Canadian metal mfrs. tout customization
Michael Knell -- Furniture Today, November 25, 2004
WINNIPEG, Manitoba -- Canada’s remaining cadre of metal furniture producers is learning to give consumers what they want when they want it.
Customization seems the only viable strategy as raw material prices skyrocket and retail prices fall, thanks mainly to surging imports from China.“The basic five-piece dinette is cheaper today than it was 30 years ago; it’s often advertised for C$299 or less,” said Terry Clark, president of metal casual dining specialist Acme Chrome Furniture, based in Winnipeg. In 2003, China took a dominant position in Canada’s metal furniture market, outshipping the six remaining major Canadian producers combined. Chinese imports last year in the category rose 10.2% to C$220.8 million, while domestic shipments fell 19.4% to C$213.4 million.Clark, also president of the Canadian Council of Furniture Manufacturers and chairman of Furniture West, said the deflationary effect of cheap imports is bad enough, but the almost-monthly increases in steel prices over the past year have been perhaps more damaging.“We’ve seen several price increases this year and it’s not over yet,” he said, adding the irony is that the Chinese have been the driving force behind those increases, since they’ve been buying so much steel.
“They’ve distorted the world steel market,” Clark said.Where Chinese producers have an almost unbeatable advantage is in the cost of labor. “Material costs are virtually the same everywhere in the world, but the going labor rate for a skilled iron worker in China is US$90 a month,” said Brian Lecker, director of marketing for Origo Designs.The weakness of the U.S. dollar also is a factor, since raw materials are global commodities priced in U.S. dollars. Those with stronger currencies pay relatively more. And a stronger Canadian dollar makes Canadian products less competitive in the critical U.S. market because those goods become more expensive in U.S. money.Not to mention that China already has staked out a huge slice of the U.S. metal casual dining market.
These mounting pressures prompted the CCFM to include metal casual dining as one study area for a possible antidumping suit against Chinese imports into Canada. The results of the study should be known in coming weeks.In addition to Acme Chrome and Origo Designs, major Canadian metal producers include Artage International and Reflections Furniture, both based in Toronto along with Origo, and Amisco of L’Islet, Quebec, and Hemsley of Montreal.To compete, companies are adopting various strategies.Some, such as Acme and Origo, have made residential metal furniture only part of their overall business. Acme is active in the hospitality industry and supplies stools and other items to casinos all over North America. Origo has a flourishing metal fence business.Artage, Reflections and Origo have augmented their offerings with imports, giving them a presence in the lower price points.All have eliminated anything that doesn’t contribute to the bottom line. For example, Amisco last year got out of the home office category, once 20% of its business, to concentrate on bedroom, dining room and barstools. “The overall business is flat,” said President Rejean Poitras. “But the businesses we’ve kept are growing.”
But the central strategy is customization, combined with quick turnaround.“The key for Canadian producers is to create a diverse product range that will not interest the high-volume importers,” Acme’s Clark said. “They cannot do things in small batches; that’s not effective for container producers.”“We have the ability to produce custom orders,” said Jim Nopper, director of corporate marketing for Reflections. “China can’t do that yet.”Design is an important part of customization, as evidenced by the recent resurgence in retro looks, stainless steel and other niches.“The consumer has a lot of appreciation for well-styled, premium quality metal,” Clark said. “But the promotional end of the market is going to be filled by the low-wage countries.”“(China’s) design sense doesn’t seem to be as good as it is in North America, but they’re learning,” said Origo’s Lecker. “To compete as a Canadian manufacturer, we have to excel at the medium to high end.” Even though imports account for almost 40% of Reflections’ business, Nopper said his factory is as busy as ever. “We’re being more creative than ever with our own new product,” he said. “It doesn’t look like a ‘me-too’.”Every Canadian metal factory has cut delivery times in recent years. With just-in-time manufacturing techniques and substantial inventories, product can be out the door as soon as 48 hours after recipient of order.“Everything we make, we hold in inventory,” Lecker said. “Service demands are greater today than they’ve ever been.”
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Canadian metal mfrs. tout customization
Dec 5, 2004
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