Tariffs: a statistical background
From the HGO Merchandiser
While in many ways, the global pandemic was a boon to Canada’s upholstery manufacturers as drove demand create production backlogs not seen for quite some time. But an analysis of the numbers published by Statistics Canada and other government agencies suggests that in other ways, the once-in-a-century cataclysm merely added insult to injury, quickening the industry’s recent slide into an ever-smaller share of retail floors across the country.
We’ve updated the chart first published in these pages in our Winter 2020-2021 edition – The Upholstery Issue – to include full-year apparent market statistics for the year 2020. As you can see, overall domestic shipments of upholstery by Canadian manufacturers fell for the third consecutive year, dropping 8.6% to $512.3 million.
Similarly, imports into the Canadian market also fell, in all by 9.6%. What’s particularly interesting is imports from the People’s Republic of China (PRC) and the United States declined by 11.2% and 18.5% but those from the Socialist Republic of Vietnam actually climbed 26.1%.
When all is said and done, the apparent market for upholstery in Canada – the value of domestic shipments less export plus imports before retail mark-ups and sales taxes – fell 9.9% in 2020 to $1.42 billion from $1.58 billion the year before.
The first quarter of 2021
Most economists and other financial analysts are urging 2021’s performance – whether for factory shipments or retail sales – should be more properly compared to 2019, writing off 2020 as an aberration created by COVID-19, although it should be remembered the pandemic wasn’t declared until mid-March 2020.
As of press time, the most reliable data available is for the first quarter – that is, the January to March period – of the year. The trends are positive.
Canadian domestic shipments are up over the comparable periods for both 2020 (8.8%) and 2019 (15.6%). Exports are also up 6.8% over the first quarter of 2019.
Imports for the first quarter – before the anti-dumping tariffs were levied against imports of motion furniture and leather stationary upholstery on May 5, 2021 – also made significant gains, climbing 13.9% over 2019 after falling 14.4% for same period last year.
Imports from all three of Canadian retailer’s largest offshore sources were up significantly in the first three months of the year (see chart).
The data suggests the apparent market for upholstery grew 29.1% over 2020 and 15.7% over 2019 – good news for retailers hoping to attract consumer attention as the economy begins to re-open across the country. And, for the first quarter of 2021, imports accounted for 81.2% of the apparent Canadian market.
The data’s downfall and HGO’s estimates
Statistics Canada only publishes dollar volumes and doesn’t perform unit counts in its surveys. Manufacturing data is broken down furniture into four general categories including upholstery, case goods, metal and mattresses. It doesn’t break down upholstery into motion or stationary, leather or fabric, so it’s difficult to give precise category data. The same is true of Innovation, Science and Economic Development Canada (formerly Industry Canada) and its import/export data.
While Statistics Canada reports retail sales by commodity, it only publishes sales of indoor furniture and it doesn’t break out upholstery – or any of its categories – lumping it in with every other kind of furnishings.
HGO has developed what it believes to be reasonable estimates for the size of the upholstery market in Canada at retail. These are the result of off-the-record conversations with a number of seasoned industry observers. While they weren’t unified in their outlook, their observations informed these estimates.