The Board of Directors of the European Federation of the Parquet Industry (FEP) met last month and discussed amongst others both the parquet situation and recent economic indicators on the European market. To begin with: there is some positive news.

The positive news is that the latest Economic Sentiment Indicator of the EC continued its upward trend, increasing sharply both in the euro area and in the EU. The indicator rose for the fourth successive month in both regions, marking a two-year high in the EU. FEP: “Despite some of these more optimistic messages, demand expectations further deteriorated. The information provided by the individual country representatives confirms the past observations, namely that the European parquet producers continue to face important variations at country level.”

A brief per country recap, provided by FEP:

Austria
The harsh weather conditions in Austria which already impacted the parquet consumption in the first quarter continue to weight on the market and were even reinforced by an evenly difficult spring. In this context, parquet sales went slightly down by about 2% in the first semester of 2013.

Belgium
In a not entirely unfavorable economic climate in Belgium, various FEP sources indicated that the parquet market was experiencing a contraction in excess of 5% on a year to year basis for the first six months of 2013.

Denmark
After a stable first quarter, parquet sales declined and now show a negative trend. Compared to S1/2012, the first six months of 2013 are lagging 4% behind.

Finland
In the first semester of 2013, the consumption of parquet decreased by 3% compared to the same period in 2012.

France
The first semester of 2013 showed a decrease of 10% in parquet sales y/on/y. This means that the tendency already reported for the first quarter of the year is continuing, as a result of a weak consumers’ confidence and a lack of political action to solve the real issues.

Germany
Parquet sales in S1/2013 remained flat in general. The construction sector performs well with an increase in building permits.

Italy
The high taxes have a negative impact on the consumers and on the market, which is estimated to have lost 11% in the first semester of 2013 compared to the same period of last year. The woodworking industries as a whole go through difficult times, with a loss of 25% in sales. Imported products benefit from the favorable EUR/USD exchange rate.

Netherlands
The negative trend was put to an end. The situation on the parquet market in the first semester is comparable to the situation of last year. The renovation market is performing well, but the bigger part of it does not involve the replacement of old parquet floors, but rather their refurbishment.

Norway
Despite the downward adjustment of the number of finished dwellings, a slight improvement can be seen on the Norwegian parquet market, which is improving by 2% compared to the same period last year.

Spain
Sales went further down in the first semester of 2013, by 10% compared to last year.

Sweden
Parquet consumption is continuing its downward tendency, already witnessed in Q1/2013: the first six months saw a contraction of the market by approximately 3%.

Switzerland
After a more or less stable start in Q1/2013, parquet sales increased in S1/2013 compared to S1/2012. This positive evolution is estimated to be between 2 and 3%. The market is however more and more flooded with products of dubious quality, hampering the image of real wood parquet.

GFA/FEP, October 2013
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Compared with the same period in the previous year, the market for laminate flooring produced in Europe by member firms of EPLF was relatively stable overall in the 1st quarter of 2013, the trade organisation for the laminate flooring industry says.

There were differences on the individual sales markets however: figures for Asia and South America were up and Eastern Europe increased slightly too while North America and Western Europe remained stable at a relatively high level. Between 2007 and 2012, global sales of laminate flooring increased by 1.5%, but fell in Europe by 4.4%. In 2012 for the first time, the ordinary EPLF members also provided sales figures by product thickness. Around 45% of all laminate flooring sales were products with a thickness of <≅7.5 mm, around 45% were 8-9 mm thick and the remaining 10% >≅10 mm. Products 8-9 mm thick are the biggest sellers in Eastern Europe and Turkey. In Western Europe, and Germany in particular, customers prefer <≅7.5 mm products. In 2012, the market share of laminate flooring production in Europe, including Turkey, supplied by EPLF members was 89%; globally the figure was 53%. Nevertheless, China has caught up and in 2012 was for the first time the largest individual producer with a market share of 28%, ahead of Germany with 27%.

EPLF says it continues to focus on the markets in Turkey and Russia. Turkey currently makes up 8% of global production while Russia has more than doubled its share of production since 2007 to reach 5%. There are three Turkish producers in the EPLF at present. The association is now considering whether to also invite Russian manufacturers onboard. “They would however have to ensure strict compliance with European product quality standards and be prepared to be inspected by neutral institutions.” EPLF continues: “It is with some concern that the EPLF is seeing the Russian laminate flooring market being flooded with mass produced Chinese goods, which also do not meet high European standards. There is a risk that these products will damage the reputation of laminate flooring amongst Russian customers. The EPLF has therefore decided to initiate a quality campaign to raise awareness of the high-quality products of European manufacturers and to distance itself from inferior cheap products.”

GFA/EPLF, July 2013
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Further amplifying the January forecast of the FEP (European Federation of the Parquet Industry) issued at the start of Domotex in Hannover, the consolidated data provided by member companies and affiliated national associations indicates that the market still does not show the signs of the recovery announced and expected by the European authorities.

However, the general picture, as expected by FEP, is not uniform with considerable variations from country to country. Compared to 2011, the overall consumption figures in 2012 point to a decline of 5.88% in the FEP area, to a level of 87,509,000 m2, with Austria, Germany and Belgium able to slightly increase their share. According to the figures received by the federation, the expectations expressed in the January prognosis were not far from reality, but a little too optimistic. In terms of consumption per country, Germany consolidated further its first position with 23.98% (an increase of more than 2% compared to 2010) and is still followed by France which is losing some more ground to 14.32%. Italy was able to maintain its third position with 9.32%. The per capita parquet consumption remains the highest in Austria (0.88 m2) and Switzerland (0.73), followed by Sweden at 0.66 m2. In the total FEP area, the consumption per inhabitant lost one point at 0.22 m2 in 2012.

As far as production is concerned, the trend already witnessed in the previous years, namely the strategic choices made by several producing companies to relocate their production in European countries outside the FEP territory, was once again confirmed, according to the federation. While the total production in FEP territory went down by 4.7% to a volume of 68,266,133 m2, the total production in Europe (FEP countries + EU countries outside FEP) is estimated to reach over 75 million m2. Increases were recorded in Poland and Belgium, while all other countries were at the best stabilizing. In absolute production figures by country, Poland is consolidating its top position with 18.97%, Germany still ranks second at 15.24% and Sweden completes the usual podium with 13.3%.

The 2012 total parquet production per type remains similar to the picture already presented in 2010 and 2011, whereby multilayer comes in first with 78% being followed by solid (including lamparquet) with 20% and mosaic at 2% of the total cake. The usage of wood species in 2012 indicates that oak is advancing further to close to 70%, tropical wood species follow the opposite direction and now show a mere 6.2%. Ash and beech are the two other most common chosen species with 6.5% and 6.1% respectively.

As far as the outlook for 2014 is concerned, FEP thinks it is hardly possible to give a waterproof prognosis on developments in the European parquet industry in the coming year. However: “The latest market indicators tend to point (...) in the direction of challenging times that still lay ahead.” FEP does not expect important differences between member countries to simply vanish in the short term as well. “Nevertheless, since the start of the crisis in early 2008 the European Parquet Industry has proven to be resilient and able to cope with myriad adversities.”

Production and consumption in FEP territory 2012/2011

GFA/FEP, June 2013
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The Board of Directors of the European Federation of the Parquet Industry (FEP) met on 24 April 2013 and discussed amongst others both the parquet situation and recent economic indicators on the European market. The only parquet market still growing, compared to last year, is the Norwegian.

FEP: “Though it is yet too early to give a reliable forecast for the current year, the information provided by the individual country representatives indicates that the European parquet producers continue to face important challenges and variations at country level in a market that still does not show the signs of the recovery announced and expected by the European authorities.” FEP however wishes to stress the merits of its members in keeping their business well alive in these difficult times, “by finding ways to adapt to an ever changing environment and respond to the needs and expectations of the customers, with the most creative and innovative solutions.”

A brief per country recap, provided by FEP:

Austria
The harsh winter conditions in Austria had an impact on the parquet consumption, which went slightly down in the first quarter of 2013.

Belgium
2012 saw a stabilization on the parquet consumption side, whereas production is expected to increase by a comfortable margin. The first quarter of 2013 seems to be following the same direction.

Denmark
Parquet sales are flattening out. Construction output is expected to continue to grow in 2013 though at a low rate (2.2%), staying below pre-crisis levels. While all segments are forecast to increase moderately, new residential construction shall remain weak in 2013 reflecting subdued house price developments.

Finland
The consumption of parquet decreased significantly on a y/y basis to reach -10%. Unemployment is around 8.5%.

France
The first quarter of 2013 showed a decrease of 15% in parquet sales. Solid parquet is a little less affected and manages to perform better than multilayer. Production is adapting accordingly. Unemployment reached 10% and is still growing.

Germany
Parquet sales in Q1/2013 remained flat in general, with the exception of wide planks which continue to grow. The construction sector performs well with an increase in building permits.

Italy
The situation in Italy has been characterized by political uncertainties in the last few months, which translated into a difficult economic situation. However, things are expected to get better now that a government has been formed. The parquet market lost close to 20% in sales in Q1/2013, but should also follow the post political crisis stabilization path.

Netherlands
The negative trend witnessed at the end of 2012 is continuing. Consumption contracted by 10% compared to Q1/2012. The renovation market is more promising but this is evidently not the solution for parquet producers who need m2 sales. Production is growing, but the major part goes to exports (± 60-65%), predominantly the 2-layer products.

Norway
The parquet market is slowing down but still growing compared to last year. The building market remained flat. Unemployment is estimated to be between 2 and 3% at the moment.

Spain
Parquet production is estimated to be flat, but sales went down in the first quarter of 2012 by 5 to 10% compared to last year. The shift observed in other countries towards wide planks is also witnessed in Spain. Unemployment remains a major concern with 25% of the population out of job, and a worrying 50% among the younger generation.

Sweden
Parquet consumption is slightly down in Q1/2013, after a fairly flat Q1 in 2012. This tendency is actually valid for the entire economy, which is slowing down.

Switzerland
The mood in Switzerland remains sound. Parquet sales are more or less stable in Q1/2013. Wide planks are in vogue as well. The construction market is picking up after the winter, which is also reflected in the increasing number of building permits. One hopes that the economy can stabilize at last year’s level.

GFA/FEP, May 2013
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After a year in which the European parquet Industry succeeded in stabilizing and even slightly raising the overall consumption on the European market, FEP’s (European Federation of the Parquet Industry) preliminary forecasts for 2012 point in the direction of a decline of close to 4%.

FEP’s forecast should be seen as a first prognosis subject to variations. Furthermore, and in line with the general evolution in the past few years, FEP stresses that the results vary considerably from country to country and the overall picture is increasingly polarized rather than uniform at EU level. The latest figures suggest that parquet consumption in the EU/EFTA area in 2012 is slightly above 91 million m2, with the Austrian, German and Swiss markets performing solidly, whereas the situation in the southern regions remains disquieting, according to FEP. “Though the ongoing struggle confronting parquet producers in certain regions gives reason for concern, the German speaking countries are performing rather well and one can only wish that the positive trend will progressively also reach the important markets in the south of the EU,” FEP comments. As regards the product mix, the market shows a strong demand for one-strip planks, the considerable success of which largely compensates the decline in some other product categories.

Apart from the shaky economy, major challenges for the sector result from high energy costs, continuously stiff competition, expensive transport & logistics, extremely high unemployment rates in some important EU regions and the never certain EUR/USD ratio, according to FEP. “There are two major developments that fuel hope of a better future ahead,” comments FEP Chairman Lars Gunnar Andersen. “On the one hand the never ceasing innovative product creativity and evolutionary design reflected in the vision of the European parquet manufacturers. (...) On the other hand, the multiple economic forecasts for the current year converge on a more optimistic business development in the second semester, which should also give a boost to overall consumer confidence. Our industry is ready for the return of better times and market stability”.

GFA/FEP, February 2013
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In spite of the - especially Southern European - crisis, the volume of laminate floorings sold in 2012 by EPLF-members declined by a marginal percentage only. The 22 ordinary members of the EPLF sold 460 million m2 globally (previous year 468 million m2) out of their European manufacturing facilities. This means a decline of 1,7 % in volume.

According to the EPLF-board, stagnant sales of the association’s members in some countries seem to result from, as they put it, “economic downturn only”. And wherever laminate flooring becomes substituted, “the alternatives are often manufactured by EPLF-members too.”

The traditional ‘front runners’ of the Western European national markets didn’t change their rankings, whereas dimensions and absolute distances between them showed significant moves. With sales close to 298 million m2 (prev. 299 million m2) the market of the region as a whole showed a relative stability (- 0,6 %). Germany reduces to 76 million m2 (prev. 80 million m2), but still stays no. 1 as the strongest single market of the region in Western Europe. This development is seen by the specialists from the EPLF as less influenced by the economy rather than by new kinds of flooring systems winning ground.

Turkey (included by the EPLF as part of the Western European region) is gaining 66 million m2 (prev. 54 million m2), making it for rank 2. The ongoing economic growth of the country – resulting from a strongly growing population as well as urbanization tendencies with an accompanying construction boom – as well as the development of the Turkish membership offer a firm basis for this situation in the future, predicts the EPLF. In France laminate flooring lost 0.5 million m2, nevertheless the market volume was able to surpass the 40 million m2 (prev. close to 41 million m2) – a stable third rank. After years of massive declining Great Britain shows consolidation: 29 million m2 (prev. 30 million m2) and a ‘secure’ rank 4 inside Western Europe.

In the past the Netherlands, according to the EPLF, proved to be a “hoard of stability”. A decline of little more than 2 million m2 to 19 million m2 (prev. 21 million m2) doesn’t endanger rank 5, but through the eyes of the EPLF-board this means first signs of a shift of the demand to other products with a similar build-up, similar to Germany. Appreciable two-digit million amounts are generated in Spain still, 15 million m2 after 18 million m2, meaning rank 6. The economic crisis mainly in Southern Europe leaves its traces similar to other Western European markets: the remaining 18 countries of this most important sales region for the EPLF reach 53 million m2 after 55 million m2 in the year before – after all a minus of close to 4 %.

In Eastern Europe the contraction of the market has not ended yet too: 99 million m2 after (prev.) 104 million m2 have manifold reasons (- 4,8%). Poland defends rank 1 with 24 million m2 (prev. 26 million m2), closely followed by Russia 23.7 million m2 (prev. 25 million m2). Concerning Russia, the EPLF expresses its opinion that the Russian figures well represent the truth about its members’ operations, but not the market as a whole, which is judged to be more positive – the reason being successfully commissioned new capacities in the country. Romania is reviving slowly to 9.8 million m2 (prev. 9.2 million m2), maintaining third place ahead of Ukraine with 8 million m2 (prev. 8 million m2). Hungary - 4.3 million m2 (prev. 5.5 million m2) – loses its fifth rank to Bulgaria - 4.8 million m2 (prev. 4.4 million m2). The other 13 countries of this second part of the EPLF’s home market gather 24 million m2 after 26 million m2 in the previous year – altogether a minus of 7.7 %.

The speed of the decline in Northern America dropped significantly. But 24 million m2 after 27 million m2 in the previous year merely means the proverbial ‘fade of the pain‘, nothing more, explains the ELPF. In 2010 the sales in this area of EPLF’s overseas trade amounted to 41 million m2. From the sales in 2012, 12 million m2 were directed to the USA (prev. 13 million m2), parallel the development in Canada – also 12 million m2 after 13 million m2 in the previous year.

Asia-Pacific succeeded light tendencies of growth on a comparably low level. Years ago the market for imported floorings from EPLF-members in China crashed, due to the installation of own capacities inside the country. Now the EPLF can state a kind of ‘roll back’-tendencies especially in the segment of high-prized, specialized brand products. China including Hong Kong is back surpassing 3 million m2 (prev. 2.3 million m2), Israel achieves 1.9 million m2 (prev. 2 million m2), followed by Iran 1.6 million m2 (prev. 1.6 million m2) and Australia 1.5 million m2 (prev. 1.4 mil. m2). Worth mentioning in other regions are especially Chile with 6.5 million m2, Mexico 4.3 million m2, Columbia 2.1 million m2, South Africa 1.9 million m2 and Argentina 1.6 million m2.

Sales by Continents (source: EPLF)

GFA/EPLF, January 2013
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