On 29 March 2021, Ebrahim Patel, Minister of Trade and Industry, signed off the preliminary Furniture Industry Master Plan. The plan aims to help revitalise the South African furniture sector, which has struggled in recent years.
Justin Berry, Executive: Sales & Marketing at PG Bison, says that despite current challenges in the market, some as a result of an unexpected surge in demand, he remains upbeat about the outlook for the domestic furniture sector. “I think that our actions show PG Bison to be remarkably committed to ensuring the long-term sustainable supply of this industry and to championing the opportunities we see arising from the South African Furniture Master Plan,” he says. “There are massive opportunities for all of us if we can successfully implement the actions within the Master Plan and it can only happen if we all work together as government, retailers and furniture manufacturers. PG Bison wants to be part of the solution at the end of the day.”
Berry says that one of the challenges the industry is facing, being the perceived stock shortage, is actually the effect of the frenetic pace at which the market picked up toward the middle of last year and has yet to slow down. The uncertainty of the early stages of lockdown did not help the situation. When the COVID-19 pandemic arrived and South Africa went into lockdown, all of PG Bison’s plants had to shut down. The company was unable to manufacture any product. To manage cash-flow and look after its employees, PG Bison took some strategic decisions. These decisions were looking forward months at a time and not easy to reverse once the conditions began to quickly change. To keep supplying the market, even at reduced capacity, PG Bison had to sell into its reserve stocks. These reserve stocks create a buffer, absorbing market volatility and ensuring smoother and more consistent customer service. Without them, any bump in the road is felt that much more. Compounding the supply challenges, the company then suffered a major setback in the form of a serious fire at its Piet Retief factory. Thankfully, nobody was injured, but the damage was severe and took some time to address.
“During this period, we lost production of 20 000m3 of particle board, which is the equivalent of 400 truckloads,” says Berry, “and when you are already under pressure with supply to the market, there is just no chance to make that lost production up again.”
When lockdown eased, the market picked up drastically, as homeowners began to invest in their homes, which they were spending more time in than ever before. “Although it feels sometimes like it’s impossible to catch up in this buoyant market, we’ve implemented several measures to help address the supply needs,” Berry says. “We postponed our Ugie plant maintenance shut-down, which was planned for December 2020, to June of this year. While we know many people would prefer us to hold off, we cannot delay it any further. But the market can rest assured, we have planned for this shut within our stock allocations and the shut should have a limited impact on the committed supply into the market over this period.
Investing in the Future
This is part of PG Bison’s R2 billion total investment in the next few years. The Piet Retief upgrade of R560 million will increase Particleboard capacity by 400m³ per day – a 53% increase in current plant capacity, which should come online by December 2021. The remaining R1.5bn investment is into a SupaWood medium density fibreboard (MDF) new plant, which will increase PG Bison’s capacity by 800m³ per day. The new plant should be commissioned end 2023 to early 2024 depending on power connection from ESKOM.
Beyond this, PG Bison announced in April 2021 that it had received approval for the purchase of a new melamine faced board (MFB) press and an additional hot coating line from its shareholder, KAP Industrial Holdings. This will bring PG Bison’s tally to seven MFB presses and two hot coating lines. The new lines will be commissioned in the third quarter of 2022.
“With these projects coming online within the next year and a bit, we hope that the shortage of supply will be short lived,” Berry says. “The additional capacity being installed by PG Bison will double the current supply into the market. We will also continue to focus on import replacement and growing additional African export markets and building capacity to support future growth in South Africa.”
He says that PG Bison a 100% Proudly South African wood-based panel manufacturer remains committed to the long-term growth of the South African furniture industry and working with all stakeholders to create a sustainable future. “We must ensure that we protect our raw material supply chains and finished goods industries to ensure localisation and job creation,” he says. “PG Bison would like to be part of the solution. We would like to engage directly with industry members who are experiencing supply constraints.”
Bernadette Isaacs, Chief Operating Officer of the South African Furniture Initiative (SAFI), says that SAFI has been working hard to expedite the creation of the Master Plan and undertook a nationwide roadshow, meeting furniture manufacturers around the country. “We are particularly proud of the fact that our roadshow included previously underserviced areas, such as Mpumalanga and the Eastern Cape, and it managed to attract manufacturers of all sizes, suppliers and other role players,” she says.
She notes that the furniture manufacturing sector is a significant contributor to job creation and South Africa’s gross domestic product. The industry employs approximately 26 000 people and is responsible for 1% of the country’s GDP. However, the industry is currently highly fragmented. Engagement between stakeholders is critical to change this, and to drive a more unified approach.
“Through initiatives like the Furniture Industry Master Plan, the government and industry bodies such as SAFI hope to guide future industrial development, the creation of supportive policies and the growth of the industry through export promotion. They also hope to guide transformation in the industry,” concludes Isaacs.