Blair McKolskey is brimming with ideas for the future of furniture manufacturing in New Zealand - a future he says is coming under increasing threat from foreign competition.

McKolskey became the director of Finewood - an Auckland-based furniture manufacturer founded in the 1970s - around four years ago.

Finewood currently earns around 15 to 20 per cent of its revenue through exports. Its main export markets are Australia and Britain.

McKolskey, who is also vice president of the Furniture Association of New Zealand, says he would like to see Finewood's exports doubled.

His statistics on the state of the furniture manufacturing industry are sobering.

In 1998 New Zealand furniture imports were worth NZ$171 million and exports NZ$64 million, McKolskey says.

Ten years later, in 2008, he says imports had increased by 160 per cent to NZ$445 million, while exports had grown by just 42 per cent to NZ$91 million.

"It's pretty much a steady line which is going in the wrong direction for domestic manufacturers," says McKolskey. "It's a pretty bleak picture, to be honest."

McKolskey says Kiwi manufacturers will never be able to compete with their overseas counterparts - particularly those in China and India - when it comes to production cost.

Instead, he says the industry must become more productive, export more and be "design-led" in order to recover from its slump.

But McKolskey says focusing on design also has its challenges.

"If you and I were to collaborate and come up with a design that suddenly became the hottest thing in the world - how long would it be before a low-cost manufacturer knocked it off?"

McKolskey says foreign knock-offs are difficult to avoid, and defending intellectual property is beyond the means of most New Zealand furniture manufacturers.

But foreign knock offs could be avoided by creating "iconic New Zealand products" that are difficult to replicate overseas, he says.

One way Finewood is looking to stay design-led is through its partnership with UNITEC - fostering the talents of young design students.

Two students studying for a major in furniture design worked with Finewood this year to create a "quintessentially New Zealand product".

UNITEC senior lecturer Roger Bateman says Finewood demonstrated "resilience and forward thinking" in entering the partnership.

"Finewood have recognised that it's often during difficult times that the best ideas are developed," says Bateman. "Because of this innovative Kiwi spirit two young designers have had a chance to establish their design careers before leaving university."

One of the students, Jesse Hindt, developed a stylised couch designed for the classic Kiwi batch - with a nautical theme - recognising New Zealand's maritime history and geography.

The other student, Jane Hakaraia, designed a chair based on prevalent landforms in the New Zealand environment such as ridges on farmland caused by the movement of sheep, along with the patterns left on beaches by the outgoing tide.

The students worked with Finewood right through to the construction of their prototypes, with the company giving input to ensure their creations were commercially viable.

McKolskey says Hakaraia's chair is particularly suited to the commercial furniture market.

Finewood is now working with UFL - specialists in designer commercial and residential furniture - to critique Hakaraia's design before it is manufactured on a commercial scale.

UFL has fitted out airports and other commercial buildings around the world, and McKolskey hopes the student's design will have a future in this lucrative market - worth US$12 billion annually in the United States alone.

UFL director Madelaine Reesby says the company looks forward to being involved in the development of Hakaraia's chair.

"We are pleased to be involved with Finewood's journey as they move towards making Jane's creative expression into a commercially viable product," says Reesby.

McKolskey says the students will be reimbursed for any future commercial success their designs achieve.

"I expect to be able to sell their designs and I expect to share in the proceeds."

McKolskey says Finewood is also investigating ways of making its products as environmentally sustainable as possible.

The company is looking at ways to use timber off cuts and avoid seating foams containing petrochemical components.

New Zealand sourced materials are also used where possible, he adds.

McKolskey says corporate clients fitting out commercial buildings are hungry for sustainable products.

"The only people who will be able to afford a social conscience will be the corporates," he says. "In fact, most corporates have an obligation to be socially responsible."

McColskey says having an independent agency that can verify that a product is genuinely sustainable is a major challenge.

Finewood is investigating the use of lifecycle analysis software, which can break down a product to its core level to gauge the sustainability of individual components.

"Unfortunately one chair would cost us $20,000 [to analyse], so it's a significant investment."

McKolskey says Finewood - which employs 25 staff - has managed to maintain its turnover through the turbulent months of the global recession.

"We haven't grown like we were hoping to at the beginning of the year, but relative to the industry that puts us in a pretty good space."