The general decline of manufacturing in the EU has had a major impact on Bulgaria and its furniture industry, which employed 90,000 people in the 1980s but today employs only 47,000. Since 2001, more than 3000 furniture companies in Bulgaria have closed. Presently, unemployment rates in the regions where the furniture industry is centered range from 13-15%. The productivity per worker in the furniture industry in Bulgaria is approximately EUR 18 000 per annum, while according to Eurostat, in Germany it approximates EUR 160 000 per worker.
We, in Industrial and Business Park Aitos, conducted over twenty interviews with Bulgarian industry participants and policymakers, few of whom sounded optimistic about the current trajectory of the industry. Our research revealed that firms are focusing on short-term profits instead of building long-run sustainable competitive advantage through investments in automation, productivity, design and innovation.
However, the Industrial and Business Park Aitos has many of the essential ingredients for success: highly trained workers, proximity to high quality timber, access to major airports and ports, a location central to EU, Russia, Turkey and Arab markets, a strong network of specialized industries (e.g. logistics, warehousing, software, factoring) that support the Park, and the High Point Market, which connects over 85,000 professional buyers and sellers.
Reinvigorating the Bulgarian furniture industry will require action from firms, government, and Institutions for Collaboration to improve competitiveness. We present policy recommendations to address the broad issues we have identified as impacting the Bulgaria, EU, Burgas region and Aitos municipality.
Summary Recommendations
For Bulgarian firms:
• Shift from cost and price-based competition to strategies focused on increasing willingness
to pay through customization, faster delivery, higher quality, customer service.
• Consider one of our suggested four business models to leverage strengths of Industrial and Business Park Aitos
• Invest in capital equipment and processes to automate furniture production.
• Seek to compete globally by identifying international markets for expansion.
For Bulgarian government
• Encourage stronger collaboration and communication in the furniture industry and build bipartisan
consensus around supporting it at the highest levels of government.
• Use policy to stimulate product and process innovation in Industrial and Business Park Aitos. For example, offer tax credits for plant capital expenditures or grants for research.
For Institutions for Collaboration
• Develop a holistic furniture cluster strategy, rather than business plans for individual industries.
• Partner with local colleges and institutions to create programs that teach furniture expertise, particularly in higher value parts of the value chain such as design.
