panel Saw for Woodworking: costing $2,300.00 – $2,500.00 ((equivalent of N828, 000 – N900, 000)
- Sofa frame making CNC router: estimated at $3,900.00 – $4,300.00 (equivalent of N1, 404, 000 – N1, 548, 000);
- HF Solid Wood Glue Spreader Machine GS400: costing around 2,800.00 – $3,000.00 / Set (N1, 008, 000 – N1, 080, 000);
- Microwave generator HF30-SA, moderate size supporting wood and metal works, with ancillary parts: costing $7,000.00 – $7,500.00 / Set (N1, 880, 000 – N2, 060, 000);
A set of hand-tools needed by a small-scale operator (carpenter or cabinet maker) are estimated at approximately N2m.
Summary of Costs
As summarized in the table below, the total capital required to start up a standard medium scale Home and Office Furniture Production business is about N13.6m.
Cost Categories Amount (N) Total Amount (N)
Sub-total, Preliminary/ Preoperational costs 3,550,000.00
Working Capital: Raw Material + Labour Costs (SU) 2,000,000.00
Machinery/ Equipment Costs 4,884,000.00
Capital Utilities 2,700,000.00
Fixtures & Fittings) 475,000.00
Sub-total, Fixed Assets (Machinery/ Equip + Fixtures & Fittings) 10,059,000.00
TOTAL COSTS 13,609,000.00Details of how to set up a standard furniture enterprise, raw material and labour requirements, lucrative product components, production process flow, market and pricing dynamics including strategies employed by existing operators, profitability projections, return on investment and all other essential information, will be incorporated in a bankable feasibility report to be packaged for interested prospective investors.
If you need the writer’s assistance, contact him at: chukwudiodili902@yahoo.com
