Restructuring wood processing sector: an urgent mission

The wood processing sector needs to begin investing in its 4.0 future as soon as possible

This was announced by experts at the Rethinking Wood Processing Models seminar organised by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) and Yorkers Trade & Marketing Service Co., Ltd. in Ho Chi Minh City on September 10. This seminar was a pre-event of the 13th International Woodworking Industry Fair (Vietnam Wood), which will be held in Ho Chi Minh City’s Saigon Exhibition and Convention Centre on September 18-21.

The wood processing sector of Vietnam is facing massive challenges, including the fierce competition with foreign wood processing firms which have relocated to Vietnam due to the impact of the US-China trade war. The relocation will create competition in market share and human resources.

According to the statistics published by the Foreign Investment Agency, in the first five months of this year, a total of 40 new projects were registered in the wood sector, equalling 73 per cent of the total number of projects in this sector in the whole year of 2018. Especially, 60 per cent of these projects are related to the wood processing segment.

The increase in FDI inflows created a HR shortage, driving up wages in industrial parks by 10-20 per cent without actually satisfying enterprises' thirst for labour.

Besides, labour productivity of Vietnam is lower than in other countries, including Singapore, Malaysia, and Thailand, among others. Furthermore, digital applications in operating and trading are becoming more popular, while online trading is transforming the wood sector.

To tackle the challenges posed by these trends, the need to rethink and upgrade technology lines at wood processing firms is imperative.

Leslie Lye, sales manager for Weinig Group, said that with the changes in consumer buying behaviour and the availability of new technology, there has been a shift in customers’ buying requirements. Instead of buying furniture manufactured in bulk, customers are increasingly buying personalised furniture to meet their requirements. The production cost of customised furniture must be comparable to mass-produced products.

“To fulfil market needs, furniture manufacturers need to develop a system to cater for personalised design and production management for orders with different batches. Vietnamese factories have been making greater technological investments compared to other Southeast Asia countries. The investment for the Industry 4.0 era should start now or as soon as possible," he said.

“Of course, the technological investment must help solve all urgent orders first to match production with customers’ current needs and to maximise profit as much as possible. But in the long run, the company should foresee what technology in Industry 4.0 is offering to optimise the woodworking process, so they can invest in technology wisely and correctly to obtain a consistent profit and a sustainable business,” said Lye.

Nguyen Quoc Khanh, chairman of HAWA, said, “The allocation of technology, namely AI, robotics, and cloud computing, created a breakthrough in the development of the wood sector, contributing to increasing the capacity and quality of products, decreasing the dependence on human resources. Thus, if enterprises can take advantage of technology, they will enjoy massive benefits for their operations.”

Hong Kong-based Yorkers Trade & Marketing Service Co., Ltd. is one of the leading firms specialising in organising trade fairs and exhibitions in the ASEAN during the past 30 years. The company organised machinery-related events in Bangladesh, Cambodia, Myanmar, and Vietnam.