STUDY OF WOOD SECTOR

Methodological Centre for Vocational Education and Training
STUDY OF WOOD
SECTOR
Research report on skill needs
2008, Vilnius
STUDY OF WOOD SECTOR
Experts: Aleksandras Abišala, Giedr÷ Beleckien÷, Arūnas B÷kšta, Antanas Vidimantas Bumelis, Gintautas Bužinskas, Vaidas
Daujotas, Vincentas Dienys, John McGrath, Bronislava Kaminskien÷, Rūta Karvelyt÷, Vitalija Motiekaitien÷, Loreta Račelien÷,
Albertas Šlekys, Lina Vaitkut÷
We are sincerely grateful to the Wood sector companies, personnel search and selection companies,
vocational education and training establishments and everyone who has contributed to this activity. We hope
that the information presented will be helpful in the staff training planning process as well as in other areas.
2
SUMMARY
The wood sector is defined with regard to the international classification of Economic activities in the
European Community (NACE). It consists of two subsectors: Manufacture of wood and wood products (20.1,
20.2, 20.3, 20.4 and 20.5 activities) and Furniture manufacture (36.1 activity).
International development trends in the wood sector
The international wood industry has become more complex due to globalisation, production assortment and
the development of technologies. Environmental protection also plays a major role to the development of this
sector (processed materials, nature preservation, etc). European, Australian and USA manufacturers
compete with the imported Asian products that are cheaper. The industry has responded to these threats by
enhancing productivity, targeting niche markets and improving quality, design and marketing. In many
companies, the production process consists of the assembly and gluing of particleboard which is coated with
a decorative covering such as a veneer. The level of skills involved is not as sophisticated as in craft work.
Nevertheless, the skills are important particularly in respect of the operation and maintenance of computer
numerically controlled machines, finishing techniques and in the case of soft furniture, the sewing, cutting
and pattern making. The method of working, however, is as important as the actual skills of the operatives.
Specifically, ‘working in cells’ has been shown to be more efficient in reducing lead times and in optimising
machine utilisation. These working arrangements, however, require a high degree of multi-skilling on the
part of the production operatives. The development of craft skills is essential for the survival of the European
furniture industry. Craft skills are necessary to produce high quality, intricate furniture items based on solid
wood. The market for such products is less sensitive to price than the market for mass produced furniture
constructed from wood composites and it is a market therefore which can be successfully exploited by the
European companies. The increasing complexity of the industry means that it requires a cadre of university
qualified professionals to provide many of the technical, supervisory and management functions. Design and
marketing have become the twin pillars on which any successful development strategy for this industry must
be based.
Wood sector development trends in Lithuania
Companies. There are 2162 companies in the wood sector, 65% of those specialise in the field of
Manufacture of wood and wood products. Small companies prevail in the sector (the number of staff does
not exceed 49 people). The process of enlargement in the companies is ongoing in both subsectors. At the
moment the start-up of new companies is more intense in Furniture manufacture sector than in the
Manufacture of wood and wood products subsector. Lithuanian owned capital companies dominate in the
sector. The biggest concentration of wood and furniture manufacturers is in Vilnius and Kaunas counties.
Staff. Wood sector employs the biggest number of people in the field of processing industry in Lithuania. It
employs about 53000 people; the majority of them work in Manufacture of wood and wood products
companies (about 58% of all people). During five years (2003-2007) the number of people employed in the
sector was continuously growing, especially in Furniture manufacture subsector. The employees who work
shorter hours amount to 6% of all the employees in the sector, women amount to 40%. With regard to the
occupational groups the most popular are highly-skilled and low-skilled worker jobs. Employees of 30-50
year of age are prevailing in the sector; 60 years of age and older amount to 3% of all the employed in the
3
sector. In 2007 licenses for working in Wood and wood products companies were issued to 177 foreign
nationals, which is 3 times more than in 2005. Highly skilled workers were dominant among them.
Main development features. Wood sector is the strongest and the fastest growing cluster in Lithuania. Even
though the manufacturing of wood high added value products is developing fast in Lithuania, the wood
consumption level is still quite low. The major experience is accumulated in the sectors of furniture, sawn
timber, chipboards, sanitary paper and carton manufacturing. These sectors were continuously modernised
and the demand for such products has not been decreasing. The experience is good in the manufacturing of
wooden houses and their parts. The number of furniture manufacturers is growing. They successfully
cooperate with retail chains; they are fast in reacting to the demand of different markets. Furniture
manufacture competitiveness was very much influenced by a newly implemented business model when the
chipboard production is in its final form – construction materials and furniture parts and furniture companies
focus on the production of chipboards. Such a business model promotes capital concentration and reduces
logistics costs.
Performance indicators. Wood industry foreign trade balance is positive and continuously growing. The
majority of the companies export their products to other countries. This demonstrates sufficient
competitiveness of the sector on the international level. Even though this industry is increasing turnover and
added value, the productivity (added value for one factual working hour) is lagging behind from many other
activities. The average monthly gross1 salary in the wood industry still remains one of the lowest among the
activities of processing manufacturing. In the last two years the majority of wood sector companies
introduced new products or services. The main purchasers of the wood products are construction
companies, furniture retailers and individual customers. The competition on the Lithuanian and foreign
markets remains quite big.
Technologies. More than 50% of the companies in the manufacturing use modern technologies. Out of those
in Wood and wood products subsector the most popular are efficient waste usage technologies, Furniture
manufacturing – modern technological equipment. Among the Wood sector companies modern technologies
e-banking and accounting systems are the most popular.
In Furniture manufacture subsector software
design, such as AutoCAD, etc, programmes are quite popular.
Development trends. The development of wood industry companies are related to modern technological
equipment and the automation of the manufacturing process. In the coming two years the plans are to
implement software manufacturing planning and management programmes, technological process
automation technologies and modern technological equipment. The turnover of the companies in the sector
will continue to grow and it is likely that the growth pace will slow down. One of the reasons is insufficient
labour recourses. Therefore, one needs to look for other sources to ensure manufacturing development,
such as increase in labour productivity, which is at the moment quite low. Since labour productivity is related
to the modernisation of the manufacturing process, this will inevitably increase the demand for employee
training. The average monthly salary before tax should also grow and this would create more attractive
conditions for work in the wood industry. The increase in prices of raw materials and energy recourses could
1
Salary before tax
4
negatively influence the scope of turnover and export. More efficient use of local wood recourses,
clusterisation and the development of new business model as well as efficient logistics system would reduce
the negative effect. The company clusterisation process will continue as well as the manufacture of highadded value products. According to the company survey the threat to the successful growth of the business
is posed by the „tax system“, „shortage of labour“ and „lack of employee competencies“.
The main factors that will influence Wood sector in the future will be the following:
•
Increase in demand of environment friendly products;
•
Fast change in consumer demands;
•
Increase of import (from the countries where the prices of materials, energy and labour force are
lower);
•
Increase of international competition;
•
Reduction of employee supply (in terms of number and qualification level).
Staff demand. Staff annual turnover in the sector amounts to 39%. It is determined by the following reasons:
work conditions (low salaries, working hours and location, seasonality of work), personal qualities
(alcoholism, absence, non-compliance with the internal rules of the company) and emigration. The highest
turnover is observed among the low-skilled and highly-skilled worker groups, the lowest – among the
administration specialists.
From 2003 till 2006 the number of people registered in the Labour exchange office has reduced. The supply
of vacant positions also decreased slightly. Even though the level of tension (ratio of vacant positions and
the number of employees) in the Wood sector is lower than the country average, some occupational groups
are quite problematic. For example, in the worker group, the highest demand is for the „machinists“ and
„furniture manufacturers“. Also, „technologists“ and „constructors“ are on high demand, so are Sales and
marketing specialists, where „suppliers“ are of the highest demand.
In the coming five years the number of employees in the Wood sector will continue to grow. This will
influence all occupational groups. The demand for the new entrants into the market will amount to 5.600
people annually. The highly-qualified and low-qualified employees will be of a highest demand.
Changes in skills. Wood industry specialists mostly lack personal qualities, i.e. language skills,
manufacturing organisation, quality management and initiative taking skills. The workers lack personal and
special skills, such as, taking the initiative, honesty and work with the most recent technologies. Also
technical and safety at work as well as punctuality skills are quite relevant.
Skill change with regard to the jobs in the Wood sector will be determined by the consumer expectations, the
increase in prices of energy recourses and the implementation of new technologies and work tools in
manufacturing. In the future the companies are aiming to increase labour productivity by automating
manufacturing process and modernising work methods. Quality management skills and learning and
teaching skills will be necessary for almost all job group representatives. For highly-qualified employees work
with the software machinery their maintenance and programming skills will be relevant. Engineers will need
5
creativity, analytical skills, work in a team and the knowledge in technologies and technological processes.
Sales and marketing specialists will need to strengthen general skills, especially, communication, negotiation
and foreign language.
Staff supply. Even though the employment rate of workers on the market twice exceeds the number of
specialists (including civil servants), with regard to the admission to study data, the part of the young
generation in vocational education and training is twice as low as that of those who choose to study in the
universities. This also influences the ratio of vocational education and training and higher education
establishment graduates. Therefore, in the future the gap between the employee demand and supply in all
economy sectors may increase even more and may give rise to the serious problems for the development of
the business.
The demand of employees in the wood sector exceeds the supply in the group „Engineering specialists“.
With regard to the employees, in an ideal case, if all the relevant graduates of the vocational education and
training programmes opted for the wood sector, there was a balance between the demand and supply,
however, the qualification for the above mentioned employees is suitable to work in the construction sector
as well and there the salaries are one of the highest on the market. Therefore the turnover of the employed
in the analysed sector may increase in the future, which will increase the lack of specialists and workers. It is
noted that due to big annual turnover of employees the high demand for qualification development and requalification exists.
Recommendations:
•
To improve employee qualification by updating study/ training programmes with regard to the
established skill needs. Also, it is important to focus on the development of teaching and learning skills
in the system of education. The lack of teaching/ learning skills manifests at schools and at the
workplace when people need to learn new things. Therefore, it is recommended to foresee and
implement the tools (for example, relevant teaching textbooks and methodologies) that would improve
the development of the mentioned skills among the pupils and the teachers.
•
To reduce the challenge of emigration as well as annual employee turnover by improving working
conditions, especially the payment for work, as well as developing employee motivation system
(insurance, loans, incentives, etc);
•
To improve the balance between the employee demand and supply by changing admission
requirements to the higher education school and providing for the tools promoting the mobility between
different education chains, i.e., some study programmes should be established with vocational
education and training and work experience requirements. Also, the Wood sector companies could use
opportunities of the Amendment to the Law on Vocational Education and Training (2007) that
establishes new Apprenticeship VET organisation forms (in-house training). This would help to solve the
lack of employees and their qualifications problems;
•
With the aim to improve the admission planning to the VET and higher education schools, it is necessary
to establish data collection and storage system enabling reliably assess admission, graduation and
future graduate career trends.
6
Study structure. The study consists of 6 chapters. The first chapter gives a brief introduction to the Study
objectives and main definitions as well as the research methodology. It also provides for the composition of
the Wood sector. The second chapter deals with the international Wood sector development trends and its
overview. The third and the fourth chapter focus on the analysis of the key sector business indicators as well
as the employee demand assessment. The third chapter indicators are described with regard to the
statistical data drafted for the study and the accessible information, the fourth chapter analyses the research
data.
The fifth chapter assesses the employee supply, whereas the sixth – provides with the
recommendations that were drafted with regard to the overall information analysis, on the reduction of the
gap between the employee demand and supply in the Wood sector.
7
TABLE OF CONTENTS
1. RESEARCH METHODOLOGY ...........................................................................................................................................................9
1.1. Introduction..................................................................................................................................................................................9
1.2. Authors of the Study....................................................................................................................................................................9
1.3. Goal of the Study.........................................................................................................................................................................9
1.4. Methodology..............................................................................................................................................................................10
1.5. Definition of the Sector ..............................................................................................................................................................10
1.6. Sociological Survey of the Wood Sector Enterprises ................................................................................................................11
2. INTERNATIONAL TRENDS IN THE WOOD SECTOR ....................................................................................................................12
2.1. Introduction................................................................................................................................................................................12
2.2. The Globalisation of the Wood Processing and Furniture Industry ...........................................................................................12
2.3. The importance of skills at operative levels...............................................................................................................................14
2.4. The role of the craft skills ..........................................................................................................................................................17
2.5. The role of the furniture ‘professional’ .......................................................................................................................................20
2.6. The emergence of the design function as a critical competitive advantage ..............................................................................22
3. STATISTICAL CHARACTERISTICS OF THE WOOD SECTOR .....................................................................................................25
3.1. Introduction................................................................................................................................................................................25
3.2. Briefly about the Wood sector ...................................................................................................................................................25
3.3. Enterprises ................................................................................................................................................................................26
3.4. Employment in the Sector .........................................................................................................................................................27
3.5. Performance Indicators .............................................................................................................................................................30
3.6. Development Trends .................................................................................................................................................................32
3.7. Summary ...................................................................................................................................................................................33
4. CHARACTERISTICS OF WOOD SECTOR BASED ON SURVEY FINDINGS................................................................................36
4.1. Introduction................................................................................................................................................................................36
3.2. Performance Indicators .............................................................................................................................................................36
4.3. Employees.................................................................................................................................................................................40
4.4. Forecast of Demand for Employees in the Future.....................................................................................................................44
4.5. “Future Skills” ............................................................................................................................................................................45
4.6. Summary ...................................................................................................................................................................................47
5. SUPPLY OF EMPLOYEES...............................................................................................................................................................49
5.1. Introduction................................................................................................................................................................................49
5.2. Education and Occupational Groups.........................................................................................................................................49
5.3. Supply of Employees by Areas of Education and Level of Education.......................................................................................51
5.4. Supply of Skilled Workers, including Operatives, for the Wood Sector.....................................................................................52
5.5. Supply of Specialists, including Clerks, for the Wood Sector....................................................................................................53
5.6. Summary ...................................................................................................................................................................................54
6. RECOMMENDATIONS .....................................................................................................................................................................56
6.1. Recommendations on the reduction of gap between skills demand and supply in wood sector...............................................56
6.2. Recommendations on the improvement of “Future skills” identification methodology ..............................................................57
Annex 1.................................................................................................................................................................................................58
8
1. RESEARCH METHODOLOGY
1.1. Introduction
Since 2005 the Methodological Centre for Vocational Education and Training has been involved in the
project Development of the system of VET standards, which aims at increasing the compliance between the
teaching and labour market needs and improving lifelong learning conditions. One of the main project
activities is aimed at establishing „Future skills“ establishment methodology that can be applied to different
economy sectors and applying it in the selected industry. The project is of national importance and is funded
by the European Social Fund.
1.2. Authors of the Study
The study was drafted with the help of different experts from the Lithuanian institutions (education, science,
statistics, social security and labour, business, etc). The specialists from Ireland that have similar research
and skill establishment experience contributed to the Study.
1.3. Goal of the Study
The goal of the Study is two-fold. On the one hand it aims at carrying out the overall “Future skills” analysis in
the Wood sector (hereinafter referred as WS), by assessing the economic development, innovations, skills
and job interaction. On the other hand, the Study aims at verifying the principles of „Future Skills“
establishment methodology and drafting recommendations for improvement.
With regard to the „Future skills“ establishment methodology, the lack of skills and their combination
monitoring on the market helps to establish the existing and future problems related to the employee
qualifications. The skills in this study are defined as knowledge and experience to carry out certain
intellectual and (or) physical activities in a specific business area where experience is a consequence of
formal, informal and non-formal learning and work in a specific job. „Future skills“ are perceived as
qualitatively and quantitatively expressed lack of skills (the non-compliance of qualification to the
requirements of the workplace and the lack of the employees with relevant qualifications).
Skills in this Study are analysed with regard to three major groups:
•
Personal – long-term personal qualities that influence the performance (for example, independence,
initiative, punctuality); these skills depend on the personal temper, they are shaped by the
environment (for example, family, school, friends);
•
General – the skills developed during the learning process that are relevant to all jobs regardless of
the activity area (for example, communication, work in a team, foreign language skills, computer
literacy);
•
Special – – the skills developed during the learning process that are suitable for the specific job or
their group (for example, finance planning and management, industrial machinery maintenance and
repair).
9
1.4. Methodology
The main methodological elements are the following:
1. With regard to the real situation the economic sector definition is specified under the international NACE
classification activities and the job organisational model is drafted.
2. With regard to the accessible information and the statistical data package drafted for the Wood sector
study employee demand and supply (unemployed and vacant position), technological and organisational
trends are assessed. The analysed period – no fewer than 2 years.
3. The documented company survey is carried out. It aims at the collection of the detailed data on the
economic, technological and human recourse trends in the sector. The survey unit – a company involved
in the business under the economy sector definition. The scope of the survey is compiled with regard to
the data of Legal entity register and with regard to the following parameters:
•
the prevailing economic activity (with regard to the international classification of Economic
activities in the European Community (NACE);
•
size of the company (micro – up to 9 employees, small – from 10 to 49 employees, medium –
from 50 to 249 employees, large company – 250 and more employees;
4. The survey of staff search and selection companies by applying interview method. It aims at establishing
the job vacancies that were most difficult to fill during the last 6 months.
5. Sector company survey by applying interview method. It aims at assessing the lack of skills qualitatively,
i.e. job functions and the personal, general and special skills that are needed to perform them.
6. Overall analysis of the information collected and research results is carried out and the main factors that
could influence employment and skill change in the economy sector are established.
7. The obtained results are summarised and the recommendations are drafted.
1.5. Definition of the Sector
The wood sector is defined with regard to the international classification of economic activities (NACE)
(Figure 1.1). The definition was specified together with the Lithuanian and the EU experts, which makes the
study results comparable internationally. With regard to the definition the Wood sector consists of two
subsectors: Wood and wood products manufacturing (hereinafter referred to as the WM) and Furniture
manufacturing (hereinafter referred to as the FM).
Figure 1.1 Composition of wood sector with regard to the international NACE classification of economic activities
Wood sector (WS)
Wood and wood product manufacturing (WM)
Sawmilling and planning of wood, impregnation of wood
(20.1)
Furniture manufacturing (FM)
Furniture manufacturing (36.1)
Manufacture of veneer sheets; manufacture of plywood,
laminboard, particle board, fibre board and other panels
and boards (20.2)
Manufacture of builders carpentry and joinery (20.3)
Manufacture of wooden containers (20.4)
Manufacture of other products of wood; manufacture of
articles of cork, straw and plaiting materials (20.5)
10
1.6. Sociological Survey of the Wood Sector Enterprises
The sample of the postal survey was compiled based on the data of Legal entity register and the prevailing
economic activity (with regard to the international classification of Economic activities in the European
Community (NACE) and the size of the company. In total 1017 companies were selected, 595 of those were
– WM, and 422 – FM manufacturers. All the respondents of the survey were asked to fill in the
questionnaires and return them by mail within a few weeks. After sending out the questionnaires, the
respondents after some time were contacted by phone to remind them about the deadline such a way it was
possible to ensure a sufficient level of return of 23% (WM – 22%, FM – 23%).
Interview was carried out with the respondents of the companies that prevail in the Wood sector. All in all
there were 15 Wood sector companies in the study (WM – 6 and FM – 9 companies). The obtained
information was used for the establishment of the lack of skills and the assessment of training requirements.
Personnel search and selection company survey was carried out by e-mail and by phone. All in all 21
company took part in the survey. The survey was aimed at establishing the job vacancies that were most
difficult to fill during the last 6 months. 13 respondents claim that they have not experienced such a case.
11
2. INTERNATIONAL TRENDS IN THE WOOD SECTOR
2.1. Introduction
This chapter contains an analysis of skill trends in the international furniture and wood processing industries.
The analysis draws on examples from many countries to illustrate the contribution which different skills make
to the development of an internationally competitive industry.
The focus of the analysis is on three sectors; finished wood products, timber processing and semi-finished
products, and soft furniture. Products included under the finished products category include wooden
furniture, builder’s carpentry and joinery, wooden containers and other wooden products, such as
ornaments, picture framing and marquetry. Activities in the timber processing and semi-finished goods sector
includes sawmilling and planning of wood, and veneer sheets, plywood, laming board, particle board and
orientated strand board. Soft furniture includes the construction of mattresses, seats and sofas.
2.2. The Globalisation of the Wood Processing and Furniture Industry
The liberalisation of international trade has had a dramatic impact on the international furniture and wood
processing industry. It has resulted in a significant transfer of the manufacturing processes of many
European and American companies to Asia – particularly to China.
The processing of wood is one of the most labour intensive of all manufacturing activities. As such, labour
costs constitute a relatively high component of the final retail cost of any wood-based product. The wages of
factory operatives in Asia in wood processing and furniture companies are only a fraction of the
corresponding rates in West European and American plants. This wage differential has given Asian
companies, particularly in China, Indonesia Malaysia, Vietnam, Hong Kong and the Philippines a significant
competitive advantage and has resulted in a major shift of output and employment from the United States
and Western Europe to Asia. China has now passed Italy as the World’s largest exporter of finished and
semi-finished furniture products. In contrast, production is contracting dramatically in the United States and
over 40% of American companies have closed since the beginning of the decade.
The major furniture exporters still include Canada, Germany and of course Italy but the Asian economies,
particularly Malaysia and Indonesia – in addition to China - now figure prominently among the world’s top
exporters while Poland and to a lesser extent the Czech Republic are also major exporters of furniture. In
Latin America, both Brazil and Mexico have emerged as major exporters of furniture.
The industry in the United States and Western Europe has responded to the threats posed by Globalisation
primarily through outsourcing their manufacturing process to Asian economies. They have done this in one
of two ways; either by purchasing companies in these economies or through entering into franchising or
other contractual relationship with existing companies for the purpose of securing low cost supplies of semifinished and finished wood products.
This process of relocation, in many cases, has involved a large element of technological transfer. The level
of technology in wood processing and furniture companies in Asia in general is quite low and the emergence
12
of significant clusters of foreign-owned companies has resulted in a much greater level of diffusion of
technological innovation.
The Swedish company IKEA is perhaps the best exponent of the success of the outsourcing model. It has
over 13,000 suppliers located in over 55 different countries. It produces less than 10% of its final product in
Sweden itself. While some of its producers are located in West European countries such as Italy, and also
more recently in the United States, most of its producers and suppliers are based in Asia or Eastern Europe.
The trends towards outsourcing creates opportunities for the industry in countries such as Lithuania because
wage costs in these countries are considerably less than in Western Europe and also because the industry
has a strong tradition of good quality and well-designed furniture.
However the wage costs in Eastern Europe are significantly higher than in Asia. Consequently, the industry
in Eastern Europe must achieve higher levels of productivity to continue to compete in the international
marketplace and to attract business from West European and American companies.
The industry in Poland provides a good example of how companies located in Eastern Europe can achieve
an international competitive position despite having a relatively higher cost base than the industry in Asia.
The Polish wood processing and furniture industry is booming and it accounts for over 10% of all Polish
exports. It provides about 12% of IKEA’s global needs.
There are a number of factors which underpin the success of the industry in Poland. Firstly, there has been a
considerable level of acquisitions of Polish companies by major West European companies – particularly
German companies. Indeed, about a quarter of the former State owned furniture industry has been acquired
by German companies.
The influx of funds which occurred as a consequence of these acquisitions has been used to modernise
plants and purchase modern equipment. These companies also provided access to European Union export
markets - even before formal accession occurred - through their network of West European-based plants.
Another feature of the Polish industry is the relatively young age of the major national companies. Firms
such as the Adriana Group, the Klen company, and COM 40 in soft furniture and Nowy STYl, Mikomix,
Profim, MDD and Balma in hard furniture are only in production a relatively short time and they have
incorporated the latest technology in their plants. Almost all of their plants have computerised controlled
machinery (CNC); indeed some of the plants are fully mechanised with a computer aided manufacturing
system (CAD) and their soft furniture industry uses equipment such as Adler upholstery sewing machines
and lectra digital leather cutting scanners.
These technologies have transformed the Polish industry and Poland is now the major exporter of hard and
soft furniture in Eastern Europe and some Polish companies such as Styl are world leaders in their particular
niche market (i.e. office chairs).
13
As already stated, the industry in Lithuania shares many features of the Polish industry. For this reason,
some examples from Polish companies will be alluded to in this chapter to illustrate the importance of
developing a skilled workforce in the Lithuanian wood processing and furniture industry.
2.3. The importance of skills at operative levels
Much of the furniture produced today in the international market is based on a wood composite such as a
particle board which is coated with a decorative covering – usually a veneer.
Consequently, in many
companies, the workers on the factory floor are not qualified craft workers but are rather production
operatives and assemblers.
The employment of qualified craft workers is even less apparent in the production of soft furniture. The
manual skills deployed in the factory usually involve sewing, cutting and pattern-making as well as the
assembly and gluing of frames which contain the foam which forms the filling for the fabric.
Despite the absence of craft workers, however, factory operatives do require some training for some of the
tasks they are required to carry out.
It has already been mentioned that one of the reasons underpinning the relative success of the Polish
furniture industry is its utilisation of modern equipment such as computer numerically controlled machines.
There is a considerable level of skill required in setting-up, programming and maintaining this machinery and
the industry in Europe has invested extensively in training in these areas. Most of this training is conducted
in-house as the equipment is relatively expensive. However, in many cases, such as in Ireland and the
United Kingdom, the National Vocational Training system subsidises a proportion of the cost of training
provided it is carried out by an approved trainer and it achieves a recognised formal accreditation.
In Ireland, training in CNC operation is also provided in purpose built training centres to job-seekers.
However, the training is usually carried out on ‘simulators’ because of the relatively high cost of the
machines. Simulators are in effect miniature CNC machines which are used in vocational training centres as
a relatively inexpensive method of demonstrating how CNC machines are programmed.
Modules on CNC training are also an integral part of most wood-based apprenticeships in Western Europe.
However, before commenting on the apprenticeship system, reference should be made to the other skills
required of production operatives in the wood processing and furniture industry.
As already stated, many wood products are constructed out of particle-board and finished with a decorative
material which had been stained in a appropriate manner.
Knowledge of gluing techniques and of stains therefore is required by many production operatives in the
industry.
The basic skills are usually learnt on the shop-floor but more sophisticated finishing techniques
are usually acquired through the apprenticeship system.
14
There are also a wide range of skills required by production operatives employed in soft furniture companies.
These include sewing machining, pattern making and cutting. These skills are usually acquired on the job
although in many European countries, including the United Kingdom and Ireland, the cost of training is partly
subsidised by the national vocational training system, provided certain conditions are met.
One of the difficulties in trying to raise productivity at operative levels in the wood processing and furniture
industries is that the fixed costs associated with the industry – in terms of plant and equipment - are very
high indeed. However, the market for the products of the industry is fragmentary and transitory. This tension
between a high fixed cost and a volatile marketplace creates an inherit tendency towards sub-optimal
performance. The machines are often under-utilised and leads times (i.e. the time between receiving the
order and delivering the final product) are often too long to respond adequately to changing market
conditions.
A number of best practice companies have trained their operatives in techniques such as ‘cell working’ to
optimise machine utilisation and reduce lead times. For example, the Polish company, CIMIR have been
required to reduce their lead times from two weeks to 5 days in order to comply with the requirements of
IKEA who is one of their main customers. They have laid their shop floor out in cells rather than on a process
flow basis. Each cell contains 5 – 6 workers who assemble all aspects of the sofa frame from its constitute
parts. This gives the workers a sense of ownership of the final product and helps to generate a sense of
pride in their work. It also allows for more flexibility as the work of any one individual can be done equally
well by anyone on the team and it also facilitates shorter production runs as new designs can be introduced
into the work station without causing any delays to the work-flow.
However, these working arrangements do assume a relatively high level of multi-skilling on the part of each
individual in the team and it requires a considerable level of training to achieve this level of dexterity.
Such training is usually delivered in-house and in many European countries, the cost of the training is partly
subsidised by the appropriate vocational education and training authority.
Finally, operatives working in the wood processing and furniture industries are required to possess skills
which are not unique to this sector but which are a feature of the work of production operatives throughout
manufacturing industry.
management.
The most frequently used of these skills relate to forklift driving and stores
The national vocational training systems in most European countries offer short 2-3 days
training courses in forklift driving to job seekers while in some countries, employee training programmes in
forklift driving are partly subsidised.
The management of stores and the control of inventory has become a more critical skill because of the
globalisation of the sourcing and procurement functions and because of the influence of information
technologies. Most inventory systems in furniture companies are now computerised. The ‘computerised
inventory control technician’ is an acknowledged occupation of medium level skill which requires a familiarity
with computer systems such as enterprise resource planning (ERP) and of bar coding.
15
In conclusion, in practice it is the factory worker rather than the craft worker who is often the maker of
furniture and other finished and semi-finished wood products in furniture and wood processing companies.
This is because much of the product is composed of a wood composite such as a particle board which is
coated by a decorative covering or a veneer. The performance of these companies is therefore critically
dependant on the skills of their operatives.
In hard furniture and wood processing companies, it is imperative that these operatives are capable of
setting-up, programming and maintaining CNC equipment. In soft furniture companies, the operatives must
be accomplished in sewing machining, pattern making and cutting as well as the assembly of wooden
frames
In both cases, however, the way operatives work together as a team is as important as their individual skills.
In the modern plant, operatives must be sufficiently flexible to substitute for one another as the demands of
the international market means that the production process consists of continually changing short runs and
very low lead times.
Figure 2.1. Pyramid of skill needs in wood sector
Marketing and
branding
of Products.
Targeting niche
markets
Design and Innovation.
Multi-functional products,
intelligent design
Sourcing of materials and
components globally
.
Managing international supply chains
Degree; Professional or ‘Meister’ courses
incorporating some management and design
functions including CAD.
Craft; Courses in carpentry, cabinet-making and wood
machining. Usually apprenticeship format
Semi- skilled includes CNC machining, basic finishing techniques, sewing
and cutting and pattern making
Furniture fixtures and assembly and frame construction;
some CNC machining
16
2.4. The role of the craft skills
The next level of skill in the skills pyramid (figure 2.1.) is represented by the Craft Trades.
In most European Countries, the vocational training system distinguishes between three different trades, the
carpenter and joiner, the cabinet maker and the wood machinist. However, there is a trend in recent years to
subsume the wood machinists into the other trades. This trend reflects the fact that most machines are now
programmed by computers and a module on CNC machining is an integral component of the training for all
the crafts. Thus, in some countries, it is not considered necessary to have a separate wood machining
apprenticeship.
In most European countries, apprenticeships provide the route for the acquisition of the craft skills. However,
the format of the apprenticeship system varies widely among European countries. In particular, the
relationship between the on-the-job component and the off-the-job components of the system differ
dramatically between countries.
The off-the-job component of the apprenticeship system is relatively extensive in those countries where the
apprenticeship system is imbedded in the second level education system. These countries include Germany,
Austria, and many of the countries which were part of the former Soviet Union.
In the case of the latter, it is often the case that the education system cannot afford to purchase the
equipment and the students do not have the opportunity to learn how to programme CNC machines while
they are on the on-the-job component of their apprenticeship.
These difficulties are compounded by the fact that many wood processing and furniture plants within the
industry in these countries do not have modern CNC machines and consequently students can experience
difficulties finding companies which provide work experience on this technology.
In these situations, it can be cost efficient for the national vocational education system to exploit ‘spare
capacity’ in best practice companies for the purpose of providing on-the-job training for apprentices. This
approach does involve the payment of money to companies
but is can be more effective and less
expensive than the State directly investing in the appropriate technology.
There are a small number of international best practice wood processing and furniture companies located in
Lithuania and the State education authorities could consider discussing the possibility of providing off-the-job
training modules to apprentices specifically in the operation and maintenance of new technology using the
‘spare capacity of these companies.
In the United Kingdom, the training of apprentices is exclusively ‘on the job’. Firms are encouraged to apply
for training subsidies in respect of the training of employees for the National Vocational Qualifications levels
2 and 3 in furniture skills. The training is validated by industry experts. This approach has a number of
merits. Firstly, it is less expensive than the traditional model because the State is not required to invest in
17
expensive equipment. Secondly, the apprentice is exposed to modern methods of production and has the
opportunities of working with the most up-to-date technologies.
However, this approach has also a number of weaknesses. Firstly, the employer is interested primarily in
training the apprentice in the skills required in his or her company; this can result in training which is too
company-specific and which limits the career opportunities of apprentices when they complete their
apprenticeship. It can also result in diminishing the status of the apprenticeship system as the system is not
considered to be an integral part of the education system. In this situation, it becomes difficult to distinguish
the apprenticeship system from other employee training programmes.
There is some evidence that the apprenticeship system in the United Kingdom may have experienced a
lowering of its status. It has certainly become more difficult in recent years to attract young people to
apprenticeships especially in the construction and wood-related trades.
In Ireland, the apprenticeship system combines elements of both class-based tuition and on-the-job training.
However, the class-based components are not part of the second-level educational structure. The apprentice
is considered to be a member of the workforce and is paid a percentage of the official craft rate, depending
on the particular phase of the apprenticeship process. The off-the-job
training component is provided by State training centres and third level colleges and the on-the-job
component is provided by employers and is validated by inspectors from the National Vocational Training
Authority.
The industry plays a pivotal role in the apprenticeship structure. All apprentices must be sponsored by an
employer and the employers play a critical role in the setting of standards and the design of curricula. They
provide the subject matter experts who participate on the curricula review committees and the employer
organisations are also represented.
The industry in Malaysia, which is the tenth largest exporter of furniture in the world and the largest in SouthEast Asia, introduced a formal apprenticeship system in 2003 and the structure resembles the Irish model in
certain critical respects. The scheme provides multi-skill training to school-leavers who have completed their
studies to the junior or senior second level cycle (i.e. after 9 or 11 years of full-time schooling). To participate,
the school-leavers have to be sponsored by employers who are registered with the Malaysian Human
resources Development Cooperation (PSMB). The apprentices are bound by an apprenticeship contract with
their sponsors for a specified period. The scheme is attractive to employers because the course fees are
borne by the the PSMB – the employers are only required to pay a monthly living allowance and provide
insurance cover and these costs are re-imbursed by the PSMB through the national training fund. The PSMB
provide the on-the-job training through its Wood Industry Development Centre while the employer provides
the on the job training.
The duration of the apprenticeship is 16 months during which the apprentice acquires qualifications at two
different levels; at level 1 he or she is qualified as a furniture production operative and can perform
assembly, wood machining and finishing techniques. At level 2, the apprentice is sufficiently skilled to
18
operate sophisticated computer equipment, construct furniture, and engage in sophisticated lamination
techniques and control inventory and packaging.
The duration of the furniture apprenticeship system in Ireland is four years. However, there is a view in
Ireland that the apprenticeship system for some trades – including furniture – is rather long and that a shorter
apprenticeship would be more beneficial.
It is important from a national economic perspective that the furniture industry has access to a cadre of
qualified craft workers. The qualified craft-worker, unlike the production operative, has the skills to construct
finished items of furniture out of solid wood. As such, the craft worker is capable of producing specialised
items for niche markets or indeed once-off items customised for particular clients such as a table for a
corporate board-room.
These solid wood products are not as easily transported as semi-finished products or unassembled ‘flatpacks’. Consequently, these products are not as exposed to price-competition from low cost overseas
producers. At a time when the American and European industry is under intense pressure from Asian
producers, the craft product represents a market opportunity which the industry can develop to sustain
employment and output in its domestic market and to target lucrative markets overseas where quality and
design are more important considerations than price.
The apprenticeship system also provides the type of skills which facilitate new business start-ups, and many
of those who graduate from wood-based apprenticeships prefer to work on their own rather than seek
employment in the industry.
For this reason, many European vocational training authorities, such as in Ireland, are introducing a module
on entrepreneurship into their apprenticeship system. They are also offering training in the management of
small businesses to craft workers who have graduated from an apprenticeship and who wish to set-up their
own companies. There is a general recognition that the small craft-based company producing high quality
solid wood furniture is one of the niche markets which can survive and prosper in relatively high wage
economies.
To conclude, in most countries the furniture related craft skills are acquired through a formal apprenticeship
system. The structure of apprenticeships varies greatly in different countries; in some countries the system
is embedded in the secondary vocational system; in others it is virtually indistinguishable from other
employee training programmes, while in countries like Ireland and Malaysian, the system provides structured
and formal on and off the job training modules to school-leavers.
The apprenticeship system is essential for the survival of the furniture industry in Europe because it provides
a cadre of persons who are capable of producing a product which is less sensitive to price pressures than
products which are based on wood composites and which are more easily shipped in a pre-assembly format.
19
2.5. The role of the furniture ‘professional’
The wood processing and furniture industry has become much more complex in recent years. This enhanced
complexity reflects a number of developments which are interacting with one another. A number of these
developments have already been noted such as the globalisation of the market for wood based products and
the development of very sophisticated production and finishing technologies. In addition, the wood
processing and furniture industry has also been significantly affected by the emergence of the ‘green’
agenda in Europe and the United States. On the one hand, the fact that wood is a totally renewable natural
resource with high levels of thermal efficiency has increased the demand for wood components in residential
development and as the raw material in many sustainable heating systems (e.g. wood chip and wood
pellets). On the other hand, the ‘green agenda’ has also increased our awareness of the need to protect the
forests – particularly tropical hardwood forests – and wood processing and furniture companies are coming
under increasing pressure from retailers to show evidence that they source their wood supplies exclusively
from renewable forests. This pressure had resulted, for example, in IKEA demanding that their suppliers of
raw material adhere to a rigid set of standards in regard to their harvesting practices.
Concerns about the depletion of forests has also resulted in an increasing use of other materials in the
production of furniture - particularly glass and plastics, This development in turn has exposed the industry to
a whole new set of regulations which govern the manufacture of these materials.
The combined impact of all of these developments has persuaded many national and federal education and
training authorities in Europe, United States, and the United States to introduce degree programmes for
graduates who aspire to working in the wood industry.
High profile degree course in furniture have been set-up throughout Europe, the United States and Australia.
Notable examples are found in Sweden, Denmark, Scotland, Australia Ireland and in the United States
particularly in North Carolina around High Point, and in South Carolina and in Mississippi.
While the curricula in these third-level colleges vary from country to country, the underlying rationale for the
introduction of such degree programmes is the same; there is a general acceptance within the industry that a
modern wood processing and furniture sector requires a supply of qualified graduates who are capable of
operating in the space between the craft workers – or the production operative in a company which is
involved in mass production – and the designer and marketing manager.
To some extent, the German ‘Meister’ system performs this role in that graduates of the ‘Meister’ system
often become production managers in furniture companies. However, the graduates produced by these
colleges are more than ‘master crafts-persons, although a craft background can be an advantage in that the
student already has an appreciation of what is entailed in the production of finished and semi-finished wood
products. In particular, such graduates must develop an expertise in the management of international supply
chains. The impact of information technology combined with enhanced shipping technology has provided a
new and more sustainable source of value-added for European and American companies than the traditional
method of reducing operating costs.
20
IKEA – the world’s most successful furniture producer and retailer - provides the best example of how the
effective and innovative management of a global supply chain can become the major source of added value
for a wood processing or furniture company. In the IKEA supply chain, it is the customer who provides the
added value to the company by carrying out many of the more costly functions which were the prerogative of
the firm in the more traditional model. This, in the IKEA supply chain, it is the customer who transports the
product to the final destination and it is the customer who constructs the final product in their own home. It is
also the customer who supplies much of the market information which IKEA relies on to customise its
products and target specific markets. Indeed, IKEA claim that in their production process it is its customers
who create the single biggest cost reduction by eliminating the high costs associated with shipping ‘air’. It is
far more economical, for example, to transport a bookcase in a pre-assembled format than it is in its final
state.
The IKEA example illustrates the type of issues which have to be addressed in successfully managing a
European or American wood processing or furniture company.
Companies must constantly introduce
innovations in the way they source, manufacture, distribute, and market their products. This often involves
the company entering into mutually beneficial contracts with other companies to provide them with relatively
low cost supplies of semi-finished and finished wood-based products.
The modern international supply chain for furniture and semi-finished wood base products consists of a
myriad of different companies throughout the world which are involved in a series of inter-dependant
mutually beneficial relationships; each company specialising in the activity where it has a comparative
international advantage.
In this international marketplace, each company occupies a specific position in a supply chain and provides a
specific specialised product, but they are present in many different supply chains and they are supplying the
product in which they are specialising in to many different companies. The Polish company Alve for example
is able to produce pine office furniture at an internationally competitive price because it is located close to an
extensive Pine forest which significantly reduces its transport.
Other companies adopt innovative marketing strategies to acquire an international competitive advantage.
The Swedish company, Bernz, for example, provides a customised ‘apparel’ service through the internet for
people who have purchased an IKEA sofa but who want a more personalised design. In contrast, the Polish
soft furniture company CIMIR, found that it could produce more efficiently by outsourcing the covering of its
sofas to another company and concentrating on producing the actual sofas. In this case, two companies
acquired a competitive advantage through specialisation.
The purpose of these examples is to illustrate just some of the issues which must be considered by those
who are managing the production of furniture or semi-finished wood products. The level of complexity
involved requires the type of education which is associated with a third level degree rather than a craft
qualification. For this reason, the furniture industry in most European countries, Australia, Canada and many
North American States, have at least one major university providing specialised programmes for the furniture
industry.
21
The emergence of University courses is a relatively recent phenomenon and many of those currently working
at supervisor or management levels in furniture companies throughout Europe have not had the benefit of a
university education. Consequently, many national education and training authorities offer partly subsidised
training programmes for managers and supervisors working in the industry. While the number of relatively
small furniture companies in the United States and Europe has declined in recent years as a result of a
significant level of mergers and acquisitions, the small and medium sized company is still the dominant
player in the industry. Many of the managers of these companies have a craft background and they require a
considerable level of training to successfully manage their companies in a marketplace which has become
highly complex and global.
To conclude, the professionally qualified graduate is now a core component of the skills profile of a modern
furniture industry and any skills strategy which is designed to improve the performance of the sector must
take this fact into account.
2.6. The emergence of the design function as a critical competitive advantage
The globalisation of the wood processing and furniture industry and the difficulties experienced by European,
Australian and American companies in competing with Asian imports on price has catapulted the design
function to the very forefront of furniture production. Producing the right design is now widely regarded as
the best means of differentiating the European, American or Australian product from the mass produced
Asian imports and of acquiring access to the lucrative high income west European and American markets.
Third level colleges specialising in the design of furniture have emerged in almost every European country
over the last decade. These colleges have all developed very close relationships with the local industry and
an extensive period of internships with a furniture company is a feature of the curricula in virtually all cases.
Design has become integrated into the strategic marketing strategy for many furniture companies. Some
companies for example are targeting their products to people who are ecologically conscious. Other
companies use designers to co-ordinate all their products using colour and design combinations which are
compatible with one another; the objective being that the customer will feel obliged to purchase the whole
range of products rather than just a single item. In many cases, this ‘design’ strategy entails developing
partnerships among a number of different companies which agree to produce their hard and soft furniture to
a particular ‘theme’.
Furniture design has increasingly exploited developments in other technological fields to produce highly
unusual and innovative products which retail at relatively high costs. The recent success of the Irish soft
furniture company Kaymed is a case in point. Kaymed produces mattresses for the international market from
locations in Ireland, the United Kingdom and the United States. It is therefore subject to the relatively high
salaries which prevail in these countries. Keymed however has survived and prospered by designing beds
which incorporate the latest technological innovations. In its most recent range of mattresses, it uses
innovations in thermal materials to produce a spa effect and the mattress produces a different heat level at
22
different locations, all of which can be controlled at both sides of the mattress. These mattress retail in the
United States at over 2,000 dollars each.
Design however does not have to be associated with expensive products. The core philosophy of IKEA is to
produce innovative designed furniture at an affordable price. IKEA does this by utilising a wide range of
different materials in its design process. It has over 100 designers working for them – the vast majority on a
freelance basis. They are not only creating innovative designs, but they are also constantly sourcing new
materials to reduce the cost of the final product to the customer. Their PS Ellan Rocking dining chairs, for
example, are composed of an inexpensive blend of wood chips and a plastic which is used in highway noise
barriers, while one of their bookcase designs are constructed out of recycled milk cartons.
Design is widely recognised as offering the furniture a core competitive advantage. The enhancing of design
and marketing skills have become the core strategy for realising the potential of the furniture industry in
many countries.
The Malaysian Furniture Promotion Council (MFPC) have recently introduced a furniture design services
programme in which graduates of industrial engineering courses, interior design courses and third level
furniture programmes are offered a three month internships with internationally trading furniture companies.
They are also permitted to work on an individual basis if they so wish. The graduates are paid by the MFPC
during the internships. The rationale underpinning this initiative is to inculcate a design culture in the furniture
industry in Malaysian by demonstrating in a practical way how innovative design can increase market share.
In contrast, at Monash College in Victoria in Australia, the third year students are required to produce
designs which can easily be transported in a ‘flat pack’ and which can be assembled at home by the
customer without the use of any tools. These designs are showcased at international fairs and many of them
have been sponsored by IKEA.
Design is an integral part of modern marketing strategies. It provides the opportunity to target niche markets
and for European, Australian and American companies, it provides an opportunity to add value to a product
which would be uncompetitive on the basis of price alone. Some of the niche markets where design plays a
pivotal role include the following:
Green furniture: As a result of the increasing awareness about environmental protection and more stringent
legal requirements worldwide, furniture manufacturers are becoming more cautious in choosing the materials
for production. This has resulted for example in using less polypropylene in the production process and a
greater use of wood from sustainable forests in the finished product. Other sustainable products such as
recycled plastics and discarded stone are increasingly been used in products which are marketed in Western
Europe as ecologically friendly.
Multi-functionality: Homes throughout Europe are becoming smaller and space is at a premium. This trend
has given rise to furniture which is multi-functional. Examples include raised beds with storage space
underneath and folding chairs which can be hung from walls.
23
Home office furniture: There is an increasing demand for home offices in order to meet the need for people
working from home, early retirements and layoffs due to the slowing economy.
Ready-to-assemble (RTA) and Do-it-yourself (DIY) furniture: RTA and DIY furniture and home furnishing
products have gained popularity around the world, especially in Europe and North America. Fewer official
working hours (e.g., in France), increasing aging population and early retirements will be the major drive of
growth in the sector.
To conclude, the development of a strong furniture design culture is essential if the European, Australian and
American furniture industry is to survive and prosper.
2.7. Conclusions
•
The international wood processing and furniture industry in Europe, Australia and the United States
is under intense pressure from Asian producers, who can process and produce wood-based
products at a much lower costs.
•
The industry has responded to these threats by enhancing productivity, targeting niche markets and
improving quality, design and marketing.
•
In many companies, the production process consists of the assembly and gluing of particleboard
which is coated with a decorative covering such as a veneer. The level of skills involved is not as
sophisticated as in craft work.
•
Nevertheless, the skills are important particularly in respect of the operation and maintenance of
computer numerically controlled machines, finishing techniques and in the case of soft furniture, the
sewing, cutting and pattern making.
•
The method of working, however, is as important as the actual skills of the operatives. Specifically,
‘working in cells’ has been shown to be more efficient in reducing lead times and in optimising
machine utilisation. These working arrangements, however, require a high degree of multi-skilling
on the part of the production operatives.
•
The development of craft skills is essential for the survival of the European furniture industry. Craft
skills are necessary to produce high quality, intricate furniture items based on solid wood. The
market for such products is less sensitive to price than the market for mass produced furniture
constructed from wood composites and it is a market therefore which can be successfully exploited
by the European companies.
•
The increasing complexity of the industry means that it requires a cadre of university qualified
professionals to provide many of the technical, supervisory and management functions
•
Design and marketing have become the twin pillars on which any successful development strategy
for this industry must be based.
24
3. STATISTICAL CHARACTERISTICS OF THE WOOD SECTOR
3.1. Introduction
This Chapter presents a brief overview of the Wood sector. It includes the main Wood sector company,
employment and business indicator aspects. The analysis was carried out with regard to the statistical data
that was drafted for the purpose of the Study. They also served the basis for drafting the tables and figures in
this study. Also, secondary data was used, i.e. studies and overviews and other accessible information about
the development of wood sector and Lithuanian economy.
3.2. Briefly about the Wood sector
Under the information in the „The technology platform vision of the Lithuanian forest sector“(authors UAB
„Investment and finance analysis centre“, 2006-11-30):
•
Lithuania has low wood consumption level from the total wood growth.
•
Wood industry foreign trade balance is positive and continuously growing. The major experience is
accumulated in the sectors of furniture, sawn timber, chipboards, sanitary paper and carton
manufacturing. These sectors were continuously modernised and the demand for such products has not
been decreasing. The experience is good in the manufacturing of wooden houses and their parts.
•
WS is the strongest and the fastest developing cluster in Lithuania.
•
The number of furniture manufacturers is growing. They successfully cooperate with retail chains, they
are fast in reacting to the demand of different markets. Furniture manufacture competitiveness was very
much influenced by a newly implemented business model when chipboard productions is of a final form
– construction materials and furniture parts and furniture companies focus on the production of
chipboards. Such a business model promotes capital concentration and reduces logistics costs.
•
High added value wood product manufacturing is a fast growing sector in Lithuania.
The main WS development prospects are related to the following aspects:
•
Optimal use of local wood resources;
•
Modern technologies;
•
high added value wood products;
•
new business model development;
•
development of clusters;
•
increase in export;
•
development of furniture logistics system;
•
standardisation in the wood industry;
•
employee training and qualifications.
With regard to the accessible information, the following key factors will influence the development of WS in
the future:
•
Increase in demand of environment friendly products;
•
Fast change in consumer demands;
•
Increase of import (from the countries where the prices of materials, energy and labour force are lower);
•
Increase of international competition;
•
Reduction of employee supply (in terms of number and qualification level).
3.3. Enterprises
Enterprises distribution by subsector and size. When statistical data was analysed, there were 2162
companies in the Wood sector, 65% of them specialise in the WM subsector. Small and micro companies
are prevailing in the sector (the number of employees does not exceed 49 people). They amount to 90% of
all the companies in the sector. Wood sector composition is presented in Table 3.1.
Table 3.1. Wood sector composition
subsector
Economic activities under NACE
Wood and wood
products
(WM)
Furniture
manufacturing
(FM)
Companies with regard to the number of
employees
total
Up to 9
from 10
to 49
from 50
to 249
from
250
Sawmilling and planning of wood, impregnation of wood
(20.1)
389
310
47
2
748
Manufacture of veneer sheets; manufacture of plywood,
laminboard, particle board, fibre board and other panels
and boards (20.2)
14
10
6
3
33
Manufacture of builders carpentry and joinery (20.3)
217
129
33
1
380
Manufacture of wooden containers (20.4)
39
63
16
0
118
Manufacture of other products of wood; manufacture of
articles of cork, straw and plaiting materials (20.5)
78
53
7
0
138
Furniture manufacturing (36.1)
380
263
81
21
745
1117
828
190
27
2162
total
Changes in the number of enterprises in the Wood sector. From 2003 to 2007 the number of companies in
the Wood sector has slightly increased, mostly due to the development of FM subsector (Figure 3.1).
Fig 3.1. Change in the number of Wood sector companies
2500
2098
2140
2156
2189
2148
Wood sector
2000
WM
1500
FM
1000
500
0
2003
2004
2005
2006
2007
In both subsectors the number of small (from 10 to 49 employees) and medium (from 50 to 249 employees)
companies has increased (3.2.). In the FM subsector the number of micro (up to 9 employees) and large
(250 and more employees) companies has increased. On the other hand, in the WM subsector the number
26
of such companies has decreased. To summarise, the process of clusterisation is present in both
subsectors. In the FM subsector the establishment of new companies is more intense than in WM subsector.
Fig. 3.2. The change in enterprise numbers in the Wood sector with regard to the subsectors and size
WM
1.800
FM
1.600
1.400
1.200
1.000
800
600
400
200
0
2003
2004
2005
2006
up to 9 employees
2007
2003
10-49 employees
2004
2005
50-249 employees
2006
2007
250 and more employees
Geographic distribution of companies in Lithuania. In Vilnius and Kaunas counties the number of wood and
furniture manufacturers is the biggest. In other counties Wood sector company distribution fluctuates from
3% up to 12%. (3.3.).
Fig. 3.3. Wood sector company geographic distribution in the counties in 2007.
35%
FM
WM
30%
30%
20%
17%
15%
12% 12%
10%
5%
26%
24%
25%
3%
5%
10%
7%
10%
3% 4%
8%
4% 4%
4%
7%
6%
3%
0%
s
ytu
Al
as
un
Ka
a
÷d
aip
Kl
mp
rija
a
M
ol÷
s
žy
v÷
ne
a
P
i
lia
au
Ši
ur
Ta
÷
ag
Te
a
lši
i
a
en
Ut
us
lni
Vi
3.4. Employment in the Sector
Employee distribution by subsectors. In accordance to the statistical data of 2007 almost 53000 worked in
the Wood sector. This makes up to a bit more that 3% of the employed in the Lithuanian economy. The
majority of them work in Manufacture of wood and wood products companies (about 21% of all the employed
in the Processing industry).With regard to the number of employees per subsectors, the majority of them
work in the WM subsector (some 58% of all the employees of the wood sector). During five years (20032007) the number of people employed in the sector was continuously growing, especially in Furniture
manufacture subsector. (3.4). It is noted that the number of employees in small companies has decreased
during the analysed period, however, their number has increased significantly in the medium WM
enterprises. The number of employed in all FM companies has increased. (3.5).
27
Fig. 3.4. Turnover of employees in the Wood sector
60000
50000
Wood sector
40000
WM
FM
30000
20000
10000
0
2003
2004
2005
2006
2007
Fig. 3.5. Employee turnover in the Wood sector with regard to the subsectors and company size
WM
35.000
FM
30.000
25.000
20.000
15.000
10.000
5.000
0
2003
2004
2005
up to 9 employees
2006
2007
10-49 employees
2003
2004
50-249 employees
2005
2006
2007
250 and more employees
Employee demand and supply2 (unemployed and vacancies). From 2003 till 2006 the number of people
registered in the Labour exchange office has reduced. This trend is more vivid in the FM subsector.
According to the preliminary data the number of the unemployed will grow in 2007. The supply of vacant
positions also decreased slightly in both subsectors (3.6).
It is noted that in the FM subsector the number of vacancies is twice as big as in the WM subsector. The
same trend is similar with regard to the number of the unemployed.
According to the preliminary data in 2007 the level of tension (ratio of vacant positions and the number of
employees) in the Wood sector does not exceed 1 and is a bit lower than the corresponding indicator on the
national level (respectively 0,7 and 0,9). This indicates that the supply of the employees in quantitative terms
exceeds the demand in the WS. From 3.7 one can see that the tension level in FM is higher than in the Wm
subsector.
2
Data source – Lithuanian Labour exchange data drafted for the purpose of the study
28
Fig. 3.6. Number of unemployed and vacancy supply in the subsectors
WM
3.000
FM
2.500
2.000
1.500
1.000
500
number of unemployed
20
06
20
07
(fo
re
ca
st)
20
05
20
04
20
03
(fo
re
ca
st)
20
06
20
05
20
04
20
03
0
number of vacancies
Fig. 3.7. Level of tension (ratio of vacant positions and the number of employees) in the subsectors
1
0,9
0,8
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
national
WM
FM
2004
2005
2006
2007 (forecast)
When analysing the tension level trends with regard to subsectors and occupational groups, one may
indicate some problematic areas. Under the provided data, in the WM subsector Qualified employee group
the level of tension was continuously growing from 2003 till 2006 and in 2007 it should reduce and reach the
country‘s average. In this group the demand of the „machinists“ is twice as high as the supply. In the FM
subsector the supply of the „machinists“ meets the demand but there is a lack of „furniture manufacturers“.
Also, „technologists“ and „constructors“ are on high demand, so are Sales and marketing specialists, where
„suppliers“ are of the highest demand.
Permits to the foreign nationals to work in Lithuania3. With regard to the present data, the number of the
permits to foreign nationals issued to work in Lithuania is continuously growing. From 2005 till 2007 it has
increased 3,5 times. This trend is typical to all sectors of economy, including the wood sector. According to
the preliminary data in 2007 177 foreign nationals received a permit to work in the WM subsector, i.e. 3 times
more than in 2005. Out of those 79% were qualified employees. In the activity group „Other manufacturing
3
Data source – Lithuanian Labour exchange data drafted for the purpose of the study
activity“, where FM4 also belongs, the number of the issued permits to foreign nationals to work in Lithuania
during the analysed period has increased more than 4 times. Among the foreign nationals with permits to
work in FM subsector qualified employees were also dominant.
3.5. Performance Indicators
Turnover. According to the official data the turnover in the Wood sector in the last 5 years has been
continuously growing (3.8). This trend is typical to both subsectors. Faster turnover growth is observed in the
FM subsector. From 2003 till 2007 it increased by 2,5 times (WM - 1,8 times).
Fig. 3.8. Change in turnover in the Wood sector (thousands Litas)
4500000
4039522,1
4000000
3484450
3500000
3000000
2500000
Wood sector
3039411,5
WM
2474178
FM
1973635
2000000
1500000
1000000
500000
0
2003
2004
2005
2006
2007
Productivity (turnover/ number of employees.). From 3.9 one may see that productivity from 2003 till 2007
has been growing in both WS subsectors. This trend is especially vivid in large (250 and more employees)
WM companies. The data in 3.10 demonstrates that in 2007 the analysed indicator in WM large companies
was almost twice as high as the respective in the Fm subsector. It is also clear that in the WM subsector the
gap between large and small (up to 9 employees) company productivity is much bigger than in the FM
subsector (respectively 3,7 and 1,9 times). One may draw a conclusion that modernisation is the fastest in
the WM sector in large companies.
4
Data about the permits issued to foreign national to work in the Furniture manufacture sector are not provided
separately
30
Fig. 3.9. Productivity (turnover/ nb. employees) in the Wood sector (thousands Litas)
90,00
79
80,00
70,00
60,00
50,00
53
59
57
53
62
65
69
70
73
WM
FM
40,00
30,00
20,00
10,00
0,00
2003
2004
2005
2006
2007
Fig. 3.10. Change in productivity according to the subsectors and company size (thousands Litas)
WM
180,00
FM
160,00
140,00
120,00
100,00
80,00
60,00
40,00
20,00
0,00
2003
2004
2005
up to 9 employees
2006
2007
10-49 employees
2003
50-249 employees
2004
2005
2006
2007
250 and more employees
5
Salaries. In 3.11 the data demonstrates the average monthly gross salary change in the WM subsectors
and in the national economy. Even though the salaries in the recent 5 years has been growing in the WM
and FM subsectors, they still remain smaller than the country‘s average. When the analysed indicator is
compared with other processing industries it becomes clear that the WS monthly average salary is one of the
lowest. According to the preliminary data smaller salaries are only in the „Textile and textile goods“ and
„Leather and leather goods“ activity groups..
5
Salary before tax
31
Fig. 3.11. Change in salaries (average monthly before tax) in the subsectors (Lt)
2.500,00
WM
2.000,00
FM
national
1.500,00
1.000,00
500,00
0,00
2003
2004
2005
2006
2007
(preliminary)
Share from the Gross Domestic Product (hereinafter referred to as the GDP). According to the data the
added value generated in the WM subsector has increased in the recent 5 years by 1,5 times. According to
the preliminary data in 2007 it was 1,56% from GDP. The added value generated by Furniture manufacturers
during the analysed period has increased twice and amounts to the 1.49% from GDP. Even though with
regard to the generated added value WS is one of the leader in the Processing industry, in terms of
efficiency (added value per one factual working hour) is lagging behind as compared to other economic
activities. The growth pace of added value in the WM in the last two years started decreasing. If in 2005 it, in
fact, was in line with the national indicator and amounted to 7,97%, according to the preliminary data in
2007 the growth rate slowed down and amounted to -3,49%. The value of the indicator on the national level
was 8,99, in the processing industry - 6,13. The data of the added value growth in the FM sector is not
provided separately.
Export and import. Even though the scope of import in the Wood sector is increasing a bit faster than that of
export, foreign trade balance remains positive for a number of years. This trend is typical to the WM and FM
manufacturers. According to the export scope, the MS is one of the leaders in Processing industry. On the
national level the foreign trade balance is negative and from 2003 till 2006 increased by 1,8 times. To sum
up, one may draw a conclusion that the MS is quite competitive on the international level.
3.6. Development Trends
The data about the change of number of employees, companies, turnover, productivity, salaries and share
from GDP in the WM and FM subsectors in the past and future forecast are in the Table 3.2. Regressive and
autoregressive models were used for the assessment of forecast, general Lithuanian economy development
trends and historical statistical data. According to the obtained results the forecasts are quite optimistic: WM
and FM company turnover will continue to grow, though it is likely that the growth pace will slow down. One
of the reasons – insufficient labour force resources. Therefore, there is a need to look for other sources for
the development of manufacturing, for example, increase labour productivity which at the moment is quite
low. The average monthly salary before tax should also continue to grow, which would make the work in the
WS companies more attractive. Company clusterisation process, especially in the WM subsector will
continue to grow. The WS development trends in the near future will remain similar. Detailed historic data
and forecast assessment results under subsectors and company sizes are in Annex 1.
32
Table 3.2. WS turnover in the past and forecasts for the future
WM
FM
2003
2007
Change
(sometimes)
Forecast
2012
Change
(sometimes)
2003
2007
Change
Forecast
2012
Change
(sometimes)
Number of
companies
1613
1476
(0,9)
1430
(0,97)
485
672
(1,4)
719
(1,1)
Number of
employees
24355
28998
(1,2)
31019
(1,1)
12989
23908
(1,8)
27665
(1,2)
Turnover (in
thousands of
Litas)
1288229
2303060
(1,79)
3110417
(1,35)
685406
1736462
(2,5)
2209696
(1,3)
Productivity
(turnover/
number of
employees)
52,9
79,4
(1,5)
100,3
(1,3)
52,8
72,6
(1,4)
79,9
(1,1)
Average
monthly salary
before tax
712
1268
(1,78)
2640
(2)
931
1619
(1,7)
3579
(2,2)
Share from
GDP (%)
1,69
1,56
(0,92)
1,59
(1,2)
1,20
1,49
(1,2)
1,04
(0,7)
- increase; - decrease
3.7. Summary
•
The level of wood usage from the overall wood increase in Lithuania is low.
•
Wood industry foreign trade balance is positive and continuously growing. The major experience is
accumulated in the sectors of furniture, sawn timber, chipboards, sanitary paper and carton
manufacturing. These sectors were continuously modernised and the demand for such products has not
been decreasing. The experience is good in the manufacturing of wooden houses and their parts. .
•
WS is the strongest and the fastest developing cluster in Lithuania.
•
The number of furniture manufacturers is growing. They successfully cooperate with retail chains, they
are fast in reacting to the demand of different markets. Furniture manufacture competitiveness was very
much influenced by a newly implemented business model when chipboard productions is of a final form
– construction materials and furniture parts and furniture companies focus on the production of
chipboards. Such a business model promotes capital concentration and reduces logistics costs.
•
High added value wood product manufacturing is a fast growing sector in Lithuania.
The main WS development prospects are related to the following aspects: optimal use of local wood
resources; modern technologies; high added value wood products; new business model
development; development of clusters; increase in export; development of furniture logistics system;
standardisation in the wood industry; employee training and qualifications.
•
The following key factors will influence the development of WS in the future: increase in demand of
environment friendly products; fast change in consumer demands; increase of import (from the
countries where the prices of materials, energy and labour force are lower); increase of international
competition; reduction of employee supply (in terms of number and qualification level).
•
When statistical data was analysed, there were 2162 companies in the Wood sector, 65% of them
specialise in the WM subsector. Small and micro companies are prevailing in the sector (the number
of employees does not exceed 49 people).
33
•
The process of clusterisation is present in both subsectors. In the FM subsector the establishment
of new companies is more intense than in WM subsector.
•
In Vilnius and Kaunas counties the number of wood and furniture manufacturers is the biggest.
•
Almost 53000 employees work in the Wood sector, the majority of them in the WM companies (about
58% of all the employees of the wood sector). During five years (2003-2007) the number of people
employed in the sector was continuously growing, especially in Furniture manufacture subsector.
WS employees the biggest number of people of all Processing industry sectors.
•
From 2003 till 2006 the number of people registered in the Labour exchange office has reduced.
According to the preliminary data the number of the unemployed will grow in 2007. The supply of
vacant positions also decreased slightly in both subsectors. In the FM subsector the number of
vacancies is twice as big a in the WM subsector. The same trend is similar with regard to the
number of the unemployed. Even though the supply of the employees in quantitative terms exceed
the demand in the WS, some occupational groups are quite problematic. For example in the
„Qualified employee group“ the „machinists“ and „furniture manufacturers are on highest demand“.
Also, „technologists“ and „constructors“ are on high demand, so are Sales and marketing specialists,
where „suppliers“ are of the highest demand.
•
in 2007 177 foreign nationals received a permit to work in the WM subsector, i.e. 3 times more than
in 2005. Out of those 79% were qualified employees. In the activity group „Other manufacturing
activity“, where FM6 also belongs, the number of the issued permits to foreign nationals to work in
Lithuania during the analysed period has increased more than 4 times. Among the foreign nationals
with permits to work in FM subsector qualified employees were also dominant.
•
During the recent 5 years the WS turnover has been continuously growing. The faster growth in
turnover is more typical to FM subsector.
•
Productivity (turnover/ number of employees) from 2003 to 2007 has been growing in both WS
subsectors. The modernisation is the fastest in large Ws companies.
•
7
Even though the average monthly gross salary in the recent 5 years has been growing in the WM
and FM subsectors, they still remain the lowest paid among the other processing industries.
•
The added value generated in the WM subsector has increased in the recent 5 years by 1,5 times.,
whereas in the FM sector – 2 times. Even though with regard to the generated added value WS is
one of the leader in the Processing industry, in terms of efficiency (added value per one factual
working hour) is lagging behind as compared to other economic activities. The growth pace of added
value in the WM in the last two years started decreasing. The data of the added value growth in the
FM sector is not provided separately.
•
The foreign trade balance in the WS remains positive for a number of years. The scope of the Wood
sector import are growing a bit faster than those of the export. The WS is quite competitive on the
international level.
•
The WM and FM company turnover will continue to grow, though it is likely that the growth pace will
slow down. One of the reasons – insufficient labour force resources. Therefore, there is a need to
look for other sources for the development of manufacturing, for example, increase labour
6
Data about the permits issued to foreign national to work in the Furniture manufacture sector are not provided
separately
7
Before tax salary
34
productivity which at the moment is quite low. The average monthly salary before tax should also
continue to grow, which would make the work in the WS companies more attractive. Company
clusterisation process, especially in the WM subsector will continue to grow.
35
4. CHARACTERISTICS OF WOOD SECTOR BASED ON SURVEY FINDINGS
4.1. Introduction
This Chapter described the Wood sector with regard to the survey data. It analyses the WS company
business trends and employee demand in the sector.
The scope of the survey by mail was compiled with regard to the data of Legal entity register and the
prevailing economic activity (with regard to the international classification of Economic activities in the
European Community (NACE) and the size of the company. All in all there were 1017 companies selected,
595 of those were – WM, and 422 – FM manufacturers. All the respondents of the survey were asked to fill in
the questionnaires and return them by mail within a few weeks. After sending out the questionnaires, the
respondents after some time were contacted by phone to remind them about the deadline, so in such a way
it was possible to ensure a sufficient level of return of 23% (WM – 22%, FM – 23%). By trying to ensure the
sufficient return level, it was assumed that large and medium company results have the biggest impact on
the development of the sector. The data on the distribution of the return level and company size are in 4.1
table.
Table 4.1. Distribution of the respondents’ answer return level with regard to the subsector and company size
WM
Number of employees
Number of
companies that
received
questionnaire
FM
Return
level %
Number of
companies that
received
questionnaire
Return
level %
Up to 9
120
9%
80
7%
From 10 to 49
360
21%
240
15%
From 50 to249
109
39%
81
53%
250 and more
6
60%
21
70%
The interview was carried out with the leaders of the Wood sector companies. All in all 15 Wood sector
companies participated in the interview (WM – 6 and FM – 9 companies).
Personnel search and selection company survey was carried out by e-mail and by phone. All in all 21
company took part in the survey. The survey was aimed at establishing the job vacancies that were most
difficult to fill during the last 6 months. 13 respondents claim that they have not experienced such a case.
3.2. Performance Indicators
Company characteristics. According to the results of sociological survey „independent companies“ prevail in
both sectors. In the FM subsector one fifth of the companies answered „a member of some company group“,
whereas in the WM subsector this answer was selected by only 4Į of the respondents. The Lithuanian capital
companies amount to the majority of the WM and FM subsector companies (respectively 89% and 86%).
The share of the foreign capital companies in the origin structure is bigger in the FM subsector and amounts
to 11%.
36
The majority of the WM and FM companies started their business between the years 1991 and 1995, fewer 1996 and 2000. The results of the survey demonstrate that in the WM subsector there was not a single
company established in „2006 and later“ (4.1.). The obtained results confirm the trend that the start-up of
new companies in the FM sector is more intense than inn the WM subsector.
Fig. 4.1. Start of the business according to the answers of the respondents
2006 and later; 0%
2006 and later; 6%
between 2001 and 2005; 24%
between 2001 and 2005; 25%
between 1996 and 2000; 31%
between 1996 and 2000; 26%
between 1991 and 1995; 39%
between 1991 and 1995; 33%
up to 1990; 10%
up to 1990; 6%
MG
BG
Change on the market of goods/ services. With regard to the assessment of the respondents, goods/
services market in 2006 and 2007 increased. The majority of the respondents in both subsectors forecast the
similar trend to remain in 2008, i.e. the market for the goods/ services will increase.
Introduction of new goods/ services to the market. During the recent two years 64% of the companies
according to the respondents have introduced new products/ services to the market in the WM subsector
and almost 89% in the FM subsector. The majority of the WM and FM producers (respectively 74% and
90%) plan the implementation of new products/ services in the future (in the next two years).
Competition. When assessing competition on the local market the answers of the respondents were
different: the majority of the WM companies opted for the answer „average“, whereas the majority of the FM
companies answered „big“. International competition assessments coincided in both subsectors – the
majority of the respondents opted for „big“.
Export. The respondents were asked to indicate approximately what part of the goods/ services are exported
annually. According to the received data one fourth of the respondents do not export the goods. From 81%
to 100% production is exported by 28% of the WM and 35% of the FM respondents.
Change in the turnover. . The assessments in the change of the turnover in fact coincide with the
assessments of goods/ services market change i.e., the majority of the respondents are of the opinion that
the turnover in 2006 and 2007 increased. The growth is expected in 2008 as well. The obtained results
coincide with the trends of the statistical data.
37
Use of local raw materials. According to the survey results local raw materials in the manufacturing process
use almost all respondents, though their volumes differ. For example, 74% of the WM respondents indicated
that local raw materials amount from 81% to 100% of all the raw materials used in the manufacturing
process., whereas in the FM subsector the majority of the respondents indicated that local raw materials
amount up to 60%.
Sale volumes. The respondents were asked to assess the sales volumes in percentages during the last 12
months. The distribution of answers under the subsector sis in Table 4.2 In the WM subsector the majority of
the production was sold to the „others“ and „construction companies“, whereas in the FM subsector – to the
„others“, „furniture retailers“ and „individual buyers“.
Table 4.2. The distribution of answers on the scope of sales
WM
Sale volumes
(average %)
FM
Sale volumes
(average %)
Pre-packing and packaging companies
11
0
Construction companies
19
2
Chemical industry companies
1
0
Household wholesalers
7
7
Furniture retailers
6
27
Individual buyers
15
24
Others
34
28
Key factors for the successful development of the companies. According to the respondents the key factors
to the successful development of the WS were as follows: supply of raw materials and prices, quality and
demand of goods / services. Quite important factors were employee qualification, productivity and customer
requirements, a bit lower on the scale were – technologies and capacities.
Membership in the associated structures is not important factor for company development according to the
respondents.
Business obstacles. The main business obstacles for the WS business according to the respondents were
tax system and lack of labour force and lack of employee competency.
Technological innovations that will influence company development during the new two years. In the WM as
well as in the FM subsectors the respondents most often related company development with modern
technological equipment and the automation of the manufacturing process. With regard to the answers of the
respondents, in the majority of the WM and FM companies the automation level does not exceed 20% of the
manufacturing process. According to the results, in the WM subsector there are more companies where the
level of automation is higher than 60% (respectively 14% of WM and 9% of the FM respondents).
Use of information technologies (hereinafter referred to as the IT). The data about the currently sued and
planned to use information technologies are in 4.2. The majority of the companies in both subsector use ebanking and accounting systems. The FM subsector is famous for using design software, such as us,
38
AutoCAD, etc as well as manufacturing planning and management software systems. According to the
planned to use IT, it is clear that in the WM subsector the manufacturing planning and management software
systems and e-banking will become more popular. Similar trends are typical to the FM subsector.
Fig. 4.2. Used and planned to use IT in the companies according to the respondents in the WS subsectors
WM subsector
0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Manufacturing planning and management software system
CRM
Design system
Accounting system
E-banking
E-sales
Taking orders on the internet
uses
other
plans to use
FM subsector
0%
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Manufacturing planning and management software system
CRM
Design system
Accounting system
E-sales
Taking orders on the internet
uses
Other
plans to use
Use of modern technologies. Almost 53% of the WM and 66% of the Fm respondents use modern
technologies. 74% of the WM and 75 of the FM respondents plan to use modern technologies in the future.
According to the results one may say that the implementation of modern technologies will become speedier
in the future in both subsectors. Among the most popular modern technologies in the WM subsectors
efficient waste use technologies and in the FM subsector – modern technological equipment. Among the
planned used technologies in the both subsectors the most popular are automation of technological process
technologies and modern technological equipment. The data about the currently used and planned to sue
modern technologies are in 4.3. The assessments on the impact of innovations and modern technologies
implementation to the capacities of the companies, the number of employees, productivity, sales volumes,
prime cost and quality coincide in both subsectors: the number of staff will reduce and the prime cost, the
growth is forecasted in all the other mentioned areas.
39
Fig. 4.3. Used and planned to use modern technologies in the companies according to the respondents in the WS subsectors
WM subsector
0%
10%
20%
30%
40%
50%
60%
70%
80%
Modern raw material management system
Automation of technological process
Modern technological equipment
Efficient waste use technologies
Quality management system
Process management and other management systems
uses
other
plans to use
FM subsector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Modern raw material management system
Automation of technological process
Modern technological equipment
efficient waste use technologies
Quality management system
Process management and other management systems
uses
other
plans to use
4.3. Employees
Staff. With regard to the statistical data drafted for the purpose for the study, 53000 employees work in the
Wood sector. The survey results are in line with this figure. The employees who work shorter hours amount
to 6% of all the employees in the sector, women amount to 40%.
Employee distribution by occupational groups. According to the results of sociological survey the most
popular are qualified and non-qualified worker occupational groups in both subsectors. The Information
technology specialists in the sector do not amount to 1% of the employed. This is typical to both subsectors.
In the WM subsector staff structure the majority are non-qualified workers and in the FM – qualified
employees. The part of the engineers in the FM subsector employee structure is a few times bigger than in
the WM subsector. This can also be said about the sales and marketing specialists. Detailed distribution of
employees by the occupational groups is presented in Figure 4.4.
40
Fig. 4.4 . Distribution of employees by occupational groups
heads
administration specialists
BG
engineering specialists
sales and marketing specialists
computer specialists
qualified workers
non-qualified workers
MG
0%
other staff
10%
20%
30%
40%
50%
WM
FM
Heads
4,2%
5,0%
Administration specialists
4,7%
5,8%
Engineering specialists
2,0%
4,5%
Sales and marketing specialists
1,8%
3,6%
Computer specialists
0,3%
0,2%
Qualified workers
37,0%
51,2%
Non-qualified workers
40,5%
24,3%
Other staff
9,6%
5,5%
60%
70%
80%
90%
100%
Employee distribution with regard to their age. As one may see from Figure 4.5, the structure of employees
with regard to their age in both subsectors is quite similar: employees of 30-50 years of age are dominating
in both subsectors; 60 years of age and older amount to about 3% of all the employed.
Fig. 4.5. Distribution of employees with regard to age
WM
60 and older; 3%
50-60 years of age; 14%
50-60 years of age; 15%
60 and older; 3%
40-50 years of age; 29%
40-50 years of age; 27%
30-40 years of age; 30%
30-40 years of age; 30%
younger than 30; 24%
younger than 30; 25%
FM
Employee skills. The survey respondents were asked to mark the skills that their employees lack most of all
(separately for the specialists and workers). The WS specialists mostly lack language skills. Also, initiative
taking, manufacturing process organisation and quality management skills are quite relevant. Quite
frequently the respondents mentioned the lack of skills in the fields of safety at work, planning, organisation
and dealing with problems as well as working with the most recent technologies. When analysing the results
41
with regard to subsectors, some differences became evident. For example, for the WM specialists initiative
taking and work monitoring and control skills are more relevant, whereas in the FM subsector quality and
manufacturing process management skills are more emphasized. The WS workers mostly lack initiative,
honesty and work with the most recent technologies skills. Also, technical and safety at work skills as well as
punctuality are quite relevant. The obtained results are presented in Table 4.3.
Table 4.3. Skills groups with regard to the frequency of the chosen answers
WM specialists
language skills
taking initiative
work monitoring and control
management of manufacturing
process
work organisation
quality management
dealing with problems
work planning
work with the most recent
technologies
management of customer
relations
computer literacy
communication and negotiation
analytical
punctuality
honesty
learning
safety at work
technical
other
FM specialists
WM workers
language skills
quality management
management of manufacturing
process
I
taking initiative
honesty
work with the most recent
technologies
work planning
taking initiative
work organisation
II
safety at work
technical
punctuality
work organisation
learning
work monitoring and control
dealing with problems
work with the most recent
technologies
III
work planning
quality management
language skills
dealing with problems
computer literacy
management of customer
relations
analytical
computer literacy
communication and negotiation
safety at work
punctuality
IV
work monitoring and control
other
analytical
learning
technical
honesty
other
V
management of manufacturing
process
communication and negotiation
management of customer
relations
FM workers
taking initiative
honesty
work with the most recent
technologies
quality management
punctuality
safety at work
work organisation
technical
dealing with problems
learning
work planning
work monitoring and control
computer literacy
language skills
communication and negotiation
management of manufacturing
process
analytical
other
management of customer
relations
Staff training. In the WM subsector 13Į of the respondents mentioned that they had a written training plan. In
the FM subsector the number of such respondents is higher – 23% of all the respondents. When indicating
the part of the costs allocated for employee training in the Wood sector, the answers were quite evenly
distributed in the intervals [up to1%] and [more than 1%], respectively 52% and 48% from the part of the
respondents who allocated the money to the training.
Staff turnover. The turnover of employees in the W Sis quite remarkable and amounts to 39%. According to
the interview results such turnover is determined by the following reasons: work conditions (insufficient
payment, work time and place, work seasonality), personal qualities (alcoholism, absence, non-compliance
to the work discipline) and emigration. According to the results provided in Table 4.4 the majority of the
employees in 2007 changed in the non-qualified worker group, a bit smaller number in the other worker and
qualified worker groups. The lowest turnover of employees is observed among the administration specialists.
42
In the next two years it is planned to employ 87% of the WM and 76% of the. FM respondents. The
increase in the number of the employed is in fact very likely in all the occupational groups.
Table 4.4. Wood sector employee turnover by occupational groups
Occupational groups
turnover
WS
Turnover
WM
Turnover
FM
Heads
9%
8%
9%
Administration specialists
6%
6%
6%
Engineering specialists
12%
19%
9%
Sales and marketing specialists
16%
12%
18%
Computer specialists
10%
10%
8%
Qualified workers
32%
39%
27%
Non-qualified workers
58%
48%
75%
Other staff
47%
30%
79%
Lack of employees. According to the study results in both subsectors „qualified employees“ are on the
highest demand. The biggest number of vacancies was in the WM and FM qualified and non-qualified worker
groups (4.6). The most difficult it was to find qualified workers and engineering specialists (4.5). When
mentioning the biggest difficulties in searching for employees qualification and personal qualities (for
example, alcoholism, unwillingness to work, lack of honesty) were among the most frequently mentioned
ones. Also, quite often the difficulties were related to the lack of labour force. Some respondents mentioned
the work conditions (mostly the payment for work).
Table 4.5. Occupational groups in terms of difficult to fill vacancies in 2007
WM
FM
Qualified workers (1)
Qualified workers (1)
Engineering specialists (2)
Engineering specialists (2)
Non-qualified workers (3)
Sales and marketing specialists (3)
Heads (4)
Heads (3)
Other staff (4)
Non-qualified workers (4)
Sales and marketing specialists (5)
Administration specialists (5)
Administration specialists (6)
Computer specialists (6)
Computer specialists (7)
Other staff (7)
43
Fig. 4.6. Part of the respondents who had vacancies in occupational groups in 2007 compared to total number of the respondents
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Heads
Administration specialists
Engineering specialists
Sales and marketing specialists
Computer specialists
Qualified workers
Non-qualified workers
WM
FM
Other staff
4.4. Forecast of Demand for Employees in the Future
WS manufacturing sector employee demand forecast by occupational groups was calculated after having
assessed the development of the sector and the employee turnover. When assessing the employee demand
two reasons for the staff turnover were taken into account:
•
Some employees when they leave work, they do not return to the labour market 9for example, they
retire). It was considered that all 60 year old and older employees leave the labour market in five
years. Since the survey results demonstrated that there are 3% of such employees, during the
assessment it was considered that in each job group 0,6% of the employees do not return to the
labour market. Such an employee number is hereinafter referred to as the variation rate.
•
Other employees stay in the labour market. So, they have two possibilities – to go to another
company within the sector or to find a job in another sector of economy. Two assumptions were
made with the aim to assess the number of the latter: (1) the part of the employees leaving the
sector is directly proportional to the turnover intensity; (2) if the employees of a certain job group
change the job every year, the likelihood that they will move to another sector is equal to 50%.
The forecast was drafted with regard to the survey results and is presented in Table 4.6. The forecasts were
not drafted with regard to the separate subsectors due to too little statistical data.
Table 4.6. Employee demand forecast for 5 years
Occupational groups
Employee
nmb. 2007
Development Annual
for 5 years turnover
Heads
2439
151
9%
119
270
50
Administration specialists
2764
212
6%
105
310
60
Engineering specialists
1692
418
12%
109
520
100
Sales and marketing specialists
1400
321
16%
128
440
80
Computer specialists
135
212
10%
7
210
40
Qualified workers
23244
1690
32%
6536
8220
1600
Non-qualified workers
17343
-723
58%
14955
14280
2800
47%
2317
3920
780
Other staff
4028
Total
1603
53045
Leave sector Demand for new
within 5 years employees for 5
years*
Demand for new
employees for 1 year *
3885
*Rounded down
44
In Table 4.7 the forecast for employee training/ study demand are presented for 5 years. These forecasts
were drafted with regard to the development of the sector and the employee variation rate. The latter was
assessed with regard to the age structure of the employed in the sector. The WS employee variation rate for
five years is equal to 3% of the employed. The difference between the annual new employee demand and
the forecasted study/ training demand demonstrates the continuous training (qualification development and
re-qualification) annual demand. In the employee groups the latter amounts to 4000 employees annually.
Table 4.7. Learning/ study demand forecast for 5 years
Occupational groups
Employee
nmb. 2007
Developmen Variation rate for 5
t for 5 years years
Training/ study demand for
1 year*
Heads
2439
151
73
40
Administration specialists
2764
212
83
60
Engineering specialists
1692
418
51
90
Sales and marketing specialists
1400
321
42
70
Computer specialists
135
212
4
40
Qualified workers
23244
1690
697
480
Non-qualified workers
17343
-723
520
0
Other staff
4028
1603
121
340
Total
53045
3885
*rounded down
4.5. “Future Skills”
According to the interview results the skill change with regard to the jobs in the Wood sector will be
determined by the customer expectations, the increase in raw material and energy resource prices and the
implementation of the new tools in manufacturing. In the future the companies aim to increase the
productivity of their work by making the manufacturing process automated and by modernising work
methods. It is forecasted that the requirements to the quality of goods will grow and therefore the knowledge
in the quality management principles will be necessary to all employees. It is noted that learning and
teaching skills will gain more importance among the qualification of the specialists and workers.
More advanced equipment will require higher qualification staff to maintain it, i.e. for the qualified workers
work with software machinery, their maintenance and programming skills will be relevant in the future.
The complexity of manufacturing and increase in prices of energy resources and other resources means that
engineering specialists will need to carry out more technical, maintenance and management functions. They
will need creativity, analytical, work in a team, technological and knowledge of technological process skills.
Flexibility in trying to adjust to customer needs and the speed in delivering the delegated tasks will become
the most essential elements of successful sales and marketing specialist work. Therefore, the need for
general skills, especially those of communication and negotiation and foreign languages will increase.
45
“Future skills” demand with regard to the occupational groups are outlined in Table 4.8.
Table 4.8. “Future skills” demand in occupational groups
Occupational
group
Changes (that
will influence the
change of job
functions)
Job
All
market:
change in
customer
expectations
(quality)
All
Continuous quality
monitoring (at every
product manufacturing
stage)
quality management
skills
quality assessment
establishment of
quality drawbacks and
their causes
Sales and
marketing
specialists
market:
increase in
prices in raw
materials and
energy
resources
Sales and
purchase
managers
Fast and flexible
adjustment to he
changing conditions
Communication and
negotiation, team
work, good foreign
language (English))
suppliers
Knowledge of
technological process
Initiative taking,
activity, creativity,
interest in innovations
Wood technology
know-how
staff:
lack of
employees and
their
qualifications
technologist
s
Continuous
improvement
Analytical
Good foreign
language skills
Communication
Team work
know-how of
equipment and wood
technologies
Mechanics
(knowledge)
Technological process
know-how (knowledge
teaching
Engineering
specialists
Staff:
lack of
employees and
their
qualifications
manufacturing
:
new
technologies
and work tools
„FUTURE SKILLS“
Personal
Learning
creativity
Fast completion of tasks
and flexibility
General
Implementation of mini
inventions
(rationalisations) into
manufacturing
Intense creative work;
training of other
employees
manufacturing
:
new
technologies
and work tools
Qualified
workers
Changes in functions
Special
mechanics
Equipment programming
learning
Joinermachinists
New employee training
Responsibility
Creativity
Fast reaction
Agility
Initiative taking
Honesty
Computer literacy
Team work
Logical thinking
Teaching, mechanics,
pneumatics and
automatics skills
(knowledge)
Wood technology
know-how
Drawing reading
Work with
programmed
machinery
Experimenting during
manufacturing
learning
Computer literacy
Language skills
Teaching, mechanics,
pneumatics and
automatics awareness
Manufacturing
process awareness
Automatic
management
equipment
readjustment
wood and furniture
manufacturing
Machinery programming,
adjustment and
maintenance
Work with programmed
machinery
Speed in carrying out
the tasks
Know-how of
computer technologies
equipment
programming
Solving of problems in
consultation with the
specialists of
engineering
operators
Equipment programming
and adjustment
Equipment maintenance
and establishment of
minor breakdowns
46
awareness
4.6. Summary
•
„Independent companies“ prevail in the Wood sector. The Lithuanian capital companies amount to
the majority of the WM and FM subsector companies. The start-up of new companies is more
intense in FM subsector than in the WM subsector.
•
The goods/ services market in 2006 and 2007 increased. It is likely that the same trend will remain in
2008.
•
During the recent two years the majority of the companies inn the wood sector have introduced new
products/ services to the market. The same trend should stay in the future.
•
Competition on the international market is big for the WM and FM manufacturers. On the local
market the competition is bigger among the FM companies.
•
One fourth of the respondents do not export the goods. In most cases the export accounts for up to
60% or from 81% to 100% of the total production.
•
The turnover in 2006 and 2007 increased. The growth is expected in 2008 as well. The obtained
results coincide with the trends of the statistical data.
•
almost all respondents use local raw materials in the manufacturing process. In the WM subsector
the use of local raw materials is more intense than in the FM subsector.
•
In the WM subsector a lot of production is sold to the construction companies, in the FM subsector –
to the retailers and individual customers.
•
Supply of raw materials and prices, quality and demand of goods / services were mentioned as the
key factors to the successful development of companies.
•
The main business obstacles for the WS business according to the respondents were tax system
and lack of labour force and lack of employee competency“.
•
The majority of the WS companies relate the development to modern technological equipment and
the automation of the manufacturing process. At the moment the manufacturing process is more
automate din the WM subsector.
•
The most popular information technologies among the WS companies are e-banking and accounting
systems. The FM subsector is famous for using design software, such as us, AutoCAD. The IT
implementation should continue in both subsectors. According to the planned to use IT, it is clear
that in the WM subsector the manufacturing planning and management software systems will be of a
major focus.
•
More than half of the Ws companies use modern technologies in the manufacturing process. Their
implementation should become faster in the future in both subsectors. Among the most popular
modern technologies in the WM subsectors efficient waste use technologies and in the FM subsector
– modern technological equipment. Among the planned used technologies in the both subsectors the
most popular are automation of technological process technologies and modern technological
equipment. According to the survey respondents the implementation of the modern technologies
should determine the reduction of employees and the prime cost, increase company capacity, sales
volumes, productivity and quality.
•
53000 employees work in the Wood sector. The employees who work shorter hours amount to 6% of
all the employees in the sector, women amount to 40%.
47
•
The most popular are qualified and non-qualified worker occupational groups in both subsectors.
•
In the employee structure with regard to their age employees of 30-50 years of age are dominating
in both subsectors; 60 years of age and older amount to about 3% of all the employed.
•
WS specialists mostly lack general and personal qualities. i.e. language skills, manufacturing
process organisation and quality management, initiative taking skills. The workers mostly lack
personal qualities and special skills, such as initiative taking, honesty and work with the most recent
technologies. Also, technical and safety at work skills as well as punctuality are relevant.
•
The turnover of employees in the WS is quite remarkable and amounts to 39%. It is highest in the
non-qualified and qualified worker groups, the lowest – among the administration specialists. The
majority of the WM and FM companies plan to employ new workers within the next two years.
•
In both subsectors „qualified employees“ are on the highest demand. The most difficult it was to find
qualified workers and engineering specialists in 2007. When mentioning the biggest difficulties in
searching for employees qualification and personal qualities (for example, alcoholism, unwillingness
to work, lack of honesty) were among the most frequently mentioned ones. Also, quite often the
difficulties were related to the lack of labour force.
•
In the next five years the demand for employees in the WS will increase. This will be relevant to all
occupational groups. The demand for new employees annually will amount o 5600 people on
average. The qualified and non-qualified workers will be on the highest demand.
•
The skill change with regard to the jobs in the Wood sector will be determined by the customer
expectations, the increase in raw material and energy resource prices and the implementation of the
new tools in manufacturing. In the future the companies aim to increase the productivity of work by
making the manufacturing process automated and by modernising work methods. The knowledge in
the quality management principles, learning and teaching will be necessary to almost all employee
groups. For the qualified workers work with software machinery, their maintenance and programming
skills will be relevant in the future. Engineering specialists will need to carry out more technical,
maintenance and management functions. They will need creativity, analytical, work in a team,
technological and knowledge of technological process skills. Sales and marketing specialists will
have to strengthen general skills, especially those of communication and negotiation and foreign
languages.
48
5. SUPPLY OF EMPLOYEES
5.1. Introduction
This chapter briefly analyses information about education and occupational groups as well as the staff supply
trends in the Wood sector. Staff supply is perceived as the consequence of education, i.e. how many and
which qualification employees are trained. The main data amounts to the entrance, graduation, acquired
education and (or) qualification parameters. The analysis is carried out with regard to the statistical data
designed for the purpose of the study, the accessible information about the training/ study programmes and
VET school survey results on the employment of the graduates.
5.2. Education and Occupational Groups
8
The learning achievements are best described by the qualification . With the aim to acquire a certain
qualification, one needs to have a relevant basic education9. Education levels in Lithuania are determined by
the education system. It established primary, basic, secondary, VET and higher education that the person
10
acquires. With regard to the Law on Vocational Education and Training (new edition) , qualification is base
don competencies11, that are knowledge, skills and value propositions. Qualification or separate
competencies are regulated by certain legal documents that are established by the Laws on Vocational
12
Education and Training and Higher Education of the Republic of Lithuania . Qualification is a formal result of
formal education13 or learning achievements acquired in some different way. Training/ study programmes
with regard to their content are grouped under education areas („Lithuanian education classification“).
Vocational education and training may be primary and continuing. The primary VET is aimed at acquiring the
first qualification, whereas the continuing – to improve the already existing qualification or to acquire a new
one. The study analyses one of the forms of continuing education – training of the unemployed.
Currently vocational education and training is carried out with regard to four stage programmes:
I stage – individuals with no basic education are admitted to the first stage study programmes.
The duration – from 2 to 3 years if the person wishes to acquire basic education. Qualification
certificate is awarded after completion of such programmes.
II stage – individuals having acquired basic education are admitted to the second stage
programmes and wishing to acquire only professional qualification. The duration of studies – 2
years. After the completion of the programme professional education and training diploma is
awarded.
III stage – persons with basic education and wishing to acquire professional qualification and
general secondary education are admitted to the third level study programmes. The duration –
8
Qualification – the ability and right to engage in a certain professional activity under the procedure established by the
legal acts of the Government or the institution accountable to it. Law on Education of the Republic of Lithuania
9
Education – recognised competency, knowledge, skills, abilities and value propositions that certifies the level of
personal maturity established by the procedure of the Government or the institution accountable to it. Law on Education
of the Republic of Lithuania
10
New edition of the Law was adopted in 2007, it comes into force on January 1, 2008.
11
Competency – the ability to carry out certain activity with regard to all the acquired knowledge, skills, abilities and
value propositions. Law on Education of the Republic of Lithuania
12
Paragraph 3, Article 39 of the Law on Education of the Republic of Lithuania (new edition came into force on June 28,
2003)
13
Formal education – education carried out under the procedure established by the legal acts with regard to the
approved or registered study programmes, the completion of which grants primary, basic, secondary, vocational or
higher education and (or) qualification. Law on Education of the Republic of Lithuania
49
3 years. After the completion of studies professional education and training diploma is
awarded.
IV stage – individuals having completed 4th stage study programmes acquire secondary
education. The duration of such programmes – from 1 to 2 years. Vocational education and
training diploma is granted after the completion of such programmes.
Higher education university studies are more focussed on academic activity, whereas non-university studies
– on the applied activity.
In the case of work activity, the main variable is a workplace, i.e. the set of functions for the performance of
which the remuneration is paid. With the aim to perform such functions, one needs to have some educational
and a series of relevant skills. In such a way a workplace can be expressed through education and skills.
For grouping of jobs the classifications of ISCO
14
and SOC
15
are most commonly used. These two
classifications are interrelated. In Lithuania the Lithuanian classification of professions is drafted with regard
to ISCO (the profession is related to the factual job that the employee performs), which helps in collecting
different statistical data.
In this study the supply of employees is analysed with regard to the education and job data under the below
provided scheme (5.1).
Fig. 5.1. Employee supply assessment scheme
Education
stages
job groups
Initial vocational education and
training
1
2
Plant and machine
operators and
assemblers
3
Higher education (university and
non-university)
4
Service workers and shop
and market sales workers
Skilled agricultural and
fishery workers
Craft and related trades
workers
Professionals
Technicians and asociate
professionals
Clerks
Education and training of the
unemployeed
14
15
International standard classification of occupations
Standard occupational classification
50
5.3. Supply of Employees by Areas of Education and Level of Education
When analysing employment changes by occupational groups, one may see that from 2004 up to 2006 the
Qualified trade agriculture and fishery sector employee group has mostly decreased in number, whereas
Legislators, senior public officials, heads of companies, institutions, and organisations group increased most
of all. The group of Specialists (including public servants) in the employment structure in 2006 amounted to
less than 30 %, employees – to almost 60 % (Table 5.1).
Table 5.1. Employment structure by occupational groups
Change from
2004 to 2006
Job groups
2006
m.
19%
Legislators, senior officials and managers
9%
7%
Professionals
17%
5%
Technicians and asociate professionals
9%
4%
Clerks
4%
13%
Service workers and shop and market sales workers
13%
-27%
Skilled agricultural and fishery workers
9%
12%
Craft and related trades workers
19%
9%
Plant and machine operators and assemblers
10%
4%
Elementary occupations
11%
-8%
Armed forces (hired workers)
0%
29,5%
50,8%
10.7%
- increase; - decrease
According to the available data some 19913 persons were admitted to the vocational education and training
programmes in 2006, which is 3% less than in 2005. The demand for bachelor study diploma in 2006
increased slightly: 47240 students were admitted, which is 2% less than in 2005. Among those who chose
VET the most popular were Business and administration and Engineering and engineering profession study
programmes, among higher education students – Business administration study programme. In fact the
same trends were prevailing in 2005. Exhaustive data on the distribution of the admitted to study with regard
to education areas are in 5.2.
The distribution of graduates with regard to education areas coincide with the admission structure, i.e., the
graduates of Business administration programmes prevail, whereas the number of VET study programme
graduates is more than twice lower than that of the higher education graduates. It is noted that the number of
VET graduates in 2006 was 11 % lower than in 2005. The number of higher education graduates during this
period increased by 12 %
The submitted results demonstrate that even though the employment rate of workers on the market is twice
as high as that of the specialists (including public servants), under the admission to study data the there are
51
twice as many students in the higher education study programmes as in the VET. This also influences the
VET and higher education graduate rates. Therefore, in the future, the gap between the employee supply
and demand may increase even more and cause serious problems to the development of the business.
Fig. 5.2. The number of students admitted to study in 2006 under the education areas
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
personal qualities
teacher training
art
humanities
social and behavioural sciences
journalism and information
business and administration
natural science
physical science
mathematics and statistics
computer science
engineering and engineering
manufacturing and processing
architecture and construction
agriculture, forestry and fishery
veterinary
health care
social services
services
transport services
environmental protection
safety services
VET
higher
5.4. Supply of Skilled Workers, including Operatives, for the Wood Sector
The basis of the qualified worker supply in the primary VET „Furniture-maker“ (Manufacturing and processing
education area) and „Joiner“ (Architecture and construction education area) are study programme graduates.
The skill descriptions under the competencies acquired in these programmes are in Table 5.2.
With regard to the statistical data drafted for the purpose of the Study, the number of the students admitted
in the „Furniture-maker“ training programme reduced in 2006 and increased in 2007. According to the
preliminary data, this programme was selected by 193 students. „Joiner“ training programme is more
popular. It was selected by 783 pupils (preliminary data of 2007). According tot he VET establishment survey
results, the number of graduates in both programmes in 2007 was 561 students (31 % were „Furnituremaker“ graduates), 64 % of them were employed and the rest 36 % continue their educations, serve in the
army or left for other countries, etc. With regard to the submitted information, in reality the number of
students in 2007 in the WM and FM subsectors under the primary vocational education „Furniture-maker“
and „Joiner“ training programmes was about 360.
On the other hand, one should remember that some wood and Furniture manufacture competencies are
acquired in other primary vocational training programmes, for example, „Art works from wood maker“, „Utility
worker“ or „Construction Business service provider“. Therefore, the graduates of these programmes could
also work in the WM and FM, they would just only need additional training. On average the number of
graduates in all the mentioned programmes in 2006 was 200, 128 of them were employed.
52
Table 5.2. Descriptions of Skills and competencies acquired in the primary vocational education „Furniture-maker“ and „Joiner“ study
programmes
Competencies and skills
Furniture-maker study programme
Joiner study programme
1.
2.
3.
4.
1.
2.
3.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Professional activity that the
holder of the certificate can be
engaged into
Working safely
Reading drawings, drawing sketches
Using information technologies
Choosing Furniture manufacture materials
and furniture
Manufacturing furniture parts from solid
wood
Manufacturing parts from LMPD, MPP and
MDP, MDF panels
processing HPL covered parts
Manufacturing cancellated furniture
Assembling furniture fitting and integrated
equipment
Covering furniture detail surfaces with
shaved veneer or covering film
Assembling frame and box construction
products
Assembling the furniture
Fixing and restoring the furniture
Manufacture of furniture parts from solid wood,
chipboard; manufacture of cancellated furniture;
assembly of furniture and domestic appliances;
assembly of furniture; restoration
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Measuring and marking wood
Preparing wood for
Carrying out manual wood processing
operations
Working with manual electric wood
processing tools
Working with mechanised wood
processing machinery and equipment
Knowing how to work safely
Drafting wood product sketches
Estimating the materials
Manufacturing wood products with regard
to the drawings
Manufacturing ordinary furniture with
regard to the drawings
Carrying out wood surface finishing
Assembling wood construction products,
furniture
Doing the interior of the building
Reading construction drawings
Building wooden buildings
assembling wooden roof constructions
Insulating the buildings
Establishing the defects
Choosing product repair materials
Eliminating the defects
Wood processing manually and with the
machinery; manufacture of wooden products;
wood product assembly; wooden building
construction; repair of wooden products and
buildings
Source: Open information, consultation and guidance system (AIKOS)
As it was already mentioned this Study analyses one of the continuing education aspects – the Training of
the Unemployed. The supply of the wood sector programmes is as following:
•
Furniture-maker study programme (duration – 24 weeks);
•
Carpenter study programme (duration – 18 weeks);
•
Saw- gate specialist study programme (duration – 21 weeks);
•
Wood processing machinist study programme (duration – 24 weeks);
•
Joiner study programme (duration – 24 weeks);
•
Joiner initial knowledge and skills study programme (duration – 10 weeks);
•
Wood works painting study programme (duration – 6 weeks).
According to the data of the Lithuanian Labour exchange agency, in 2007 some 1600 of the unemployed
graduated from the WS continuing vocational education programmes. Their employment rate within 90 days
after graduation was about 70 %, i.e. the actual supply of workers was 1000 people.
5.5. Supply of Specialists, including Clerks, for the Wood Sector
The descriptions of higher education non-university and university study programmes that train the WS
specialists as well as short qualification descriptions are provided in Table 4.3.
53
According to the data on average around 200-240 students are admitted to study programmes outlined in the
Table 5.3 annually. In 2006 around 100 people graduated these study programmes. The difference between
the number of entrants and graduates is determined by the quite recent equalising studies. The opportunities
to assess the employment of the graduates are quite limited as only a small part of the higher education
schools monitor the work career of their students. According to their results on average some 70 %
graduates find a job. Based on this assumption the supply of Specialists is 70 people.
Table 5.3. WS specialist training programmes
Non-university study
programmes
(duration 3-4 years)
University study
programmes
(duration:
BA - 4-5 years;
MA – 2 years)
Programme*
Qualification
awarded
Qualification description
Furniture and
wood works
manufacture study
programme
BA of Technology
and Industry
Engineering
The graduates of the programme work in the Wood processing and
Furniture manufacture companies. A Technologist establishes the
procedures related to the efficiency of manufacturing and work
organisation, checks the quality, consults and investigates the
technological aspects of some materials, products and manufacturing
process.
Interior elements
construction and
manufacture study
programme
BA of Technology
and Industry
Engineering
The graduates of the programme work in the interior design centres,
wood processing and furniture industry state companies, limited liability
companies, individual companies, and furniture sales points. The
interior construction technologist designs the interior part of the building
and interior elements, has a good knowledge of different technological
processes, new products and their development procedures, improves
the product construction and design processes, manufactures pilot
samples and tests them.
Wood products
design and
technology study
programme
BA of Industry and
Engineering
The graduates of the programme work in the furniture and wood
processing companies as artisans, technologists and furniture
constructors.
Wood engineering
study programme
MA of Industry
Engineering
The graduates of the programme work as research directors, designers
of products and technologies, the leading engineers and technical
directors, also they carry out scientific research work and pedagogical
work.
* Manufacture and processing education area
Source: Open information, consultation and guidance systems (AIKOS)
5.6. Summary
Even though the employment rate of workers on the market is twice as high as that of the specialists
(including public servants), under the admission to study data the there are twice as many students in the
higher education study programmes as in the VET. This also influences the VET and higher education
graduate rates. Therefore, in the future, the gap between the employee supply and demand may increase
even more and cause serious problems to the development of the business.
According to the data of Table 4.7 the annual training/ study demand under the occupational groups may
amount to 480 people. Having analysed the employee demand and supply results on the highest lack of
employees, one may see that the demand exceeds the supply ion the „Engineering specialist“ group. Ina n
ideal case, i.e. if all graduates of some vocational education and training programmes went to work in the
WS, there would be a balance between the supply and demand (Table 5.4). However, the qualification of the
mentioned group employees is suitable for the construction sector as well, where the salaries are one of the
54
highest on the market. Therefore there is a real threat that the lack of employees in the „Engineering
specialist“ and „Qualified worker“ groups will increase in the future.
As it was already mentioned in Chapter 4, the big annual turnover of qualified and non-qualified workers in
the groups (table 4.6) generate qualification improvement/ re-qualification demands. In the worker group
annual continuing education demand amounts to 4000 workers (qualified and non-qualified workers, Table
4.7), whereas in 2007 the supply of workers according to the data of the Lithuanian Labour exchange
Agency amounted to almost 1000 people. It is obvious that with the aim to improve the current situation, the
measures for the reduction of turnover of employees should be established (for example, increase the
salary). On the other hand, the automation of manufacturing process and the use of opportunities provided
by the new apprenticeship vocational education and training organisation form would also contribute to
solving the employee supply problem
Table 5.4. Employees demand and initial vocational education and training supply in the Wood sector by occupational groups with
skill needs
Occupational group
Engineering
specialists
Workers
Demand for new employees for 1
year
90
480 (qualified workers)
Annual supply (2007 data)
Demand and supply
balance assessment
about 70
negative
About 480 (primary vocational
education)
balance
55
6. RECOMMENDATIONS
6.1. Recommendations on the reduction of gap between skills demand and supply in wood sector
•
With regard to the carried out analysis the threat to the successful development of business is mostly
posed by the lack of employees, especially in the group of qualified workers. Their training in the
vocational education and training establishments is quite poor. On the other hand, even though the
employment rate of workers on the market is twice as high as that of the specialists (including public
servants), under the admission to study data the there are twice as many students in the higher
education study programmes as in the VET. This also influences the VET and higher education graduate
rates; in the future the gap between the demand and supply of workers in all sector of economy may
even increase and this may pose serious problems to the development of business. Therefore, it is
recommended to change admission to the higher education schools requirements, i.e. some study
programmes should be established with vocational education and work experience requirements. This
tool would not only help to control the employee supply but would improve the study quality.
•
Amendment of the Law on Vocational Education and Training (2007) establishes a new apprenticeship
vocational education and training organisation form when training is carried out at the workplace:
company, institution, organisation, farm, at a free teacher‘s. Theoretical training may be carried out in the
VET institution or other school. With regard to the experience of other countries the advantages of
apprenticeship are related to lower training costs and work with modern technologies. Therefore, the
companies having used these opportunities would train the employees with regard to their needs and at
the same time would increase VET attractiveness. In the long term this would have a positive influence
on the worker supply.
•
The change of skills by occupational groups in the Wood sector will be determined by the customer
expectations, the increase in prices of raw materials and energy recourses and the implementation of
new technologies and work tools in manufacturing process. The companies aim in the future to increase
work productivity by automation of the manufacturing process and modernising work methods. Quality
management basics and teaching and learning skills will be necessary to almost all job group
representatives. The qualified workers will mostly work with programmed machinery, their maintenance
and programming skills. Engineering specialist will need to carry out more technical, supervision and
management functions. They will need creativity, analytical, work in a team and technological and
technological process know-how skills. Sales and marketing specialists will have to strengthen general,
especially communication and negotiation and foreign language skills. Therefore, with the aim to ensure
relevant employee qualification, it is necessary to update training/ study programmes under the
established skill demand. Also, in the system of education it is necessary to focus on the development
of learning and teaching skills. Their lack manifests at schools and works place when new subjects have
to be mastered. Therefore it is recommended to foresee and implement the tools (for example, to
56
develop relevant text books and methodologies) improving the development of the mentioned skills in
pupils and teachers.
•
With regard to the international trends, furniture construction and design are becoming strategic
company development strategies. This means that the demand of the relevant profession
representatives in the international market will increase. This trend may promote the emigration of
Lithuanian professionals. Therefore, with the aim to retain the labour force and competitiveness it is
necessary to improve working conditions, especially the pay for work and to develop employee
motivation system (insurance, loans, incentives, etc.).
•
With regard to the data, the information on the future career of university and non-university higher
education school graduates is insufficient to assess the specialist supply trends. Only some higher
education schools collect the data on the employment, further education, emigration of their graduates.
Therefore, with the aim to improve student admission planning, it is necessary to establish a data
collection and storage system that enables reliably assess admission, graduation and further career
trends.
6.2. Recommendations on the improvement of “Future skills” identification methodology
•
Vocational education and training schools usually monitor the employment level of their graduates.
Therefore a brief questionnaire was drafted with the aim to collect information on the future career of the
school leavers. The answers on the work of the graduates under each study programme offered at
school were submitted by almost all VET establishments. The obtained results contributed for a more
precise assessment of supply trends. Therefore it is recommended „Future skills“establishment
methodology supplement by the vocational education and training service provider survey on the
employment level of the graduates. It is recommended to draft such a survey every year.
57
114323,6
438720,8
403428,4
331756,1
1288228,9
3142
10950
5528
4735
24355
Share of GDP (%)
below 9
10-49
50-249
250 and more
Total
0,1
0,5
0,6
0,2
1,41
656
0,1
0,5
0,5
0,4
1,55
686
0,1
0,6
0,5
0,4
1,69
712,4
99317,4
380319,4
358554,9
262297,1
1100488,8
3473
10454
5956
3673
23556
1015
525
64
9
1613
2003
Average gross monthly salary, LTL
Iš viso
81850,4
299050,7
315948,8
105168,2
802018,3
3090
8752
5264
2075
19181
1020
513
65
6
1604
2002
36,4
40,1
73,0
70,1
52,9
Total
Total
Total
956
426
54
3
1439
2001
Productivity (turnover/ number of employees), thousand LTL
below 9
26,5
28,6
10-49
34,2
36,4
50-249
60,0
60,2
250 and more
50,7
71,4
Total
41,8
46,7
Turnover, thousand LTL
below 9
10-49
50-249
250 and more
Number of employees
below 9
10-49
50-249
250 and more
Number of enterprises
below 9
10-49
50-249
250 and more
Enterprises by number of
employees
0,1
0,6
0,6
0,5
1,79
766,4
36,0
40,3
71,5
100,0
57,2
118821,2
497426,3
478066,2
424076,6
1518390,3
3299
12338
6682
4240
26559
946
584
79
8
1617
2004
0,1
0,5
0,6
0,5
1,75
895,3
37,4
42,2
76,2
120,5
62,3
127233,9
550151,4
625413,8
479325,5
1782124,6
3398
13038
8212
3979
28627
881
602
91
7
1581
2005
0,1
0,5
0,6
0,4
1,68
1065,6
39,0
49,0
80,0
143,8
69,3
131964,4
621996,4
673535,3
519823,5
1947319,6
3384
12686
8419
3615
28104
890
575
89
6
1560
2006
0,1
0,5
0,5
0,5
1,56
1268,1
43,6
53,8
86,9
160,8
79,4
127808,8
667413,4
811922,0
695915,5
2303059,7
2932
12399
9340
4327
28998
786
582
101
7
1476
2007
Table 1: Indicators of wood and wood processing (economic activity codes 20.1- 20.5) subsector
Annex 1
0,4
0,4
0,4
0,4
1,55
1471,0
225,4
65,9
72,8
158,1
97,8
673149,8
838900,4
701896,9
701896,9
2915843,9
2987
12729
9647
4439
29802
787
598
104
7
1496
2008
0,4
0,5
0,4
0,4
1,59
1721,0
242,7
65,6
74,8
149,5
98,4
681276,5
838786,7
718370,6
710370,6
2948804,5
2807
12791
9605
4751
29954
750
599
103
7
1459
2009
2825
12864
9513
4863
30065
744
601
102
7
1454
2010
0,4
0,5
0,4
0,4
1,61
1979,2
243,2
65,3
75,7
147,4
98,6
687205,3
839999,3
719952,7
716852,7
2964009,9
Forecast
0,4
0,4
0,4
0,4
1,58
2256,3
242,9
64,6
76,4
140,8
97,6
679809,8
837002,5
728841,4
728841,4
2974495,1
2798
12955
9542
5175
30470
737
602
102
7
1447
2011
0,4
0,4
0,4
0,4
1,59
2639,8
252,9
66,9
76,7
140,6
100,3
709080,8
862611,2
739362,3
799362,3
3110416,5
2804
12888
9640
5687
31019
719
603
101
7
1430
2012
30497,8
126834,9
207044,1
321028,9
685405,7
970
2868
3929
5222
12989
Share of GDP (%)
below 9
10-49
50-249
250 and more
Total
0,1
0,2
0,3
0,3
0,93
800,0
0,1
0,3
0,4
0,4
1,08
841,0
0,1
0,3
0,4
0,5
1,20
930,7
23496,4
122257,0
207472,8
234785,5
588011,7
959
2906
3998
4089
11952
311
129
34
11
485
2003
Average gross monthly salary, LTL
Iš viso
20603,0
111971,8
184074,6
195841,1
512490,6
732
2465
3349
3814
10360
281
131
33
8
453
2002
31,4
44,2
52,7
61,5
52,8
Total
Total
Total
225
124
29
10
388
2001
Productivity (turnover/ number of employees), thousand LTL
below 9
28,1
24,5
10-49
45,4
42,1
50-249
55,0
51,9
250 and more
51,3
57,4
Total
49,5
49,2
Turnover, thousand LTL
below 9
10-49
50-249
250 and more
Number of employees
below 9
10-49
50-249
250 and more
Number of enterprises
below 9
10-49
50-249
250 and more
Enterprises by number of
employees
0,1
0,3
0,5
0,6
1,53
1016,5
44,7
44,1
59,7
69,0
59,1
45350,2
162392,1
285846,8
462198,6
955787,7
1015
3684
4792
6695
16186
299
167
43
14
523
2004
0,1
0,3
0,4
0,6
1,46
1120,1
45,6
44,8
68,3
77,7
65,2
52264,3
203812,9
388994,2
612215,4
1257286,9
1147
4545
5699
7883
19274
303
206
52
14
575
2005
1238
4995
7161
8588
21982
323
225
64
17
629
2006
0,1
0,4
0,5
0,6
1,61
1305,9
28,2
49,2
75,0
83,7
69,9
34902,6
245937,5
537189,7
719100,9
1537130,6
Table 2: Indicators of furniture production subsector (economic activity code 36.1)
0,1
0,3
0,5
0,6
1,49
1619,3
44,0
51,8
78,3
83,2
72,6
60085,3
263217,1
642689,8
770470,2
1736462,4
1367
5079
8207
9255
23908
352
230
72
18
672
2007
0,1
0,3
0,5
0,5
1,41
1927,0
45,7
58,2
78,7
84,1
74,8
64861,5
297060,0
718189,8
821839,6
1901950,9
1419
5107
9130
9769
25425
360
231
73
19
683
2008
0,1
0,3
0,5
0,5
1,32
2273,8
47,0
60,8
80,4
85,9
76,7
67545,9
326762,1
813689,9
843208,9
2051206,8
1439
5374
10114
9811
26738
361
237
77
19
694
2009
1426
5582
10114
9879
27001
361
243
77
19
700
2010
0,1
0,3
0,5
0,5
1,24
2637,7
49,1
62,7
82,0
87,5
78,3
69958,1
350224,7
829190,0
864578,3
2113951,1
Forecast
0,1
0,2
0,4
0,4
1,12
3112,4
51,2
63,0
82,4
89,0
79,0
76688,4
360997,2
854690,1
880947,6
2173323,3
1499
5729
10377
9899
27504
363
251
79
19
712
2011
59
0,1
0,2
0,4
0,4
1,04
3579,3
51,5
63,8
82,9
90,6
79,9
79418,6
372769,7
860190,2
897317,0
2209695,6
1543
5847
10377
9899
27665
367
254
79
19
719
2012