CONCEPTION AND ELABORATION OF A

MARKET STUDY-PLAN

Furniture Technology Centre in the North of Portugal

including the

Operational and Organisational Model

delivered by the

INI-GraphicsNet Stiftung

Wolfgang Kniejski Veneta Ivanova

Fabrice Azevedo Bruno Fernandes

Darmstadt, May 2007

ii

Introduction

The North of Portugal, and namely the municipalities of Paredes and Paços de Ferreira,

concentrates more than half of the companies of the Portuguese furniture industry. However,

during the last few years, major changes have taken place in the furniture market on a global

level which also affected the Portuguese furniture industry. It became very clear that the

Portuguese furniture industry has to be repositioned, especially by reinforcing its

competitiveness on an international scale. In order to respond to this challenge, the

municipalities of Paredes and Paços de Ferreira are planning to establish a technology

centre for the furniture market with the objective to coordinate and support the restructuring

of the sector and to stimulate new developments in this industry field.

A feasibility study was commissioned by the municipalities of Paredes and Paços de

Ferreira, in order to analyse the present situation of the furniture market in this region and to

develop on the basis of these findings a feasible operational and organisational model

(business model) for a furniture technology centre in the North of Portugal. This study has

been carried out between September 2006 and January 2007 by INI-GraphicsNet Stiftung.

In the first project phase, the Portuguese furniture market has been analysed from four

different point of views:

1. The macro-economical perspective of the furniture market was gained by the analysis

of available market data with the objective to provide a clear picture of the industry

with a special focus on its structure and dimension, market size and dynamics, sales

and distribution channels and last but not least, consumer preferences (secondary

market analysis).

2. In order to enable reliable conclusions on the overall market situation, it was

necessary to take a closer look at the market players and their structural

characteristics. A demand analysis (questionnaires and individual interviews) has

been carried out among 261 SMEs in the North of Portugal in order to estimate

important parameters such awareness of the new technologies and of innovation

centres as well as to study the main challenges for the SMEs, their requirements,

weaknesses and strengths.

3. The technological innovation potential of the region and also the cooperation

readiness of the research community in this field have been identified through the

systematic screening of relevant institutes and schools within the University of Minho

iii

and University of Porto. Interviews were performed with 54 professors from

departments related to the wood and furniture industry. The results have not only

shown huge technological potential, but also the willingness to cooperate with a

potential future furniture technology centre.

4. Finally, to complete the overall picture of the furniture market situation in the North of

Portugal, best practice examples in existing furniture technology centres all over

Europe as well as business and market trends in Europe and the US have been

studied and analysed in a benchmarking approach.

The input from the four fields of analysis have provided the necessary information for the

second project phase to structure the business model and the service portfolio of the

Furniture Technology Centre in the North of Portugal and to estimate its feasibility. The

results of the analysis and the concept for the Furniture Technology Centre are presented in

this report.

The Market Situation

for a Furniture Technology Centre 1

in the North of Portugal

delivered by the

INI-GraphicsNet Stiftung

Wolfgang Kniejski Veneta Ivanova

Fabrice Azevedo

Darmstadt, May 2007

1 According to a management decision, the operational name of the FTC will be CEIMP (Centro para a Excelência e Inovação

do Mobiliário em Portugal). Due to pragmatical reasons, the term Furniture Technology Centre (FTC) will be applied

2

Table of content

1 THE FURNITURE MARKET – MAJOR FINDINGS FROM THE MARKET ANALYSIS................. 3

1.1 GENERAL MARKET INFORMATION ................................................................................................. 3

1.1.1 Market Players and Geographical Distribution .................................................................. 3

1.1.2 Market Volume................................................................................................................... 4

1.1.3 Product segmentation........................................................................................................ 4

1.1.4 Sales Channels.................................................................................................................. 5

1.1.5 Market Information............................................................................................................. 5

1.1.6 Effectiveness and Reactivity of the Systems..................................................................... 5

1.1.7 Consumer Preferences...................................................................................................... 6

1.1.8 Strengths and Weaknesses of the Portuguese Furniture Market...................................... 6

1.2 DEMAND ANALYSIS...................................................................................................................... 7

1.2.1 Technology and Technology Centre Awareness............................................................... 7

1.2.2 Services required............................................................................................................... 8

1.2.3 Internationalisation, Collaboration, Partnerships ............................................................... 9

1.2.4 Strategic Market Approach ................................................................................................ 9

2 THE INNOVATION POTENTIAL – TECHNOLOGY AND SERVICE OFFERS BY THE

RESEARCH COMMUNITY ................................................................................................................... 11

2.1 HOW HUMAN RESOURCES FROM THE KNOWLEDGE SECTOR MAY BENEFIT

THE FURNITURE MARKET ...................................................................................................................... 12

2.1.1 Co-operation with Students ............................................................................................. 13

2.1.2 Professional training within the companies ..................................................................... 15

2.2 THE USE OF INFRASTRUCTURES ................................................................................................. 16

2.3 THE USE OR RE-USE OF R&D RESULTS....................................................................................... 17

2.3.1 Application Sharing and Shared Services ....................................................................... 17

2.3.2 Technology Transfer and Commercialisation Support .................................................... 20

2.4 BENEFITS FOR THE MARKET THROUGH PUBLICATIONS.................................................................. 22

2.4.1 Dissemination .................................................................................................................. 22

2.4.2 Awareness Raising .......................................................................................................... 22

2.4.3 Information Brokerage ..................................................................................................... 23

2.4.4 Translations of publications ............................................................................................. 23

2.5 SUMMARY ................................................................................................................................. 24

3 GOOD PRACTICE IN FURNITURE TECHNOLOGY INCUBATION - FINDINGS FROM THE

BENCHMARKING ANALYSES............................................................................................................ 26

3.1 BUSINESS TRENDS .................................................................................................................... 26

3.2 SERVICE PORTFOLIO.................................................................................................................. 26

3.3 MARKET TRENDS ...................................................................................................................... 27

4 CONCLUSION ............................................................................................................................... 28

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1 The Furniture Market – Major Findings from the Market Analysis

1.1 GENERAL MARKET INFORMATION

The findings from the analysis of the Portuguese furniture market are described in a separate

document.2 In this report, the key findings and major aspects are briefly summarised.

1.1.1 Market Players and Geographical Distribution

The general picture of market players in the Portuguese furniture market is characterised by

a total of 2.400 companies with 34.000 employees. This leads to an average of 14

employees per company. Only few companies employ more than 100 persons. The typical

company structure in the furniture sector is characterised by family owned small and medium

companies (SME). The number of employees varies typically from 5 to 50, however with a

strong focus on small and even micro companies with 5 to 7 employees. This type and size

of organisation of the small and micro companies limits growth beyond a certain threshold

and makes it difficult for the company to face competition, address new markets and even

suppliers. On the other hand, it provides a theoretical flexibility and easy response

capabilities. The number of companies in the Portuguese furniture market is to-date

decreasing, especially in the group of the micro companies.

The geographical distribution of the furniture companies across Portugal shows that about

60% are located only in the North of Portugal, concentrating mainly in the Porto region

(namely in the Vale do Sousa); 22% are located in the Lisbon and Vale do Tejo regions, and

16% in the centre north of Portugal. However, it is important to note that the companies

around Lisbon are above average in size and in sales. This region represents 54% of the

total sales volume. The majority of the furniture companies on the Portuguese market have

specialised in the “Wooden Bed- Dining- Living Room” production. Their number totals to

2.014 out of 2.400.

The Paredes and Paços de Ferreira municipalities hold a large quota of the national furniture

industry, and 80% of the furniture companies in this region manufacture “Wooden Bed-

Dining- Living Room” products: 642 of the furniture companies specialised in this field are

2 Market Research concerning the Feasibility of Promoting Innovation and Valuation of Research Results from the Universities in the North of Portugal

through the Establishment of a Technology Incubation Centre for the Furniture Market, delivered by the INI-GraphicsNet Stiftung, Veneta Ivanova/Fabrice

Azevedo in cooperation with METICUBE LDA., Portugal, January 2007.

4

located in this particular region, representing 32% of the total dedicated to this type of

product.

1.1.2 Market Volume

In terms of sales, the furniture industry grows steadily and slowly. The Portuguese industry

has to fight the strong penetration of imports, which have long been superior to exports,

resulting in a negative commercial balance. The loss of internal market quota however is

covered by an increase on exports. Exports have only few destinations, the number of which

has been decreasing over time. This fact considerably increases risk and limits growth.

Today, there are basically two major destinations: France and Spain, and some further

markets mainly located in Europe. Angola is now appearing as a strong new customer.

Imports come mainly from Spain, with France rising sharply in the last few years.

Summarising, in the past eight years (from 1998 to 2005), no drastic change has taken place

at macro economical level:

• Production increases continuously at a slow rate;

• Imports and exports are increasing, compensating each other after some years of

negative balance;

• National quota for the national industry is decreasing due to rising imports, being

compensated by exports.

Nevertheless, two major trends can deeply affect the status quo:

• The increase of international competition and imports, that is not competing head-to-

head but rather using design and a good ratio price/quality, supplying an increased

value proposal;

• The shift of the mass consumer preferences, away from the traditional portfolio,

namely on design, functionality, fashion and the perceived role of furniture.

1.1.3 Product segmentation

The product segmentation on the Portuguese furniture market is characterised by the

following criteria:

• Building material (wood, metal, plastic): This has implications in sourcing and

production.

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• Usage (office, house): The buyers of home furnishing and the buyers of office

furniture are completely different (with different buying behaviour and criteria)

• Life cycle: Office furniture is renewed more often, kitchen tends to be for life while

other in-house furniture, namely living-room furniture, changes more often.

1.1.4 Sales Channels

The distribution of the Portuguese furniture is mainly organised by the retail channel (more

than 60%). The wholesale channel is responsible for 30%, and the direct channel for 10%.

Distribution channels mainly used by the furniture industry are owned stores and a network

of resellers on the national level, to which the product is distributed, mainly using owned

fleet. The resellers assume the framework of furniture stores, sometimes of big dimensions,

chain stores, etc. Some companies also export their products to international resellers. The

main sales channels are: furniture stores, distribution chains and purchasing centrals.

1.1.5 Market Information

The access to market information regarding the Portuguese furniture small and medium

companies is still limited and not up-to-date. The industry players are very distant to the

market and often misconceive the market mechanisms, using as input solely their experience

and intuition. Thus, there is a high potential to develop and improve coordination and

cooperation of the several industry players, companies and associations - national and

foreigners - in order to promote the creation of synergies, e.g. in the collection of market

information, such as on conjunctures, consumer’s attributes and preferences, commercial

and legal environment, cooperation opportunities, commercialisations structures, via an

information and advising system regarding external markets (as practiced in Spain).

1.1.6 Effectiveness and Reactivity of the Systems

The effectiveness of the implemented systems is far from leading to the competitiveness

level required for the market and international competitors’ aggressiveness. The average

production cycle lasts four weeks. The average number of products launched in the past

three years is 15. The reactivity of the systems is generally insufficient, especially in the

cases of delivery (establishing and respecting target dates) and launching new products

(either copied from competitors, either from internal innovation).

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1.1.7 Consumer Preferences

The average Portuguese tends to spend a low amount of money on furniture for his home,

lives in the countryside and, with some exceptions, also in big cities. He/she buys only a few

times annually and prefers the larger specialised stores. At those stores, the customer is

offered a great variety of products, good organization and competent service. These are the

basic reasons behind this preference. Wild, anonymous consumption, which is often related

to other goods, is not very apparent in the furniture sector. The majority of Portuguese give

significant importance to their houses (in particular their living rooms). They consider comfort,

security/guarantee and light-weightiness as decisive purchasing factors, taking price into

consideration at fifth place even though it remains an important factor.

1.1.8 Strengths and Weaknesses of the Portuguese Furniture Market

The weaknesses of the Portuguese furniture market such as lack of innovation and

cooperation, distance to the market, lack of training as well as lack of management and

strategy, clearly outnumber the identified strengths, such as flexibility, labour costs and

craftsmanship. The strengths do not present a decisive competitive advantage.

The former competitive advantages, such as the small dimension of the companies and the

relatively low labour cost, are no longer sustainable at present and do not offer potential in

the future. The opening of the EU to ten more countries in 2004 and the entry of China in the

WTO with cheap labour costs opened the competition front to the Portuguese furniture

sector. Furthermore, a shift in consumer preferences to design and functionality threatens an

industry, that revealed itself as not open to a strategic market approach such as market

research and monitoring as well as slowly (if ever) adapting to the new consumer demand.

Chart 1: SWOT-Analysis of the Portuguese SMEs in the furniture industry

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Most of the improvement efforts (namely investments on equipment) are towards production.

The challenge for the companies is to integrate these improvements into a product and

market diversification strategy, allowing them to compete in quality, design, delivery, and

price, on a global level.

The necessity of reorienting the industry has led the main industry associations to undertake

several programs with the objective to reinforce the sector’s competitiveness. They tried to

achieve this by promoting the internationalization of the industry sector and by developing

the immaterial factors of competitiveness, such as professional qualification, innovation and

design, technology, strategy and quality.

These activities have led to some positive changes in the industrial tissue:

1. Some major industry players are actively searching for new business opportunities,

developing design and incorporating new materials with different styles, and

approaching new markets and market segments. These are accompanied by some

new small companies, which present small series of high-design furniture, targeting

high price segments.

2. Several companies are increasing in size, and newly created companies already start

with considerable size. Also, the number of companies with more than 20 employees

is increasing. However, most of the companies still remain in the SME (micro)

structure.

1.2 DEMAND ANALYSIS

The demand analysis among the furniture companies (questionnaire, face-to-face interviews)

in the North of Portugal has clearly identified the companies’ awareness of technology and

technology centre, their collaboration and partnership structures, the required service

portfolio that a technology centre should provide and finally the market information need and

usage. The main findings are crucial for defining the business model and structuring the

service portfolio of the planned Furniture Technology Centre (FTC) in the North of Portugal

and are thus briefly summarised in the following.

1.2.1 Technology and Technology Centre Awareness

Most part of the industry has limited knowledge about high technology and it’s potential

benefits. Typically, the technology comes from suppliers in the form of equipment, thus

8

keeping every company on the same standard, nationally and internationally. It is important

to note that there is clearly a technology adaptation problem regarding smaller companies.

Companies with less than ten employees or less than 0,5 Million Euros in sales can not

afford investment in high-cost technology.

The industry has limited perception of what a technology centre is, and presently has no

relationship with any of them (neither national nor international). Some companies are aware

of technology centres, based on their previous experience with “CTIMM”3. The CTIMM’s

image within industry, however, is very negative, especially regarding its management

approach. Nevertheless, the need for a technology centre is acknowledged for several

reasons. It is accepted, that a technology centre should provide services useful to and

needed by the industry and is able to promote risk activities with supported cost via funding

(namely research). Such a centre is also seen as a knowledge repository, as a driver of

industry projects and lobbying activities of the industry and finally as a promoter of

technology implementation (high technology, production processes or quality improvement

technologies, as well as technologies supporting the development of new materials, the

distribution and logistic processes, etc.).

1.2.2 Services required

The portfolio of services suggested by the contacted companies is quite large and can be

divided in two categories: services, generating revenues, since they reply to an explicit

demand (typically related to operations), and services, replying to an implicit need of the

companies with uncertain revenues (typically related to strategy).

There is an explicit demand for:

• Material testing and R&D in new materials;

• Training;

• Quality and product certification (standards, brand);

• Market observation and research;

• International market entry support.

3 CTIMM - Centro Tecnológico das Indústrias de Madeira e Mobiliário.

9

The implicit demand focuses on:

• Production management;

• Product and process engineering;

• Technology information dissemination.

1.2.3 Internationalisation, Collaboration, Partnerships

R&D collaboration with academia among the companies interviewed is scarce. Nevertheless,

it produces very good results, when focused on problems in the industry.

Regarding the furniture market, companies are clearly exporting, due to pressures from the

internal market (recession, competition). Success at the international market seems to

influence the price/quality ratio and the flexibility. Nevertheless, many companies have no

growth strategy, due to the existing limitations, namely the company size, response

capabilities, and available infrastructures. Instead, they only try to keep only the sales

volume steady.

External markets are approached in a rather unstructured manner: contacts are mainly made

at fairs, the starting point of a direct commercial relationship. External sales forces or

international partnerships are not targeted.

1.2.4 Strategic Market Approach

Market information regarding consumers moves through a lengthy chain from the commercial

network to the producer: consumer → store → “commission agent” → producer in the form of

feedback to the products developed. The fact that this feedback is reactive and indirect may

delay and distort the message for the producer. As a general trend among the interviewed

companies, market information (market research, consumer preferences, consumer

purchasing process, buying decision) is not studied and taken into consideration yet.

Asked for the main challenges that the industry faces, the companies named the following

(selection of the most important challenges):

• Lack of industrial space;

• International market entry;

• Market pressure in terms of flexibility and adaptability;

10

• Lack of market information;

• Marketing and commercial deficit;

• Lack of qualified personnel (trained for the industry, like operators and designers, and

middle management); and

• Production management efficiency.

However, the above mentioned market data gives an overview only of one side of the

complex environment. The picture will be completed with the results from the evaluation of

the technology potential (through screening) and the analyses of the trends in the furniture

market and the successful technology centres in Europe (through benchmarking) which will

be elaborated in the following chapters.

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2 The Innovation Potential – Technology and Service Offers by the

Research Community

In order to identify the furniture related research and the technological and innovation

potential at regional universities and institutes, several interviews have been held with

professors and scientists of the Universities in the North of Portugal. The interviews showed

clearly, that there is in fact a high potential among the activities in the knowledge sector that

could directly or indirectly foster innovation in the furniture market. This potential can not only

lead to necessary technology transfer measures supported and promoted by the FTC, but

could also lead to offer shared services for the centre. Thus, the FTC should not only be a

promoter of tech transfer, but also an application and information hub with shared facilities,

services and knowledge for all players in the furniture industry – companies and researchers

alike. The FTC can also be a broker for consulting services for improving the industry’s

productivity. As the interviews have shown, the basis is given that the FTC and the Furniture

Market can count on existing knowledge at the universities and research institutes as shown

in the Chart 2 below.

Chart 2: Collaboration with the Research Community

� Human Resources

� Professors and Lectures

� Post-graduates

� Under-graduates

� Infrastructures (Labs)

� R&D Results

� Publications

Publishing Papers

Teaching

Consulting, Coaching, Mentoring

PhD Thesis

Enter the Market

Shared use

Shared ApplicationsCommercialisation

Spin-offs

Licensing

Trade Sales

“Translation” and Communication

Shared use

� Human Resources

� Professors and Lectures

� Post-graduates

� Under-graduates

� Infrastructures (Labs)

� R&D Results

� Publications

Publishing Papers

Teaching

Consulting, Coaching, Mentoring

PhD Thesis

Enter the Market

Shared use

Shared ApplicationsCommercialisation

Spin-offs

Licensing

Trade Sales

“Translation” and Communication

Shared use

12

2.1 HOW HUMAN RESOURCES FROM THE KNOWLEDGE SECTOR MAY BENEFIT THE

FURNITURE MARKET

The anticipated benefits for the players in this mutual cooperation are illustrated in Chart 2.

While professors and teachers could provide their know-how via consulting, coaching,

mentoring and teaching efforts as well as through publications, there also exist various

collaboration opportunities with students.

During most of the interviews, providing education and training for the players in the market

was considered to be rather important. There are basically three target groups for education

and training:

• The students who can learn about the industry’s problems, desires and demands;

• The students who potentially look for job opportunities in the furniture market; and

• The management and staff within the industry, who can improve its management and

technology skills, providing higher efficiency or productivity.

Furthermore, many of the interviewed professors agreed that education and training level in

industry is typically low. Therefore, coordination and offering of target-oriented training

should for this reason also be an area within the activities of the FTC.

As an example, the Polytechnic Institute of Viseu (IPV) was referred as relevant for

education in the furniture sector, offering the only one Wood Engineering University Degree

in Portugal. 90% of these students work later in the furniture industry.

The Polytechnic Institute of Viseu is aware that the Furniture sector is one of the most crucial

industrial sectors in Portugal. Furthermore, it has an important role in the Wood field. Thus, a

new course called “Technological Specialisation Course in Furniture Design” has been

created as a response to the market needs (generally, SMEs have low budgets to recruit

graduated technicians and have also problems to find technicians with intermediate

qualifications, prepared to solve problems the company daily faces. Also there is a lack of

connection between high level technicians and labourers).

This course allows the trainees to work as drawing technicians with furniture design

specialisation. A drawing technician with this specialisation is able to analyse and implement

technical specifications on designers’ works, executing, adapting or recreating products. He

can also make creative technical and operational plans, optimise execution processes and

develop technical plans.

13

However, the Polytechnic Institute of Viseu is not active in research. Some of the professors

from Porto also teach at IPV. This opens the opportunity for a combination of academic

teaching and a more practical knowledge.

2.1.1 Co-operation with Students

During the discussions it became evident that students can play an important role in the

exchange of information between research community and the market and thus, can

contribute to raise awareness and receptiveness on both sides.

Many professors not only accept but are moreover willing to initiate student exchange

programs as an appropriate method of improving:

• The knowledge of the students – and their orientation to practical results;

• The industry’s awareness of good practices and existing knowledge and techniques,

for technologies and management.

Universities need subjects for undergraduate students’ education that the furniture industry

can provide. In many cases, students can - through their work - provide ideas for new

applications. It turned out that especially business students would support to showcase

processes and application areas in the furniture market to apply and exploit innovation.

Some examples for furniture related university work have been mentioned, e.g.:

• A PhD thesis on “Innovation Management with design aspects in product

development chain”; or

• A master thesis for product development processes.

The work load to integrate students in organisations and operations of the relevant industry

could increase, because the professor’s teams not only are able to but are motivated to

streamline and cluster students work. Interdisciplinary student thesis with students from

engineering and business departments could be tested on case-by-case examples:

• Business students work on market research, on market studies and on economical

feasibility analysis;

• Engineering students work on technical feasibility analysis.

The work would have to be co-ordinated by the FTC and supervised by the professors. As a

result the FTC would be able to generate business concepts for the furniture market.

14

There are other potentials to support the FTC from an operational point of view:

• The FTC could use students for market research in specific cases. Final year

students could be integrated into the furniture labour market;

• Final thesis could be accomplished using real cases;

• Sending students allows the exchange of ideas. Some professors are engaged in

implementing project-oriented teaching;

• There is also a need for post-graduation courses.

For the implementation and realisation of students exchange, there are already good

experiences: a professor and student with knowledge in prototyping systems have a close

contact with CINFU – metallurgy and foundry centre (www.cinfu.pt) – which is free of charge

for students.

The centre could also support the screening and selection of students for the furniture

industry. There are even financing opportunities available. For example, INOVJovem is a 4-

years program that supports the insertion of young graduated people not older than 35 years

in SMEs. The program started in 2005 and runs until 2008. It funds 75% of salary of qualified

staff from the university.

INOV-Jovem has two kinds of supports:

• Training (program 1 and 2); and

• Long term contracts (program 3 and 4).

In Program 1 and 2 there is financial and technical support (75% of costs supported). Program 3 and 4 offers also financial support. Program 3 is for companies with less than 50

employees, while and Program 4 for companies with less than 250 employees.

Furthermore, internship programs could be set-up, for which the students can earn credits.

Such jobs could also be one of the elective courses within MBA programs. By providing

supervision, the school grants certification automatically getting market experience in return.

Professors stated that they are explicitly willing to support the supervision of students to

supplement new structures in sub-disciplinary classes and courses.

As an other example could be mention the following: design contests for students are well

accepted in architecture departments. Therefore, ther is opportunity for the FTC to organise

idea contests, focusing on:

15

• Design,

• Participation in exhibitions (= opportunity to gain experience), or

• International exchange with other centres.

2.1.2 Professional training within the companies

Not only the students, but also the workers can benefit from the education program offered

by the FTC. Another education sector is the professional training of industry workers in

furniture companies. Within workshops, organised by the FTC, the professors could present

current research topics that might bring value added to the industry. During the discussion,

the professors get aware of the industry problems which helps them to perform mor applied

research to achieve a win-win cooperation witht the SMEs.

Professional training should also target company’s management. Typically, the SMEs are

managed by people with experience but who are no entrepreneurs. FEP, for example, offers

a course for management of furniture companies, with professors and industrials.

More than one professor has experience in training, so they can provide training on

advanced technologies and procedures to all levels of workers in industry. For example,

experience already exists in the metal industry, which can be applied to the furniture industry

as well. Those examples illustrate that the professors already “speak the language of the

staff in the furniture companies.” Contribution to management training may vary from one-

day-seminars to five-semester seminars.

For all those reasons, FTC should:

• Provide education to SME workers and managers to leverage the language levels

between industry and scientific community;

• Establish contacts with universities to provide subjects for student works;

• Accept students who can support the FTC’s activities by doing their university work

for the centre;

• Assign students to companies, providing them supervision and assuring information

and know-how blow between universities and industry.

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Student exchange should be promoted by the Furniture Technology Centre under the

following aspects:

• Students will be profiled for thesis in the furniture market;

• Integration of students from other field would support the integration of knowledge;

and

• FTC should identify’ specific grant schemes to support exchange programs.

2.2 THE USE OF INFRASTRUCTURES

In order to promote the better selection and use of the materials, testing facilities should be

provided for common use by the universities and research institutions. Co-ordination services

to share labs and test infrastructure should be offered by the FTC. Thus the FTC would

generate significant benefits providing the relevant the knowledge, experience and

infrastructure.

In fact, several professors offered various testing mechanisms, for example a lab for material

testing, climate chambers for vapour permeability analysis, or an acoustic lab at the

University of Porto, which could be used by the clients of the FTC.

Furthermore, INEGI (Instituto de Engenharia Mecânica e Gestão Industrial) is a certified

testing institution for fire and smoke testing with core competence areas in:

• Rapid Prototyping and Rapid Tooling;

• Experimental Stress Analysis / Non-destructive Tests;

• Simulation of Manufacturing Processes;

• Tribology & Industrial Maintenance;

• Structural Analysis; and

• Testing of Materials and Products.

17

2.3 THE USE OR RE-USE OF R&D RESULTS

2.3.1 Application Sharing and Shared Services

In the interviews, the need for an application support centre with testing facilities became

quite obvious. The interviewed professors and researchers not only supported this need, but

also offered their support to share applications. Several areas were addressed and the

following potential synergies for shared services revealed:

a. Materials

There are active research activities on the development of materials at both universities

(Minho and Porto) for a long time. The research areas include the development of new

composite materials, especially wood-based composites, such as wood-processing and

binding and supporting (glue, etc). Additionally, not only knowledge on composite materials

and experience in material structures can be provided, but also the development of new

materials according to the industry’s demands.

Thus, the strong interest coming from the universities in promoting the use of new materials

within the furniture market opens a window of opportunities for the FTC, acting as an

accelerator and as facilitator in this area.

b. Production Management

Another area of services that could be offered by the FTC is the improvement of the

companies’ production processes. Experience on a significant level of excellence is available

at the universities. Some professors, for example, promote the use of flexible layout systems

(the software is already available) and are willing to help in areas like just-in-time production,

just-in-time delivery, lean manufacturing, and logistics. There is knowledge for the simulation

of processes (logistics) and warehouse design, there is also testing software HIPIPS, which

detects defects on surfaces (cork, wood) and is also applicable to leather, ceramic, stone,

glass for quality control and feasibility.

All these systems are almost ready to be applied. Nevertheless, if a company in the market

decides to order one of the above mentioned systems, in many cases the cost-benefit ratio

would not allow an innovative decision of implementation. Thus, instead of having a costly

one-to-one delivery chain from universities to industry, the FTC could be contracted for the

final development of the software into ready-to-be-used applications, which then could be

licensed to “n” companies and application areas in the market. This would lead into one-to-n

application scenarios and would generate significant cost savings in the market plus a return

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in form of revenues and royalties back to the universities. The FTC could generate

immediate return-on-investment by participation in the revenue stream on a commission

basis.

Supporting the restructuring and clustering the companies, and creating a network could be a

further field of activity for the FTC. Contribution related to structuring, interoperability and

cooperation networks should be in the areas of developing sample business models and

business processes as well as building networks in the focus areas and support this with

software tools.

c. Other support areas

In the interviews it turned out that INEGI has broad experience in working with the industry.

INEGI provides prototypes and pre-series in metal using foundry processes, CNC punching

and pressing. They have rapid prototyping systems, and claim to be the only institute able to

provide prototyping services to the industry. There is a need in the industry for small series

due to the repositioning required in order to be competitive and to address the upper-end

customers.

Furthermore, INEGI is producing prototypes for door-knobs. This can be used for developing

a new furniture component, or create limited series. INEGI not only has potential but is highly

motivated to collaborate with the furniture industry in the fields of:

• Prototyping;

• Testing different production processes for producing metal parts, like sheet metal

forming, fire testing, or structural tests.

INEGI would also provide its services when sub-contracted by the Centre.

As there is also a very good carpentry knowledge and a lot of solid wood furniture in Portugal

and best selling domestic furniture like IKEA is self-assembled at home, an idea was

developed to combine existing knowledge of wood to create solid wood, high-quality furniture

easy to assemble at home (design for manufacturability and assembly).

d. Design

Design has already been identified as potential success factor for the Portuguese furniture

industry. In fact, the FTC can support activities in this area, e.g. by aggregating existing

knowledge, promoting the investment in design and providing design activities to the

industry. There is knowledge about industrial design, CAD, CAM systems at the universities

that would facilitate the introduction of new designs into the existing furniture industry.

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There is experience in product design among a group of professors with regard to:

• 3D scanning + modifications / CAD;

• Rapid prototyping; and

• CAM 3D – mock-up development (i.e. for KUKA robots).

Finally, INESC has experience in design validation and prototype manufacturing.

Furthermore, another partner interested to collaborate with the FTC is the School of

Architecture (FAUP), in Porto. It is also willing to offer support in design issues:

1. They can contribute to the design of the environment where furniture will be put, but

also of the furniture design itself;

2. If the centre has showroom facilities, they would need experts to bring trends to the

showroom;

3. If the centre is used as a showroom, technical support is needed, for design;

4. The centre can also provide services to the companies to have their own showrooms.

e. Administration

Several professors share the opinion that the FTC should also provide administrative tasks,

the managers in the furniture industry typically don’t fulfil. This is for example the case with

finding funds for investment for different areas like modernisation, further research and

collaboration with universities, product development and marketing. It could also be attractive

and motivating for the industry, if the FTC provides access to EU-funded project and support

in building consortia.

Management activities as well as consultancy in technologies (e.g. implementation of

information systems like Enterprise Resource Planning (ERP), digital archive services) can

also be supported by several professors. Some professors work with the school of metal

works and moulds, and can provide contacts in the textile industry. INESC, an interface

institute, also has experience with information systems, ERP, decision support, QM,

planning, etc. The FTC would be the broker of these services and could participate in the

revenue stream on a commission basis. Thus, this benefits the knowledge system and the

players in the furniture market and can be offered to companies with more than 20

employees. Moreover, these activities will bring diversity in the service portfolio that will

ensure sustainable operations. This approach is already applied in a technological centre for

the shoe market.

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Additionally, services can be offered for linking the SMEs in the North of Portugal to build a

furniture cluster and in a long term this cluster can be linked to other regions in the world.

2.3.2 Technology Transfer and Commercialisation Support

Besides identifying the real co-operation and service opportunities that professors and

scientists of the knowledge system could offer to the furniture market through the FTC, a

special focus of the interviews was put on furniture related technologies developed at the

universities and institutes. It would open a totally different business perspective for the FTC,

if it supports the commercialisation of those technologies in the furniture market.

Commercialisation channels should be spin-off creation, technology trade sales and

technology licensing. In these areas the FTC could operate as a catalyst and incubator for

the valorisation in the furniture market. The service portfolio should be build in close

collaboration with UPIN and Tecminho. The FTC should take the role to enhance their

already existing services with the specific focus on the furniture market.

Technologies and innovations to initiate those activities have been identified in the following

areas:

a. Materials and production process

• Micro-capsules with perfume, which can also be used in cushions. Bayer and some

other companies develop microcapsules. Microcapsules are finished, but application

is a problem. To apply this technology to the industry they should check if it can be

upsized;

• Chemical separation technologies may be used for paints /solvents / varnishes;

• Biotechnology for finishing fabrics; new fibres for textiles with different functions. This

is useful to not having to wash sofas every week;

• Bonding materials, composite materials, fasteners combining different materials;

• Automation and mechatronics hardware for producing “smart” products;

• Deep knowledge concerning different materials relevant for furniture, such as cork,

coconut, especially for sound isolation and absorption; an isolating panel has been

developed and sound absorption in a room with chairs as well as noise pollution in a

furniture factory studied. There are patents that can be exploited; or

• Integration/mix of natural materials with composites to be used in automotive, but first

contacts with furniture industry have been established.

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b. IT / Software

• Usage of existing modelling software to support the development and implementation

of innovative products;

• CAD may be combined with the need to develop specific, custom-made furniture;

• Implementation of a system for design and simulation of lighting; a prototype is

available, and a product could be available with the development effort of two (2)

person-years;

• Software to support the inspection of materials;

• Tools for optimising the resources – space, time, process (applicable to external

distribution, logistics);

• Software is available for designing, simulating and structuring internal processes

(automation);

• ICT tools for Business-2-Business processes;

• Board cutting software (INESC) that is very cost-effective; or

• Optimisation software for scheduling, logistics and planning (INESC). They have

developed their own optimisation algorithm implemented in a software tool and need

marketing and sales forcing support that the FTC could provide.

c. Technologies from other areas

There are technologies that gave been already applied to other industry sectors but could

also be benefits the furniture segment. Among these are:

• Existing robots, which can be used for creating a flexible factory;

• Patent for wood dye: different colouration possible inside the wood. This is to apply in

architecture or furniture, for changing the colour of wood. This technology is already

one and a half year old and can immediately be applied when required by the FTC;

could be used by a dye house/industry. It is environment friendly;

• New fibres in car seats, construction fibre etc;

• Micro capsules in textiles (spin-off already exists);

• Composites to replace wood or replacing foam in car seats;

• Product that removes smells by destroying smell molecules; or

• Fabric that changes colour with UV light or temperature, for example, a sofa would

change colour to tell that enough UV light has received, killing mites.

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2.4 BENEFITS FOR THE MARKET THROUGH PUBLICATIONS

2.4.1 Dissemination

As a result of the interviews, the lack of communication between the universities and the

industry was identified as one of the main obstacles for co-operation. Interaction with industry

is seen as a difficulty by the majority of the professors. This is due to not only the lack of

communication which makes it difficult to approach the industry, but also to the mentality of

the industrials towards the scientific community. The industrials seem to have a lack of

confidence, a general reluctance to use research results in the industry and finally

prejudices, such as ‘researchers cannot offer schedules and results’. It would be thus

appropriate to promote and publish practical studies about the benefits of using research

results.

The professors agreed on the fact, that the exchange of information between research and

industry is not only relevant, but crucial. They stressed the importance of dissemination

mechanisms to establish proper communication channels and awareness raising activities in

general.

2.4.2 Awareness Raising

The FTC is the most appropriate channel for awareness rising. These activities should not

only focus on technology awareness but also on the design aspect: information about

methodologies, materials and items has to be provided to the industry. Among the

professors, the opinion was articulated, that it is not the university’s role to go to the industry.

Instead, the FTC should cluster SMEs so they can contract research. Incentives could be

given to the industry for asking for research.

Improvement of management skills in the SMEs could be a further activity related to

awareness raising. Many large companies go to EGP (school of management) to ask for

assessment of their management structures and for advice how to improve them, but not

SMEs nor their Association. It could be one of the tasks of FTC to stimulate awareness for

management needs in the SMEs and their Association to provide assistance.

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2.4.3 Information Brokerage

The results of the interviews referred also to the role of the FTC as contact point and

information broker. It was identified that the FTC should:

• Mediate between problems and solutions: the Centre should be a place, where

industry can go with problems and university with solutions; in this case, an expert in

market needs could show the research results to industry and introduce the industry’s

needs to the university (INEGI has market experts);

• Play the role of a trust broker, as successful partnership between universities and

companies are based on personal trust;

• Act as a lobbyist for the furniture industry, as this function is currently missing;

• Create an information pool; information exchange would also help the scientists

directing their research towards the market;

• Collect and disseminate knowledge from different sectors to stimulate cooperation

instead of competition for knowledge, i.e. by integrated projects;

• Operate as facilitator to create some dynamics in the market’s decision making

processes;

• Translate between the scientific and economic languages in order to facilitate the

communication between industry and universities (main task);

• Be a contact broker for individual companies to address other companies;

• Organise and coordinate exhibitions, fairs, fashion shows and dissemination

workshops to show case prototype delivery to the market; this raises awareness,

promotes the industry sector and stimulates participation; an open day at INEGI could

motivate industry to demand knowledge from universities;

• Provide an internet portal for players in the furniture industry to share expertise (role

as contact centre).

2.4.4 Translations of publications

Publications are generally an important for information source and tool for information

exchange. However, scientific publications normally address exclusively the scientific

community. Due to IPR protection issues however, publications on technologies are often

kept undisclosed within the institutes.

24

However, universities are developing new kinds of publications, the so-called technical

information note (NIT). This publication of less-scientific material is welcomed by many of the

professors as a way of disseminating their results. The FTC could coordinate the creation,

publication and dissemination of these NITs.

Furthermore, the creation of a service brochure would be appropriate to inform about existing

institutes and to promote their work (seminars and publications). This could also be co-

ordinated by the FTC, while charging a service fee to the origins of the knowledge.

Some professors have proactively offered their support here: Some can send their scientific

collaborators to the centre to maintain awareness and objectives. Another would support the

necessary information exchange not only via seminars but also via publications.

2.5 SUMMARY

Summarising, there are in fact a lot of applying technologies at the universities and research

institutions in the North of Portugal that are not only relevant but also applicable for the

furniture industry. The development and usability of these technologies would considerably

benefit from incubation and commercialisation support provided by the FTC. A good start

would be – in co-operation with UPIN and TecMinho - to manage this pool of identified

technologies and plan the next commercialisation steps. Accordingly, the proven technology

transfer and incubation services, such as start-up consulting, provision of office space and

infrastructure, entrepreneurship training and funding support etc. have to be offered by the

FTC.

Moreover, the Furniture Technology Centre (FTC) can play an important role in being the

broker of relevant information exchange between the knowledge system and the furniture

market. It is important to inform the players in the market about currently existing innovative

systems and how it benefits the market. And it is as well important to inform the players

within the knowledge system about the processes in the market and especially about the

market needs and market requirement. As Chart 3 below shows, the FTC can be a

successful manager of valuable information.

25

Chart 3: FTC as Information Broker

This brokerage function may even result in a revenue stream that provides return-on-

investment for the universities and research institutions. In this function it will motivate and

foster further collaboration.

On the other hand, the FTC can generate information brokerage revenues for its own

accounts which will be the basis for structuring the operations and the service portfolio into a

sustainable future. The experience of some professors shows that, once a contact between

university and industry has been established, the communication barriers are gradually

broken and mutual benefits result are achieved: the industry receives more and more

practical, research based results, and the researchers find new subjects for their work. As an

example, can be mention the machine manufacturing area. In the past, in Portugal, there

were no machine manufacturers. Currently the country is an exporter of machinery, due to

closer collaboration of the industry with universities. This continuous process should be also

triggered by the FTC by contributing to more and more success cases.

In Part II of this report, the strategic and operational structure of the FTC will be detailed to

provide the basis for discussion and decision on future activities.

Universities

R&D

Institutes

Spin-offs

Human

Resources

Carriers of Ideas Furniture Networks

Informal Capital

Formal Capital

Participation

Organization Moderation Monitoring

Information Consulting

Intermediation

FFFuuurrrnnniiitttuuurrreee TTTeeeccchhhnnnooolllooogggyyy

CCCeeennntttrrreee

Ideas

Information

Qualified

Information

Investors

Enterprises

SMEs

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3 Good Practice in Furniture Technology Incubation - Findings from the

Benchmarking Analyses

In order to operate successfully and to ensure sustainability, the FTC should take into

consideration three crucial forces of influence:

3.1 BUSINESS TRENDS

It is important for the FTC to be aware of and to follow the general trends in the related

business field. Current tendencies in the incubation and technology transfer business can be

summarised as follows:

• The building of strategic networks is important for the exchange of expertise,

the access to specialised experts and for the establishment of joint (national

and international) projects and commercialisation activities;

• Entrepreneurship education on one hand and special professional training for

the workers in the furniture industry on the other, have been mentioned as

crucial by all interviewed furniture incubators. Also the training of entrepreneurs

at an international level as an essential and a critical success factor;

• Acting as a global player. The centre should not only focus on the

internationalisation of the furniture market and its players, but also on its own

international network building and positioning to be able to support the local

market players accordingly.

3.2 SERVICE PORTFOLIO

The main services offered by the analysed successful technology centres in Europe can be

summarised as follows:

• Communication and Information exchange:

- Communicate the research results to the SME;

- Communicate the SME’s needs to the knowledge system; and

- Study and communicate the market trends to the both parties.

• Application services:

- Renting infrastructure facilities, labs, etc.

• Organisation and supervision of professional training and qualification courses;

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• Analyses of company needs;

• Fostering international collaboration;

• Identifying and participating in funding mechanisms;

• Measures to stimulate the innovation and research activity (design competitions,

exhibitions, etc);

• Consulting and support in marketing activities:

- Planning, organisation and co-ordination of trade fair initiatives;

- Communication and promotion consulting services like internet presence,

creating of brochures, posters, etc.

• Information dissemination regarding the new trends on the market.

In order to build and defend a prominent position in relation to other innovation centres, it is

important that the FTC offers core services, which go beyond the standard service portfolio

of incubators and innovation centres.

3.3 MARKET TRENDS

In order to support the competitiveness of the Portuguese furniture market, it is crucial for the

Centre to follow, promote and adapt to the leading furniture market trends in the fields of:

design, showroom functionalities, materials, software tools, delivery and customer service.

Those factors have proven to have a decisive impact on the whole value generation chain

from the suppliers through the manufactures and retailers to the end customers.

The current international market trends can be summarised as follows:

• There is a growing competition from Asia; the SMEs should fight this by focusing on

design and high quality;

• Showroom design is getting an important instrument for the increase of sales

increasing and recognition;

• Internet presence and online services gain in importance;

• Rapid delivery needs to be targeted as a part of the beneficial end-customer service;

and also

• Increase in independent store closings at the multi-store level.

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4 Conclusion

The multi-perspective market analysis has identified some weak areas in the Portuguese

furniture industry. They could be strengthened considerably through the focused support

activities of a future Furniture Technology Centre. Among those identified weak areas can be

mentioned the lack of educated and qualified staff, lack of management and marketing skills

as well as the lack of long-term revenue-oriented strategies. Furthermore, many SME are not

aware of the technological state-of-the-art and the technologies available in their industry.

They often miss a constructive innovation approach as well as a certain awareness of the

profit opportunities that cooperation and networking can provide. Finally, the lack of

certification in this industry is an important factor to take into consideration. Flexibility, low

labour costs, craftsmanship have been identified as the strengths of the industry, but the

weaknesses are clearly exceeding them, thus no competitive advantage can be achieved

here at this stage.

However, some positive changes in the Portuguese furniture industry have been identified:

Nowadays, several companies are increasing in size, and newly created companies already

start with considerable size. The number of companies with more than 20 employees is also

increasing, but most of the companies still remain in the SME (micro) structure. Furthermore,

some major industry players are to-date actively searching for new business opportunities,

developing design and incorporating new materials with different styles, and thus addressing

new markets and market segments. They are accompanied by some new small companies

producing small series of high-design furniture and approaching high price segments.

The results of the screening activities at the universities in the North of Portugal show clearly,

that there is promising potential for innovative and technological impacts: There are excellent

technologies and know-how available within the region with a highly reputed network

(universities and research institutes), as well as research results relevant for the furniture

market. However, this potential has to be mobilised for the furniture market, e.g by raising

awareness for innovation and the use or re-use of R&D results, and also by providing

information about available and applicable knowledge.

As the knowledge system lacks information on the specific needs in the furniture market, the

following questions should be answered in a satisfactory way:

� How can knowledge improve the internal processes of furniture companies;

� How can knowledge improve the Business-to-Business (B2B) and Business-to-

Customer (B2C) processes;

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� What is the impact in the value-generation-chain? (Which are the problems to be

solved, how can efficiency and effectiveness be increased and what is the impact in

productivity);

� What determines the balance between demand and offer (New trends, new customer

behaviour or new customer orientation).

The benchmarking of successful existing furniture Tech Centres in Europe gives clues about

how they meet the requirements of the industry. They are often structured as Private-Public

Partnerships with a clear business orientation and a professional service portfolio. They gain

their competence through thematic clustering and a thematic focus. These centres have

close collaborations with universities and research centres and have recognised the

importance of regional, national and international networking. Finally, they consider

entrepreneurship education and specialised professional training for the workers as a critical

success factor.

Taking all this into consideration, it is recommended that the Furniture Technology Centre

targets the identified weaknesses of the industry, constructively develops the observed

strengths, transforms the information requirements into an active information strategy and

finally positions itself as an organisation capable to respond to the SME requirements and

needs, stimulating the innovation. To be more concrete: SMEs will benefit immensely from

the Furniture Technology Centre, if it offers:

• Measures to promote applicable scientific results;

• Measures to increase the readiness to implement new technologies;

• Consultancy in production management & material engineering (e.g. material testing);

• Training and qualification programs; or

• Provision of market information.

In the following part of this report it will be elaborated, how such a Furniture Technology

Centre should be structured and operate in order to optimally fulfil the requirements of the

industry.