In the central Java district of Jepara, small-scale furniture workshops are a mainstay of the local economy. In recent years, however, furniture makers have been looking at fierce competition on two fronts. Manufacturers in China are underpricing them, and other furniture makers in Java are producing similar items. Almost a fifth of the furniture workshop start-ups in Jepara have failed in the past three years. Since 2008, the Furniture Value Chain project (FVC), has supported small-scale manufacturers in their efforts to improve their situation.
Jepara is home to approximately 8,000 small-scale furniture producers. These businesses, often family run, provide at best a subsistence existence and at worst a never-ending vicious circle of debt. In years gone by, this small, beautiful district had a wonderfully peaceful and slow-paced atmosphere but by 2000 the bittersweet, monetary crisis had hit the economy hard. Established enterprises, and many newcomers to the industry, rapidly fell into debt and bankruptcy. After 11 years, those that could crawl out from under the rubble are doing well. Many others are still struggling to escape financial pitfalls, make enough profit to educate their children and put food on the table.
Pak Salim is such a business owner, in a district where he and his family are just one of thousands in the trade. After his father died when he was nine, he started out working with a friend’s father in Jakarta. He apprenticed for several years there until the cost of living increased to more than he could manage, and he returned to Jepara. He and his family may not be generating more income, but at least the cost of living is lower. Pak Salim lives and works to put his four children through school.
In the last 10 years Pak Salim’s business has declined dramatically. In 2000 he had 15 people working for him. In 2011 he has only five workers, two of whom are relatives. He is caught in the never-ending cycle of producing only for big companies. They pay 50% up front for an order, a large portion of which is often used for food and schooling. By delivery time, Pak Salim must find extra money to finish the job. At the end of the day, no profit remains to produce any stock. Part of the problem is the price the companies or brokers are offering hardly covers the cost of production. When asked why he had not negotiated a higher price, Pak Salim said that if he did not accept the work, there are thousands of other small produces who would. All these small-scale produces are in a similar position: They accept what they cannot afford and remain caught in a revolving door of poverty.
Another small producer, Pak Khoiri, learnt the trade from his grandfather. He, his wife and two young children live in one room attached to the rickety shed that houses the carving business. He has a similar story to tell, living hand to mouth meeting requests from companies or brokers who order the furniture at a price at which he cannot afford to sell and still provide for his family and business.
Not only has Pak Khoiri been caught in this vicious circle but he has also been badly treated by several brokers and one foreign company. The first time they placed an order everything went well. When Pak Khoiri felt comfortable with their relationship, he accepted orders without asking the brokers and the company to pay a deposit. Then once the furniture was delivered, no payment was made and those brokers were never seen again. Both Pak Khoiri and his wife are shy, unassuming and lack the confidence and the business and legal knowledge to stand up for themselves against such behaviour. And they are certainly not alone. If these small-scale producers continue to work in isolation, without support, the cycle is likely to continue.
While some banks offer microcredit financing schemes and many small produces do borrow money from banks, interest rates are crippling: 2% – 3% per month in 2004–2008 and 1.2% – 2.4% per month in 2011. A government programme, working through several banks, offers an interest rate of 1.2% per month, with easy conditions and procedures. This sounds reasonable, but only a few small-scale producers seem to actually benefit from this programme. For many, financial security remains well out of reach.
The Jepara Small-scale Furniture Association (the Asosiasi Pengrajin Kecil Jepara, or APKJ) is there to assist the small producers. One major problem their members have discussed is inconsistent quality, particularly when filling demanding orders. Perhaps this is because many unskilled labourers are working in the business. It is highly likely that when a large order comes in, part may be contracted out without thinking about the end result. This became evident when Pak Salim and Pak Khoiri were asked about diversifying – making products other than their regular items. They said they could, but their workers could not and there was no time to teach them.
Support from organisations and projects such as APKJ and FVC, which are helping to bring these small producers together, may contribute to helping small-scale producers of this once well respected area of the carved teak furniture industry. A few APKJ members are now working hard to help each other. With their own limited funds, they are building a cooperative showroom and another one is planned. Of equal importance is APKJ’s effort in building networks and cooperation with other organisations and institutions to help build capacity and financial security for all its members.
