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Industry needs help to grow, Richard tells parliament

12 October 2016
Furniture, Manufacturing

OTTAWA – The furniture industry should be a big part of the federal government’s promised strategy to grow this country’s manufacturing sector as it is not only still here a decade after the great recession but it remains a vibrant and innovative source of jobs, taxes and international trade. That’s the message Pierre Richard and Rejean Poitras took to the House of Commons’ Standing Committee on Industry, Science and Technology in a recent appearance before it.

In fact, it may have been the first time industry representatives had ever given in-person testimony before a parliamentary committee – at least in the modern era. The committee, which is currently studying the manufacturing sector to develop recommendations for the federal government’s promised industrial strategy, is made up of M.P.s from all three parties in the House.

Pierre RichardRichard, president and chief executive officer of both the Quebec Furniture Manufacturers Association (QFMA) and the Canadian Furniture Show (CFS),  told Home Goods Online it was vitally important to do more than just submit a brief to the committee. “I wanted to raise the profile of the industry,” he said. “I wanted to let them know we still exist. They needed to know the industry is vibrant and makes great contributions to the health of the country’s economy.”

Also taking part in the presentation, which lasted almost two hours, was Rejean Poitras, who is vice chairman of the QFMA’s board of directors and president of metal furniture specialist Amisco.

In the brief, Richard reminded the assembled M.P.s that Canada is the world’s eighth-largest furniture producer that currently employs some 63,300 workers, making it the second largest consumer products industry in Canada – after food processing. In fact, it employs almost the same number of workers as does the aerospace industry and about 25% of the total number employed by the auto sector.

One of the industry’s main challenges at this point in time is recruiting qualified people to work in furniture manufacturing. “We are growing and we are creating jobs,” he said, adding its filling those jobs that’s proving difficult.

Aiding the industry to create awareness of the career potential it offers is one of the recommendations the association made, urging the government to offer financial support in the form of scholarships and tax credits to students choosing to work in the furniture.

The association’s other recommendations to the committee included:

  • Enhancing and ensuring accessibility of assistance programs for research and development to promote both manufacturing innovation and new product development as well as improving the industry’s competitiveness;

  • Provide advice and support to manufacturers wanting to provide effective e-commerce platforms, particularly from both a strategic and technological viewpoint (creating and optimising web sites, marketing, customer service, etc.) while providing financial support to train employees tasked with developing online sales;

  • Introduce tax relief measures on the benefits derived from e-commerce for manufacturers getting into it for the first time – such as tax breaks for the first three years, for example, followed by imposing lower taxes over a set time frame.

  • Ensure the implementation of new consumer product safety measures is done in collaboration with the industry, with a gradual implementation scale over a reasonable time frame and easily adopted transitional measures;

  • Devise a furniture export strategy that uses existing Canadian and American trade shows (office and residential furniture) to attract major buyers from across North America by providing financial support to take part in these shows; and,

  • Conduct major promotional activities, such as ‘reverse’ trade missions where key buyers are invited to Canada to visit the Canadian furniture facilities (factories, stores, etc.).

While Richard doesn’t know how much of the association’s advice the committee will take, he believes the M.P.s who listened to his testimony now know the industry is here and is capable of making even greater contributions to the overall Canadian economy.

“They know we need assistance to grow,” he said. “They also know we bring money into the country when we sell to others. They also know this is a dynamic, innovative industry that’s worthy of their attention.”

The government is supported to unveil its new manufacturing strategy sometime next year.

Leda shuts down forever

12 October 2016
Furniture, Manufacturing

TORONTO – Leda Furniture has ceased operations and will go out of business before the end of November. The decision was attributed to the declining market for high-end case goods in North America and the increasing costs of manufacturing solid wood furniture in Canada. Marco Confalone, the company’s second generation president, made the announcement in a letter to his retail network late last week.

In an interview with Home Goods Online, Confalone confided it was a difficult decision to make – one that the family came to quite reluctantly earlier this summer. “We had a good run, there’s no doubt about that,” he said. “But the fact is the customer base for this type of product is shrinking and even if they don’t want buy offshore product, they want offshoring pricing.”

When Leda shutters for the last time next month, about 30 people are expected to lose their jobs.

Leda and Lino Confalone are seen here with the Grand Trillium awarded their company, Leda Furniture, in 1992. Organised by what was then the Ontario Furniture Manufacturers Association, the award recognised excellence in the design, construction and marketing of residential furniture made in Canada. Confalone also pointed out its getting more than difficult to hire production workers, particularly in Toronto. “It’s getting harder to find good employees,” he said, “especially those who are willing to learn the craft.”

He admitted the decision was made harder by the fact that the company would have celebrated its 50th anniversary in 2017. “We did think about trying to hang on for another year or two, to see if things would get better but in the end we decided now was the time,” Confalone said.

Ever since it was founded by Confalone’s parents, Lino and Leda Confalone, the company has been known as a quality producer of both residential, contract and hospitality furniture, counting some of this country’s best-known corporations and hotels among its client list.

“However after 49 years of nurturing a successful family business, Leda Furniture has decided to cease production and close its doors permanently,” Confalone said in his letter to his retail network. “The difficult decision was made due to the challenges of manufacturing in Ontario and the rising demand for cheap imported product, a strong contrast to the high-end case goods Leda produces.

LEDA’s vision of quality furniture manufacturing was initially conceived in the heart of Italy, then brought to life in Canada by the company's founders, Lino and Leda Confalone.

Lino’s father was a talented artisan who was born in the region surrounding Puglia, Italy – a woodworker who hand-crafted fine furniture. As a boy, Lino helped in his father’s shop after school before leaving for Canada at the age of 17.

Coincidentally, Leda was born in Abruzzo, just north of Puglia. Her father was also a woodworker who brought his family to Canada with her family when she was seven.

Arriving in Canada, Lino Confalone knew he wanted to work with wood – “to use my craft,” as he would later tell his son. He earned his living in carpentry, firstly building new homes before turning to building and installing kitchen cabinets.

Leda Furniture, as known today, started life in 1967 as Italcraft, producing its first line of case goods out of a 2,700 square foot space in the north end of the city.

“To us and to our customers the name Italcraft meant that our furniture was made by hand, that we crafted in the old tradition,” Lino recalled later. “When we changed our name from Italcraft to Leda, it was to show our pride in our all-Canadian made furniture. The name Leda seemed appropriate; it is elegant, unique like Leda, my wife, and like the furniture we create.”

In 1993, the enterprise moved to its present home at 350 Clayson Road. The 150,000 square foot facility incorporated state-of-the-art machinery, including a number of CNC (Computerized Numerical Control) machines, ensuring Leda’s status as a truly high-tech furniture manufacturer. The company also maintained a showroom in front of the building. Over the years, it had permanent showrooms at the High Point Market as well as independent showrooms in California, Mexico, England and Australia.

They have also been recipients of design and marketing awards from these countries as well as several Trillium awards from what was then the Ontario Furniture Manufacturers Association (now the Canadian Home Furnishings Alliance), including the prestigious Grand Trillium award in 1992.

Leda was also a featured prize on the popular game show The Price is Right during the early 1990s and its product was also featured in several movies and television shows at the time.

“We’ve heard a lot of kind words from the people we have worked with,” Confalone said, adding he is particularly proud that the family was forced out of business, but could do it the right way. “It was our decision to close.”

Mega salutes five vendor partners for excellence

12 October 2016
Furniture, People, Retail

QUEBEC CITY – Mega Group recognised five of its vendor partners for excellence in product and service at its recent member conference here.

"This provides us with an opportunity to recognise those suppliers who excel at their job," Michael Vancura, the group’s executive vice president of retail operations, explained to the approximately 300 or so industry professionals – including about 80 members, vendors partners and others – who attended the two-day gathering at the Quebec Hilton & Convention Centre here.

This was the tenth year in which the awards were presented.

Dawn Rowe and Albert Marrache of Phoenix AMD International (on the poster) couldn’t be there in person to receive their Supplier Recognition Award from Mega Group in person this year, so they sent this poster while asking Michael Knell (second from left) of Home Goods Online to accept on their behalf. Looking on are Mega Group CEO Benoit Simard (left) and board chairman Wayne Hambly (right). The process that results in the presentation of the Supplier Recognition Award begins with an electronic survey of over 300 Mega Group shareholders and affiliated retailers located across the country, as well as an evaluation by the staff of the group's credit department located at their head office in Saskatoon.

Respondents are asked to rate suppliers on quality and service areas that directly impact their businesses. These areas include: accuracy of invoicing; responsiveness of the vendor’s customer service operation; the quality of training and support; point-of-purchase materials; gross margin; debit and credit note processing; and, how well the supplier uses the group's central billing service.

This year’s survey – which covered the 2015 calendar year – covered five product categories: appliances, bedding, upholstery, case goods, and service.

The award in the bedding category went to Tempur Sealy Canada, which last received the distinction in 2012 for the 2011 calendar year. The Scarborough, Ontario-based manufacturer is also the maker of its private-label mattress label for Ronald McDonald House Charities of Canada.

Winning in the service category was Phoenix AMD International, the Bowmanville, Ontario-based provider of added-value goods and services including extended warranties, mattress protectors, furniture kits and laundry soap, among others. This was the ninth time Phoenix earned the distinction over its ten-year run.

Recognised in the upholstery category was Ashley Furniture. This was the first time to Arcadia, Wisconsin-based manufacturer won the distinction in this category although it won for case goods in both 2012 and 2014.

Taking kudos in the appliance category for the second consecutive year was Whirlpool Canada, which also won the award in 2008.

Starts fell in September

12 October 2016
By the Numbers

OTTAWA – Housing starts continued to climb in September, according to the latest data from the Canada Mortgage & Housing Corporation (CMHC), which showed upticks on a seasonally adjusted basis, but fell slightly on a year-over-year basis.

The agency’s preferred yardstick – the trend measure – also showed improvement, climbing to 199,503 units in September compared to 196,465 in August. The trend is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

“Housing starts were on an upward trend in September, as residential construction increased across the country with the exception of Ontario, where the multiples segment softened to levels that are more consistent with household formation,” CMHC chief economist Bob Dugan said in a statement. “Quebec saw the largest gain in housing starts due to the development of new rental apartments intended for seniors. That said, Quebec’s growing apartment stock emphasizes the importance of inventory management.”

Chart courtesy of the Canada Mortgage & Housing Corporation.CMHC uses the trend measure as a complement to the monthly SAAR of housing starts to account for considerable swings in its monthly estimates, as they are largely driven by the multi-unit segment of the market which can vary significantly from one month to the next.

The standalone monthly SAAR for all areas in Canada was 220,617 units in September, up from 184,201 units in August. The SAAR of urban starts increased by 19.7% in September to 201,848 units. Multiple urban starts increased by 22.3% to 137,803 units in September and single-detached urban starts increased by 14.5% to 64,045 units.

In September, the seasonally adjusted annual rate of urban starts increased in British Columbia, Quebec, the Prairies, and in Atlantic Canada, but decreased in Ontario.

Rural starts were estimated at a seasonally adjusted annual rate of 18,769 units.

On an actual basis, housing starts totalled 20,164 units for the month of September, down 3.1% from the 20,814 units in September 2015. For the first nine months of the year, starts totalled 134,387 units, down 1.9% from the comparable period last year.

Actual starts of single family homes in urban areas – which CMHC defines as population centres with 10,000 or more residents – were up 11.5% in September to 5,971 units, compared to 5,353 units for the same month last year. For the year-to-date, starts climbed to 43,793 units, a 3.4% gain over the 42,355 units started last year.

Meanwhile, starts in the multi-unit segment – which includes condominiums and rental properties in both the apartment and townhouse styles – fell to 18,531 units in September, a 9.0% decline from the 19,163 units recorded for September 2015. Starts for the January to September period totalled 90,594 units, a drop of 3.3% from the 92,395 units started in the same period of 2015.

In her note to clients, Diana Petramala of TD Economics noted housing starts have oscillated between 195,000 and 205,000 units (on a seasonally adjusted basis) since August 2015.

“While this pace of new home construction may have once been considered too hot relative to the pace of household formation, record immigration in 2016 and a 3% gain in the size of the population aged 25 to 34 (the prime age for forming a household) has likely resulted in a faster pace of household formation in 2015 and 2016,” she pointed out, adding, “Low inventory, sharp home price gains and a relatively balanced housing market suggest that the pace of new home construction over the last year might be just right.”

However, she still expects the pace of housing construction to ease through the rest of 2016. “For one, the new mortgage and tax regulation introduced by the federal government last week is likely to shave  up to 10% off home sales over the remainder the year, and homebuilding activity will likely follow suit,” she said.

Regionally, she believes most markets are likely to see a moderation in construction activity while the normalisation in Vancouver’s housing activity is likely to temper new home construction there.

Petramala also noted while housing starts in B.C. came in at a near record high in August existing home sales dipped below their ten-year average. Meanwhile, the high levels of inventory that can still be found in Atlantic Canada, Quebec and the Prairies Regions will keep a lid on construction activity in those regions.

“Ontario is the sole market where new home construction has not picked up along with the surge in existing home sales over the last year,” she said, adding, “Overall, we expect housing starts to moderate to a pace of about 180,000 units (seasonally adjusted) by early next year.”

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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