Imports likely to outweigh exports in Canadian market next year
By Michael J. Knell -- Furniture Today, June 27, 2005
Ottawa — If the current trend holds true, Canada will become a net importer of residential furniture next year.
And if that occurs, it will mark a return to the days before free trade between the United States and Canada became a reality 15 years ago, even though total Canadian shipments set a new high of $5.74 billion in 2004.
According to Statistics Canada, total furniture imports advanced by 21.9% last year to C$1.78 billion, continuing a growth spurt that has run unabated since 1997.
Imports from American manufacturers grew by 9.6% to C$480.9 million last year — a far cry from the record of C$521.1 million set in 2000.
Meanwhile, imports from China advanced 40.5% last year to C$731 million from the C$520.2 million of 2003 — and almost three times the C$252.1 million recorded in 2000.
Exports to the United States — which consistently accounts for about 95% of all Canadian exports of household furniture and bedding — fell for the second consecutive year by 3.7% to C$1.75 billion. In 2003, they were C$1.82 billion — a 10.5% drop from the all-time high of C$2.03 billion set in 2002.
Total Canadian furniture exports, as a percentage of shipments, have declined from 41% in 2000 to 32% last year. The biggest drop has been in case goods. In 2000, exports accounted for approximately 55% of case goods shipments. Last year, that figure dropped to under 36%.
Upholstery exports lost the most ground last year, falling 11.9% to C$390.1 million after sliding 3.1% in 2003 from the all-time high of C$456.5 million in 2002.
The United States and China are now running neck-and-neck in the Canadian upholstery market, although China seems to have the stronger momentum. Imports from the United States rose 14.2% to C$219.3 million last year. By comparison, imports from China shot up 72.8% last year to C$208.6 million.
Total Canadian upholstery imports were up 31.3% to C$545.8 million with goods from Italy also turning in a strong performance with sales of C$57.5 million, up from C$51.4 million in 2003.
Many industry insiders believe China's growth in upholstery has been driven by the rapidly deflating leather category. Several well-known importers — such as Hamilton & Spill and Eztia — have entered leather in a big way over the past two years, while a number of the national retail chains are importing direct to offer enhanced value to their consumers.
Leather is also the import category of choice for a number of Canadian fabric specialists as they seek to round out their offerings with a strong entry-level product.
Upholstery imports also are eating away at Canadian producers' position in their own market. While Canadian producers controlled 77% of the domestic upholstery market in 2000, their share fell to 57% last year.
Case goods were a category where almost everybody won in 2004. While exports to the United States were off 3.2% to C$1.21 billion, the 19.1% uptick in domestic shipments more than made up for the loss. Domestic case goods shipments broke the C$2 billion barrier for the first time at C$2.27 billion.
Chinese-made case goods turned in the strongest performance of all, as imports skyrocketed 44.9% to C$284 million, the fifth consecutive year of growth.
After losing significant ground in the three prior years, case goods imports from the United States increased 4.6% to C$134.7 million — still a long way from the record C$191.9 million set in 2000.
However, because so much manufacturing has moved from the United States to Asia, a good portion of the U.S-made product probably was sourced from China.
After getting pummelled in 2003, Canadian exports of metal furniture rose 3.8% to C$96.8 million last year, while the total shipments fell 6.8% to C$288.2 million.
Metal imports from China advanced 15.4% to C$233.1 million — marking a decade of continuous growth. Indeed, 2004 was the year retailers sourced more metal furniture from China than they did from Canadian factories, whose domestic shipments fell 11.4% to C$191.4 million.
Metal furniture imports from the United States suffered their fifth straight year of decline, falling 2.2% to C$89.3 million.
The bottom line is that Canada's balance of furniture trade is falling fast. While it is still in a plus position with the United States at C$1.27 billion, that level is down 7.9% from 2003. The trade deficit with the rest of the world also is deepening, breaking the billion-dollar barrier for the first time in 2004 — C$1.2 billion versus C$918.2 million in 2003.
Canada's total balance of furniture trade fell 84.2% in 2004 to a comparatively measly C$73.1 million — nowhere near the record C$794 million set in 2000.
