Derrick Penner
Vancouver Sun

Saturday, September 21, 2002

B.C. furniture makers have managed to grow their businesses by grabbing a hold in the rocketing U.S. economy, which is a fortune their American competitors have not shared.

A favourable exchange rate for the Canadian dollar is one advantage manufacturers such as Penticton's Canwood Furniture Inc. and Country Roots Furniture in Burnaby exploit to get a toe-hold in the market.

U.S. furniture makers, however, have been losing their footing and watching their manufacturing sector evaporate in the face of competition from countries such as China and Canada, the Wall Street Journal reported Friday.

The U.S. manufacturing sector has shed about 55,000 jobs since 2000, as companies such as Furniture Brands International and Lane closed factories in North Carolina and Virginia.

In the meantime, imports have grown to fill 40 per cent of its furniture market.

Many of the furniture industry's big players are opening shop in China, where wages are about $100 US a month. Some of those U.S. imports, however, have been B.C. exports.

While it is still almost cottage-industry size, (8,100 jobs and $323 million in sales in 1999 by Stats Can figures), B.C.'s small and medium-sized manufacturers have made significant inroads by finding unique niches and aggressively marketing to U.S. customers in filling them.

"We don't have the marketplace; we only have a small niche in the marketplace," said Dan Carriere, president of Country Roots. "It's all in the marketing."

Carriere said Country Roots has a multi-media expert on staff so it can turn out tailor-made marketing information more quickly than other small manufacturers. The five-year-old company's factory employs between 22 and 28 workers and Carrier said its business has grown 20-30 per cent a year. About half its sales in are in the U.S., where it has put together project sales ranging from $350,000 to $1 million for customers such as Intrawest Resorts.

Country Roots makes country-style case furniture (beds, armoires, dining sets, bookshelves) in designs ranging from Shaker to Louis Riel French designs. Carriere said the company tries to set itself apart on appearance.

"We have about 400 [variations]," he said, which encompasses nine different product series and 25 different finishes. "We're really designer-oriented and very flexible, which is really what it's all about when you're doing work to be different."

Carrier watches costs carefully and will contract out the manufacturing of specialized components rather than take on debt to buy equipment to make them himself.

Canwood tries to exploit the character of its Euro-style furniture, said company president Mel Kemp. Its trick, he added, is crafting a "critical mass" design. His company maintains showrooms in San Francisco and High Point, North Carolina -- in the heart of the U.S. manufacturing sector -- to showcase concepts for furniture that fill 3,000 square-feet of space.

Canwood makes its solid pine case furniture at a 120,000 square foot factory in Penticton where it employs 150 people.

"The first thing to acknowledge is we can never beat [offshore] producers on price, and really that's the only advantage they have," Kemp said.

"We have some real strengths. One is our commitment to quality, our commitment to styling and the execution of our program at retail."

Rob Kozak, a market researcher and assistant professor at UBC, said the furniture industry has increased both in B.C. and Canada as a whole. In B.C.'s case, its edge has been to "build design values or esthetics" into products.

"There's pressure to get the value-added wood products sector going as a means of getting more jobs per tree cut," Kozak said. "That is being promoted at every level from government to companies who are interested in exploring value added opportunities."

Statistics Canada figures show that while employment in furniture manufacturing has varied -- it dipped to 7,500 jobs in 1998 -- sales have steadily grown to $323 million in 1999 from $205 million in 1995.

Kozak said Canada's major manufacturers are in Quebec, Ontario and Manitoba, where Palliser Furniture has a factory that employs 5,000. Eastern manufacturers benefit from being "within about 200 miles of 200 million people," he said.

Bill Wilson, an economist with the Canadian Forest Service, said Canada is among the top five furniture exporters in the world. He said the sector performed well as it was dragged along as the U.S. went on "the longest, largest bull run" in history.

However, Wilson warned Canadian manufacturers can't expect to stay immune to offshore competition. He said American manufacturers are simply ahead of Canada in contraction and consolidation in the face of cheap offshore competitors.

Wilson said Asian manufacturers are building plants with the same machinery and technology that North Americans have, and have much lower labour and material costs.

"[Manufacturers] really [must] be prepared to invest in product development, work to position your products in quality and character," he said.

"You need to wring every nickel you can out of your distribution and marketing efficiencies and do all you can to exploit any market proximity you have."