Robotization and automation as a trend in the development of the furniture industry

Marek Hryniewicki: For some time now, furniture production in Poland has been clearly decelerating. Is the HOMAG Group (and of course HOMAG Poland), as a supplier of technology to the furniture industry, also affected by this slowdown?

Michał Piłat: It's a natural phenomenon that as furniture production slows down, interest in purchasing machines decreases, as well as in replacing them with new ones. Customers often have excess capacity and postpone investments to the next convenient months. Lower demand for machinery is also linked to a smaller pool of EU funds. As you know, starting at the end of 2022, few of the available subsidies were targeted at our industry. Due to other problems our customers had, not all of them decided to apply for funding under these programs.

On the other hand, however, many of HOMAG Polska's customers are taking advantage of the time of the economic downturn to reorganize production processes of all kinds - they are thinking about how to improve these processes, as well as how to adapt them to the new reality. Process optimization also includes logistics, new software, the use of new ERP systems as complementary solutions to production machinery. I've talked to many of our customers about this, who are currently at this stage, and are mainly using their time for this now. I also hope that the worst is behind us, as furniture production in the fourth quarter of 2023 was already at a slightly higher level.

Probably so, although, of course, detailed data for this period is not yet available. Instead, it seems that this crisis reached its bottom in the third quarter of last year. It should be better now, but undoubtedly the road to normality will be quite long. You stated that with the decline in furniture production, interest in purchasing machinery is declining, as well as in replacing it with new machinery. This is true, of course, but undoubtedly this demand can then - paradoxically - increase. Customers then optimize production processes, also investing in machines....

This is a very interesting thesis. I think you are presenting a model functioning of business. That is: times of downturn are a good time to invest or raise the competence of your employees. And, of course, investment includes the purchase of machinery. This is how the industry should operate

I will take your word for it, noteworthy as this is basically how it works. I myself know of technology suppliers who have been recording record revenues recently....

This is exactly what I was talking about: a complementary product. We, as HOMAG Poland, are proponents of investing in a thoughtful way, and as a result we want to provide customers with solutions, not just machines, as was the case a dozen years ago. If we have a project that involves equipping a factory with machinery, as well as implementing production management software, that's an ideal project for us. The HOMAG Group has a consulting firm, Schuler Consulting, which designs entire factories, including the production management system.

On the other hand, to the question: are more machines sold in times like today than in economic times, I would answer that no. Furniture is not a necessity product, plus high inflation has forced a more pragmatic approach to purchasing. You asked at the beginning whether HOMAG Poland is feeling the effects of the slowdown. Undoubtedly, we are not the only ones facing them, but also other machinery suppliers. Of course, it is not the case that machines are not selling at all in recent months, as many companies are using this time for thoughtful investments.

Customer interest, especially when it comes to automation and robotization, is really huge. At the last DREMA fair, we had the opportunity to present a robotized plate feeding station for machining machines, which very quickly found its buyers. We have already managed to sell two such solutions, and this is not the end of the story, as we have planned a series of further sales talks.

To sum up: customers want to adapt production processes to existing conditions. They are therefore striving to make their production increasingly automated, with robots taking over some of the work. Humans should perform more creative tasks. The next step will certainly be the use of artificial intelligence.

How much of an impact on HOMAG Poland's business is the worse economy for furniture and the resulting difficulties for furniture manufacturers? I am guessing that this is a problem for you, as you have already mentioned it. Are furniture manufacturers your only customers, or do you also serve other sectors, such as woodwork manufacturers and the construction industry?

I can see that you are very familiar with the HOMAG Group, as indeed we are primarily associated with furniture manufacturers. Machinery for the furniture industry is unquestionably our main product group. On the other hand, HOMAG is growing very rapidly in the area of wood construction. In the Group, we have WEINMANN, which supplies machinery and equipment for manufacturers of prefabricated houses. In Western Europe, this technology has undoubtedly evolved a lot over the past few years, and in Scandinavian countries it even dominates. It is different in Poland, as a result of the fact that we are a society strongly attached to traditional construction. However, taking into account the advantages of prefabricated construction, in the coming years its share is bound to increase strongly in our country as well.

The HOMAG Group successfully serves other industries as well. The Kallesoe and System TM companies handle structural timber. This is a large area in which HOMAG wants to be even more active than before. Another is joinery, which you have already mentioned, by the way. Our wide range of products also includes a lot of machinery for window and door production. The largest manufacturers of interior doors in Poland make considerable use of our solutions. The same is true for window manufacturers, especially roof windows.

In conclusion: among manufacturers of solutions for the furniture industry, HOMAG has undoubtedly been and continues to be a world leader. However, our ambitions, as I have already said, go beyond the furniture industry.

When we talk about trends, we usually mean, for example, furniture or everyday objects. Can we also talk about trends when it comes to technology and machinery? What then are the current trends? I don't mean design, of course, but rather new solutions, usability and functionality.

This is a very pertinent question, because trends are present in virtually every industry. In order to be able to offer a customer furniture made with new technology you need to have the right machines, often customized, made typically for the product. Let's remember that trends do not refer only to products. Investment in automation and robotization is currently very popular. This is the immediate future for furniture manufacturers. No one today is surprised to see robots, even in a medium-sized furniture factory. In large companies, it's actually already standard. The use of robots, especially for heavy, as well as monotonous, unattractive work for humans, is undoubtedly one such trend. There is no turning back from this, and Polish companies will certainly move in this direction. Earlier I also mentioned artificial intelligence. I think this is the next stage in the development of the furniture industry.

Besides, let's remember one more thing, because this is also somehow related to trends. In the 1980s and 1990s, we were talking about high-volume production, primarily for major furniture manufacturers. Today, on the other hand, HOMAG has machines that process each piece individually, with separate settings. Our customers know that their customers expect personalized furniture, which is why production runs are often getting shorter and shorter, and a production process organized in a thoughtful way also affects the achievement of the desired efficiency. This cannot be achieved without automation or robotization. We at HOMAG want to provide just such solutions.

Unit and small batch production is undoubtedly experiencing its time, but what about high volume production?

Of course, we cannot go from one extreme to the other and say that high volume production does not exist. Of course, many of our leading customers are engaged in such production and have been selling it with great success for many years. For such companies, we want to introduce new solutions full of innovations, which in addition will also be based on automation and robotization.

How important is a polish market for the HOMAG Group?

Poland is a very important market for the HOMAG Group. There are undoubtedly many global players operating on our market, such as IKEA, which has many factories in Poland. There are also many domestic companies operating here, which have a very recognized brand in Western Europe.

Poland is one of the largest furniture manufacturers in the world, as well as one of the largest furniture exporters. There is a correlation worth mentioning - every third piece of furniture produced in Poland goes to Germany, which is undoubtedly facilitated by the geographical proximity of the two countries. Polish furniture enjoys an excellent reputation in Western European countries, but not only there.

The importance of Poland for the HOMAG Group is undoubtedly evidenced by the fact that it has a factory for its machinery in our country. The production site in Sroda Wielkopolska is one of several places in the world where HOMAG machines are manufactured, not counting Germany, of course. Several new investments are currently being planned at this location, as HOMAG wants to further establish its presence in this part of Europe. In conclusion, the Polish market is absolutely strategic for the HOMAG Group.

From the perspective of HOMAG Poland, how do you assess the degree of automation in the Polish furniture industry? Does Poland compare satisfactorily with the leading European countries (furniture manufacturers)? You have already mentioned this a bit, while I would ask you to briefly summarize this topic.

We undoubtedly have reasons to be satisfied. Polish furniture manufacturers should not have any complexes when it comes to the degree of automation in their factories. Automation used to be available only to the largest manufacturers, while today increasingly intelligent systems are also being implemented in smaller factories. Optimization, proper organization of production are certainly issues worthy of attention for any manufacturer, regardless of the scale of production.

Robotization is also becoming more prominent in furniture manufacturing. It is usually associated with the automotive industry, because there these systems are used en masse, but robotization is also of interest to and successfully implemented by furniture companies. There will certainly be more and more projects aimed at robotizing production processes in Polish furniture factories.

For HOMAG Poland and the Polish market, does this high rating leave any more areas for action?

Things are never so good that they can't get better. Automation is used in many processes, including very complex ones. Introducing automation in repetitive machining is a relatively simple procedure, while the challenge is automation in small batch and unit production. In this case, you have to think very carefully about every detail. And since the importance of small batch and unit production will undoubtedly grow, this is certainly an interesting area to develop.

The degree of automation in each production process varies. Automation in the production of some furniture is possible, while in others it is much less so. I recently spoke with an upholstered furniture manufacturer. He said he would very much like to introduce automation systems in his factory, but it is not possible in all areas of production. So we face new challenges: how to adapt machine capabilities to processes, or vice versa: how to adapt processes to machine capabilities. In the case of hardwood furniture, on the other hand, automation is the easiest to implement.

The pandemic, the war in Ukraine and, more recently, in the Middle East, the smoldering hotbeds of potential conflicts (including armed conflicts) in other regions of the world... All this makes doing business increasingly difficult. I guess that the geopolitical situation in the world is not without its impact on machinery suppliers. How is HOMAG Poland and the HOMAG Group affected by this?

Armed conflicts are already a completely different scale of phenomena. The effects of the wars in Ukraine and the Middle East are felt not only by the countries that are directly parties to these conflicts, but also by the whole world - I am referring here primarily to the humanitarian crisis, but also to the economic effects, such as high inflation or price increases for food, energy, materials and raw materials, as well as disrupted supply chains, etc. Of course, these effects also affect us to a greater or lesser extent. Nevertheless, business must function and adapt to different situations, including the most difficult ones.

After Russia's aggression against Ukraine, many companies withdrew from the Russian market. What does this look like for the HOMAG Group? How important for the HOMAG Group were the markets of Eastern Europe, i.e. Belarus, Ukraine, as well as Russia?

Due to the circumstances, HOMAG has withdrawn from the Russian market, as well as the Belarusian market. We are not conducting any business talks in these countries regarding new investments. The HOMAG Group operates according to established rules and complies with any sanctions imposed by EU institutions.

As for the importance of eastern markets, over the years HOMAG has conducted transactions with companies in Russia, Belarus and Ukraine. These were undoubtedly very important markets for our company, just like any other market. The fact that we don't have any trade talks there now is, of course, a big loss for the company, but we had no choice. I also cannot say if and when the HOMAG Group will return to the Russian market, but at the moment there is no such possibility.

As for Ukraine, on the other hand, when the situation there calms down, HOMAG will certainly want to return to that country. A huge number of refugees from Ukraine have come to Poland. Many domestic companies, including those in the furniture industry, including HOMAG Poland, have helped these people by offering them jobs. We believe that when the war is over and the refugees return to Ukraine, they will be our best ambassadors.

Wishing this to HOMAG Polska, as well as to the entire Polish furniture industry, thank you for the conversation.

An interview made by: Marek Hryniewicki (https://biznes.meble.pl/)

HOMAG is a global leader and provider of integrated technological solutions in the field of woodworking for both small, medium-sized manufacturing plants and those producing on a global scale.