Methodological Centre for Vocational Education and Training

STUDY OF WOOD SECTOR Research report on skill needs

2008, Vilnius

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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.

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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

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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

1Salary before tax

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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 high-

added 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

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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 re-

qualification 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.

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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.

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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

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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).

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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) Furniture manufacturing (FM)

Sawmilling and planning of wood, impregnation of wood (20.1) 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)

Furniture manufacturing (36.1)

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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.

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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 semi-

finished 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

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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).

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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.

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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. The most frequently used of these skills relate to forklift driving and stores

management. 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.

16

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

17

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

18

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 South-

East 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

19

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 ‘flat-

packs’. 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.

20

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.

21

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.

22

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

23

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.

24

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.

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);

26

• 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

Companies with regard to the number of employees

total subsector Economic activities under NACE

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

Wood and wood products (WM)

Manufacture of other products of wood; manufacture of articles of cork, straw and plaiting materials (20.5)

78 53 7 0 138

Furniture manufacturing (FM)

Furniture manufacturing (36.1) 380 263 81 21 745

total 1117 828 190 27 2162

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

2098 2140 2156 2189 2148

0

500

1000

1500

2000

2500

2003 2004 2005 2006 2007

Wood sector

WM

FM

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

27

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 FM

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

up to 9 employees 10-49 employees 50-249 employees 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.

3%

24%

12%

3%

7%10%

4% 4% 3%

30%

5% 4%

10%

6% 7%4%

8%

17%

12%

26%

0%

5%

10%

15%

20%

25%

30%

35%

Alytus

Kaunas

Klaip÷da

Marijampol÷

Panev÷žys

Šiauliai

Taurag÷

Telšiai

Utena

Vilnius

FM WM

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 (2003-

2007) 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).

28

Fig. 3.4. Turnover of employees in the Wood sector

0

10000

20000

30000

40000

50000

60000

2003 2004 2005 2006 2007

Wood sector

WM

FM

Fig. 3.5. Employee turnover in the Wood sector with regard to the subsectors and company size

WM FM

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

up to 9 employees 10-49 employees 50-249 employees 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.

2Data source – Lithuanian Labour exchange data drafted for the purpose of the study

Fig. 3.6. Number of unemployed and vacancy supply in the subsectors

WM FM

0

500

1.000

1.500

2.000

2.500

3.000

2003

2004

2005

2006

(forecast)

2003

2004

2005

2006

2007 (forecast)

number of unemployed number of vacancies

Fig. 3.7. Level of tension (ratio of vacant positions and the number of employees) in the subsectors

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1

2004 2005 2006 2007 (forecast)

national

WM

FM

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

30

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)

1973635

2474178

3039411,5

3484450

4039522,1

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

2003 2004 2005 2006 2007

Wood sector

WM

FM

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

31

Fig. 3.9. Productivity (turnover/ nb. employees) in the Wood sector (thousands Litas)

79

6962

5753

7370

6559

53

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,00

80,00

90,00

2003 2004 2005 2006 2007

WM

FM

Fig. 3.10. Change in productivity according to the subsectors and company size (thousands Litas)

WM FM

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

160,00

180,00

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

up to 9 employees 10-49 employees 50-249 employees 250 and more employees

Salaries. In 3.11 the data demonstrates the average monthly gross salary5 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

32

Fig. 3.11. Change in salaries (average monthly before tax) in the subsectors (Lt)

0,00

500,00

1.000,00

1.500,00

2.000,00

2.500,00

2003 2004 2005 2006 2007(preliminary)

WM

FM

national

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.

33

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).

34

• 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.

• Even though the average monthly gross7 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

35

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.

36

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 FM

Number of employees Number of companies that received questionnaire

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%.

37

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

up to 1990; 6% up to 1990; 10%

between 1991 and 1995; 33%between 1991 and 1995; 39%

between 1996 and 2000; 26%between 1996 and 2000; 31%

between 2001 and 2005; 25%between 2001 and 2005; 24%

2006 and later; 6%2006 and later; 0%

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.

38

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 FM

Sale volumes (average %)

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 e-

banking and accounting systems. The FM subsector is famous for using design software, such as us,

39

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

other uses

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

Otheruses

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.

40

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

other

uses

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

other

uses

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.

41

Fig. 4.4 . Distribution of employees by occupational groups

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

MG

BG

heads

administration specialists

engineering specialists

sales and marketing specialists

computer specialists

qualified workers

non-qualified workers

other staff

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%

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

younger than 30; 24% younger than 30; 25%

30-40 years of age; 30% 30-40 years of age; 30%

40-50 years of age; 29% 40-50 years of age; 27%

50-60 years of age; 14% 50-60 years of age; 15%

60 and older; 3%60 and older; 3%

WM 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

42

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 FM specialists WM workers FM workers

language skills taking initiative work monitoring and control

language skills quality management

management of manufacturing process

I taking initiative honesty work with the most recent technologies

taking initiative honesty

management of manufacturing process work organisation quality management dealing with problems work planning work with the most recent technologies

work planning taking initiative

work organisation

II safety at work technical punctuality work organisation learning

work with the most recent technologies

quality management punctuality

management of customer relations computer literacy

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

safety at work work organisation

technical dealing with problems

learning work planning

communication and negotiation analytical punctuality honesty learning

management of customer relations analytical

computer literacy communication and negotiation

safety at work punctuality

IV work monitoring and control other analytical

work monitoring and control computer literacy language skills

communication and negotiation management of manufacturing

process

safety at work technical other

learning technical honesty

other

V management of manufacturing process communication and negotiation management of customer relations

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.

43

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)

44

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

Other staff

WM

FM

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 for 5 years

Annual turnover

Leave sector within 5 years

Demand for new employees for 5 years*

Demand for new employees for 1 year *

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

Other staff 4028 1603 47% 2317 3920 780

Total 53045 3885

*Rounded down

45

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

Development for 5 years

Variation rate for 5 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.

46

“Future skills” demand with regard to the occupational groups are outlined in Table 4.8.

Table 4.8. “Future skills” demand in occupational groups

„FUTURE SKILLS“ Occupational group

Changes (that will influence the change of job functions)

Job Changes in functions

Personal

General

Special

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 purchase managers

Fast and flexible adjustment to he changing conditions

Communication and negotiation, team work, good foreign language (English))

Sales and marketing specialists

market: increase in prices in raw materials and energy resources suppliers Knowledge of

technological process Initiative taking,

activity, creativity, interest in innovations

Wood technology know-how

Engineering specialists

staff: lack of employees and their qualifications manufacturing: new technologies and work tools

technologists

Continuous improvement

Fast completion of tasks and flexibility

Implementation of mini inventions (rationalisations) into manufacturing Intense creative work; training of other employees

Learning creativity

Analytical Good foreign language skills Communication Team work

know-how of equipment and wood technologies Mechanics (knowledge) Technological process know-how (knowledge teaching

mechanics Equipment programming learning Know-how of computer technologies equipment programming

Joiner-machinists

New employee training

Machinery programming, adjustment and maintenance

Work with programmed machinery Speed in carrying out the tasks

Solving of problems in consultation with the specialists of engineering

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

Qualified workers

Staff: lack of employees and their qualifications manufacturing: new technologies and work tools

operators Equipment programming and adjustment

Equipment maintenance and establishment of minor breakdowns

learning Computer literacy Language skills

Teaching, mechanics, pneumatics and automatics awareness Manufacturing process awareness Automatic management equipment readjustment wood and furniture manufacturing

47

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%.

48

• 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.

49

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

The learning achievements are best described by the qualification8. 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

acquires. With regard to the Law on Vocational Education and Training (new edition)10

, 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

Education and Training and Higher Education of the Republic of Lithuania12

. 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

50

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 ISCO14

and SOC15

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

14

International standard classification of occupations 15

Standard occupational classification

Initial vocational education and training

Higher education (university and non-university)

Education and training of the unemployeed

1 2 3 4 stages

Plant and machine operators and assemblers

job groups

Education

Service workers and shop and market sales workers

Skilled agricultural and fishery workers

Craft and related trades workers

Professionals Technicians and asociate professionals

Clerks

51

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%

29,5%

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%

50,8%

4% ���� Elementary occupations 11% 10.7%

-8% ���� Armed forces (hired workers) 0%

���� - 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

52

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 qualitiesteacher training

arthumanities

social and behavioural sciencesjournalism and information

business and administrationnatural sciencephysical science

mathematics and statisticscomputer science

engineering and engineeringmanufacturing and processingarchitecture and construction

agriculture, forestry and fishery veterinary

health care social services

services transport services

environmental protectionsafety 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 „Furniture-

maker“ 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.

53

Table 5.2. Descriptions of Skills and competencies acquired in the primary vocational education „Furniture-maker“ and „Joiner“ study

programmes

Furniture-maker study programme Joiner study programme

Competencies and skills 1. Working safely 2. Reading drawings, drawing sketches 3. Using information technologies 4. Choosing Furniture manufacture materials

and furniture 5. Manufacturing furniture parts from solid

wood 6. Manufacturing parts from LMPD, MPP and

MDP, MDF panels 7. processing HPL covered parts 8. Manufacturing cancellated furniture 9. Assembling furniture fitting and integrated

equipment 10. Covering furniture detail surfaces with

shaved veneer or covering film 11. Assembling frame and box construction

products 12. Assembling the furniture 13. Fixing and restoring the furniture

1. Measuring and marking wood 2. Preparing wood for 3. Carrying out manual wood processing

operations 4. Working with manual electric wood

processing tools 5. Working with mechanised wood

processing machinery and equipment 6. Knowing how to work safely 7. Drafting wood product sketches 8. Estimating the materials 9. Manufacturing wood products with regard

to the drawings 10. Manufacturing ordinary furniture with

regard to the drawings 11. Carrying out wood surface finishing 12. Assembling wood construction products,

furniture 13. Doing the interior of the building 14. Reading construction drawings 15. Building wooden buildings 16. assembling wooden roof constructions 17. Insulating the buildings 18. Establishing the defects 19. Choosing product repair materials 20. Eliminating the defects

Professional activity that the holder of the certificate can be engaged into

Manufacture of furniture parts from solid wood, chipboard; manufacture of cancellated furniture; assembly of furniture and domestic appliances; assembly of furniture; restoration

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.

54

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

Programme* Qualification awarded

Qualification description

Non-university study programmes (duration 3-4 years)

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.

University study programmes (duration: BA - 4-5 years; MA – 2 years)

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

55

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 Demand for new employees for 1 year

Annual supply (2007 data) Demand and supply balance assessment

Engineering specialists

90 about 70 negative

Workers 480 (qualified workers) About 480 (primary vocational education)

balance

56

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

57

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.

Annex 1

Ta

ble

1: Indicators of wood and wood processing (economic activity codes 20.1- 20.5) subsector

Forecast

Enterprises by number of

employees

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Number of enterprises

below 9

956

1020

1015

946

881

890

786

787

750

744

737

719

10-49

426

513

525

584

602

575

582

598

599

601

602

603

50-249

54

65

64

79

91

89

101

104

103

102

102

101

250 and more

3 6

9 8

7 6

7 7

7 7

7 7

Total

1439

1604

1613

16

17

1581

1560

14

76

1496

1459

14

54

1447

1430

Number of employees

below 9

3090

3473

3142

32

99

3398

3384

29

32

2987

2807

28

25

2798

2804

10-49

8752

1045

4 10

950

12338

1303

8 12

686

12399

1272

9 12

791

12864

1295

5 12

888

50-249

5264

5956

5528

66

82

8212

8419

93

40

9647

9605

95

13

9542

9640

250 and more

2075

3673

4735

42

40

3979

3615

43

27

4439

4751

48

63

5175

5687

Total

19181

2355

6 24

355

26559

2862

7 28

104

28998

2980

2 29

954

30065

3047

0 31

019

Turnover, thousand LTL

below 9

8185

0,4

99317,4

1143

23,6

118821

,2

127233

,9

1319

64,4

127808,8

673149

,8

6812

76,5

687205,3

679809

,8

7090

80,8

10-49

299050,7

380319

,4

4387

20,8

497426

,3

550151

,4

6219

96,4

667413,4

838900

,4

8387

86,7

839999,3

837002

,5

8626

11,2

50-249

315948,8

358554

,9

4034

28,4

478066

,2

625413

,8

6735

35,3

811922,0

701896

,9

7183

70,6

719952,7

728841

,4

7393

62,3

250 and more

105168,2

262297

,1

3317

56,1

424076

,6

479325

,5

5198

23,5

695915,5

701896

,9

7103

70,6

716852,7

728841

,4

7993

62,3

Total

802018,3

1100

488,8

1288228,9

151839

0,3

1782

124,6

1947319,6

230305

9,7

2915

843,9

2948804,5

296400

9,9

2974

495,1

3110

416,5

Productivity (turnover/ number of employees), thousand LTL

below 9

26,5

28,6

36,4

36,0

37,4

39,0

43,6

225,4

242,7

243,2

242,9

252,9

10-49

34,2

36,4

40,1

40,3

42,2

49,0

53,8

65,9

65,6

65,3

64,6

66,9

50-249

60,0

60,2

73,0

71,5

76,2

80,0

86,9

72,8

74,8

75,7

76,4

76,7

250 and more

50,7

71,4

70,1

100,0

120,5

143,8

160,8

158,1

149,5

147,4

140,8

140,6

Total

41,8

46,7

52,9

57,2

62,3

69,3

79,4

97,8

98,4

98,6

97,6

100,3

Average gross monthly salary, LTL

Iš viso

656

686

712,4

766,4

895,3

1065,6

1268,1

1471

,0

1721,0

1979,2

2256

,3

2639,8

Share of GDP (%)

below 9

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,4

0,4

0,4

0,4

0,4

10-49

0,5

0,5

0,6

0,6

0,5

0,5

0,5

0,4

0,5

0,5

0,4

0,4

50-249

0,6

0,5

0,5

0,6

0,6

0,6

0,5

0,4

0,4

0,4

0,4

0,4

250 and more

0,2

0,4

0,4

0,5

0,5

0,4

0,5

0,4

0,4

0,4

0,4

0,4

Total

1,41

1,55

1,69

1,79

1,75

1,68

1,56

1,55

1,59

1,61

1,58

1,59

59

Ta

ble

2: Indicators of furniture production subsector (economic activity code 36.1)

Forecast

Enterprises by number of

employees

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Number of enterprises

below 9

225

281

311

299

303

323

352

360

361

361

363

367

10-49

124

131

129

167

206

225

230

231

237

243

251

254

50-249

29

33

34

43

52

64

72

73

77

77

79

79

250 and more

10

8 11

14

14

17

18

19

19

19

19

19

Total

388

453

485

523

575

629

672

683

694

700

712

719

Number of employees

below 9

732

959

970

1015

1147

1238

13

67

1419

1439

14

26

1499

1543

10-49

2465

2906

2868

36

84

4545

4995

50

79

5107

5374

55

82

5729

5847

50-249

3349

3998

3929

47

92

5699

7161

82

07

9130

10114

10114

1037

7 10

377

250 and more

3814

4089

5222

66

95

7883

8588

92

55

9769

9811

98

79

9899

9899

Total

10360

1195

2 12

989

16186

1927

4 21

982

23908

2542

5 26

738

27001

2750

4 27

665

Turnover, thousand LTL

below 9

2060

3,0

23496,4

30497,8

4535

0,2

52264,3

34902,6

6008

5,3

64861,5

67545,9

6995

8,1

76688,4

79418,6

10-49

111971,8

122257

,0

1268

34,9

162392

,1

203812

,9

2459

37,5

263217,1

297060

,0

3267

62,1

350224,7

360997

,2

3727

69,7

50-249

184074,6

207472

,8

2070

44,1

285846

,8

388994

,2

5371

89,7

642689,8

718189

,8

8136

89,9

829190,0

854690

,1

8601

90,2

250 and more

195841,1

234785

,5

3210

28,9

462198

,6

612215

,4

7191

00,9

770470,2

821839

,6

8432

08,9

864578,3

880947

,6

8973

17,0

Total

512490,6

588011

,7

6854

05,7

955787

,7

1257

286,9

1537130,6

173646

2,4

1901

950,9

2051206,8

211395

1,1

2173

323,3

2209

695,6

Productivity (turnover/ number of employees), thousand LTL

below 9

28,1

24,5

31,4

44,7

45,6

28,2

44,0

45,7

47,0

49,1

51,2

51,5

10-49

45,4

42,1

44,2

44,1

44,8

49,2

51,8

58,2

60,8

62,7

63,0

63,8

50-249

55,0

51,9

52,7

59,7

68,3

75,0

78,3

78,7

80,4

82,0

82,4

82,9

250 and more

51,3

57,4

61,5

69,0

77,7

83,7

83,2

84,1

85,9

87,5

89,0

90,6

Total

49,5

49,2

52,8

59,1

65,2

69,9

72,6

74,8

76,7

78,3

79,0

79,9

Average gross monthly salary, LTL

Iš viso

800,0

841,0

930,7

1016

,5

1120

,1

1305,9

1619,3

1927

,0

2273,8

2637,7

3112

,4

3579,3

Share of GDP (%)

below 9

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,1

0,1

10-49

0,2

0,3

0,3

0,3

0,3

0,4

0,3

0,3

0,3

0,3

0,2

0,2

50-249

0,3

0,4

0,4

0,5

0,4

0,5

0,5

0,5

0,5

0,5

0,4

0,4

250 and more

0,3

0,4

0,5

0,6

0,6

0,6

0,6

0,5

0,5

0,5

0,4

0,4

Total

0,93

1,08

1,20

1,53

1,46

1,61

1,49

1,41

1,32

1,24

1,12

1,04