Ottawa — Canada's Top 25 producers continue to dominate the furniture and bedding business in this country, but even they are not immune to the winds of change blowing in from the east. And while only a small percentage of their current business is affected by the Asian invasion, most executives agree the competitive pressures will increase as the decade unfolds.
Total Canadian shipments of furniture and bedding hit a record C$4.76 billion in 2002, capping 10 years of almost continuous growth. The Top 25 producers accounted for an estimated C$2.44 billion or about 51.2% of all furniture and bedding made in Canada.
According to a survey conducted by Statistics Canada, there were 630 residential furniture and bedding manufacturers in Canada in 1999 — the last year for which figures are available.
During this decade of growth, the companies on the Top 25 have remained basically the same. Indeed, No. 3 Shermag's recent acquisition of No. 24 Jaymar has been the only major change among this group in many years.
As a group, the Top 25 had total sales of C$3.23 billion last year, up 7.2% from an estimated C$3.01 billion in 2001. This includes product manufactured outside of Canada in places as varied as China, Indonesia, Vietnam, Mexico and the United States but marketed and distributed alongside domestically made goods.
Export sales rise 9.3%
Canada's furniture and bedding producers can be segmented into four categories — exporters, non-exporters, bedding producers and importers.
The exporters are by far the largest group. While the 19 exporters do some business in Europe, South America and the Middle East, more than 95% of all Canadian furniture exported is sold to U.S. retailers.
Only five of the Top 25 can be considered non-exporters. Of these, four are bedding producers — Sealy Canada, Simmons Canada, Serta of Canada and Bedford Furniture/King Koil. These producers are prohibited from exporting under agreements they hold with their U.S.-based parent company or licensor.
The other company that doesn't export is the Canadian arm of La-Z-Boy.
Of the 20 companies that do export, 19 are active in the U.S. market. The only factory that hasn't entered the United States is stationary upholstery specialist Superstyle Furniture. Although its primary focus is serving Canadian retailers, it does a small but growing business in Japan.
With an estimated C$1.33 billion in U.S. sales last year, exporters on the Top 25 account for 65.2% of Canada's shipments to her largest and most important trading partner. Top 25 players' export sales were up 9.3% over 2001, outperforming the rest of the industry by a substantial margin. Only one factory reported a decline in sales to the United States last year.
Furthermore, sales to U.S. retailers accounted for about 54.5% of these companies' business last year, up from 53.2% in 2001, making them acutely sensitive to the ebb and flow of the U.S. economy. That's slightly higher than in the industry as a whole — 45.2% of all furniture produced in Canada last year found its way across the border, down from the 46.9% recorded the previous year.
Of the 19 active exporters, case goods producers are the most reliant on U.S. exports; most wood factories reported between 50% and 88% of 2002 shipments went south. While upholstery producers aren't as dependent, an ever-increasing portion of their shipments is ending up on American retail floors — the range for this group was between 8% and 37%.
Import sources see 28% gain
Surprisingly, importers represent the smallest group among the Top 25 companies. But their sales are growing fast — from an estimated C$260.1 million in 2001 to C$333 million last year — a jump of 28%.
Each of these importers does huge business in the United States, so its reasonable to assume that most of the product they're building overseas isn't for Canadian consumption.
Perhaps the best example is Shermag, which launched an import division last year to develop traditionally styled furniture for its primary customers — department stores on both sides of the border. Still, U.S. stores account for 74% of its business.
Of the seven active importers, two are specialists — Magnussen Home Furnishings and Primo International, which also manufactures some of its own products at a factory in Montreal.
Tapping global strengths
The globalization trends that have been transforming the U.S. furniture industry are starting to be felt here. Dorel, which remains Canada's largest furniture producer, last year established a new division called Dorel Asia, whose mission is to develop product suitable for North America that be built cheaply and efficiently in the Pacific Rim.
Palliser has gone so far as to build its own factories in Mexico and Indonesia, and the company now is experimenting with cut-and-sew leather from China, which it upholsters in Winnipeg.
Gerry Cockerill, past president of the Ontario Furniture Manufacturers Assn. and president of Traditional Sales, a consulting firm, has spent much of the past few years working on developing import lines for Canadian and American companies.
"I don't believe there is any product now that is immune to being manufactured cheaper offshore," he said. "The pace will only accelerate as larger, state-of-the-art furniture factories are built over there and we, in our haste and greed, rush to fill them.
"While we are all alarmed as manufacturers about the impact of imports, the need to do so is self-preservation because most, if not all, of the major retailers are now importing direct and circumventing the manufacturer. Most manufacturers got into importing in self-defense, knowing full well the impact it could have on their factory, employees and community."
But most observers don't believe imports from the Pacific Rim will have as devastating an impact on Canadian manufacturers as they've had on their American colleagues. The advent of free trade and a strong American dollar in the 1980s caused many Canadian companies to disappear. What remained was a nimble, niche-focused industry offering a high level of service.
Jean Deveault, executive vice president of strategic development for casual dining powerhouse Canadel, points out that the imports' overriding advantage is price. But with margins so low, distribution must be broad to ensure producers' profitability.
"Over the long term, the China effect will be felt less and less," he said. "When everyone has the product, then everyone will have the price, so where's the advantage?"
| Canada's Top 25 furniture and bedding producers | ||||
|---|---|---|---|---|
| Furniture and bedding shipments in C$ million | ||||
| Rank | Company name, home base, Web site, notes | 2002 | 2001 | Percent change 2001 to 2002 |
| All figures, with the exception of those supplied by publicly held companies that break out line-of-business sales for household furniture and bedding, are Furniture/Today market research estimates. For the purpose of calculating the 2001 total of the Top 25 and the percent change of 2001 to 2002, those companies whose 2001 sales were not available were assumed to be flat. Rankings are by total furniture and bedding shipments. Figures are for the 12 months ended Dec. 31 unless otherwise indicated. NA=not available Source: Furniture/Today market research |
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| 1 | Dorel Inds. | $712.9 | $701.7 | 1.6% |
| Montreal www.dorel.com | ||||
| Total revenues: | $1,557.8 | $1,419.5 | 9.7% | |
| Publicly owned producer of ready-to-assemble furniture, assembled youth furniture, futons, occasional furniture such as bar stools and card tables, and juvenile products such as car seats, high chairs, cribs and strollers. Reports sales and earnings in U.S. dollars, converted here to Canadian dollars at the official Revenue Canada exchange rate for each year. Ranking based on sales of its ready-to-assemble furniture and home furnishings divisions, and sales of cribs and related furniture items by its juvenile division. According to its 2002 annual report, the value of Canadian shipments was $246.8 million in 2002, up 9.4% over the C$225.5 in 2001. Makes no juvenile products in Canada, only furniture. Operates five manufacturing facilities in North America, in Missouri, Michigan, Ohio, Ontario and Quebec. Retail partners are primarily mass merchants Wal-Mart, Kmart, Target and Zellers in both the United States and Canada, with the U.S. market accounting for 94% of 2002 shipments. Last year, established Dorel Asia, a new division to develop product made in the Pacific Rim and marketed in North America. RTA brands include Ridgewood and Ameriwood; home furnishings brands are Cosco and Dorel Home Products. Makes the Sealy line of futons. | ||||
| 2 | Palliser Furniture | $518.8 | $493.6 | 5.1% |
| Winnipeg, Manitoba www.palliser.ca | ||||
| Canada's largest producer of assembled furniture at mass-market price points. Makes leather motion and stationary upholstery and casual contemporary case goods, including bedroom, dining room, home office and occasional furniture, including wall units and entertainment centers. Has four independently owned EQ3 stores and 130 in-store galleries; plans to roll out 30 more EQ3 stores across North America in 2003, offering European-inspired contemporary furniture, accessories and tabletop at entry to midlevel price points, targeted primarily at the under-35 demographic. Major retail partners in Canada include The Brick, Leon's and Sears Canada; in the United States, Levitz, Seaman's, JCPenney, Rooms To Go and Wickes. Operates 12 factories in Winnipeg, Manitoba; Airdrie, Alberta; Troutman, N.C.; Saltillo, Mexico; and Indonesia. Three distribution centers, in Winnipeg, Troutman and Rancho Cucamunga, Calif. Currently, 75% of manufacturing is based in Canada, with the rest divided between the United States (2.4%), Mexico and Indonesia. Shipments to the United States accounted for 62.5% of sales last year, making it this country's largest exporter of household furniture to the United States. | ||||
| 3 | Shermag Inc. | $188.0 | $163.2 | 15.2% |
| Sherbrooke, Quebec www.shermag.com | ||||
| Publicly owned producer of bedroom, dining room, home office, occasional furniture, glider rockers and high-end fabric contemporary and leather upholstery. Revenues based on the trailing 12 months ended Jan. 3, 2003. Furniture sales for the fiscal year ended April 5, 2002, were C$148.9 million, a slight increase over the previous year despite the demise of HomeLife, Shermag's largest customer. Shipments to the United States accounted for 74% of the company's sales in 2002. In 2002, launched an import division to design and market traditional case goods, and adopted a juvenile furniture strategy to support Drexel Heritage's store network. Operates 12 plants and three sawmills in Quebec, New Brunswick and Maine. Plans to add 150,000 square feet of production space in Quebec in 2003. Also operates distribution centers in Sherbrooke and in Victoriaville, Quebec. Will add 60,000 square feet to those facilities this year. Retail partners in Canada include Sears Canada, The Bay and most market-dominant retailers; in the United States, department stores and major independents. In May 2003, acquired Jaymar Furniture of Terrebonne, Quebec, a producer of mainstream leather and fabric upholstery. Divisions include Nadeau, Scotstown, HPL Furniture, Bédard, Chandéric/Conant Ball, and S.I./Sofas International. Also operates Megabois, a sawmill, and Placages Lennox, a veneer plant. | ||||
| 4 | Canadel Furniture | $155.0 | $135.0 | 14.8% |
| Louiseville, Quebec www.canadel.ca | ||||
| This family-owned solid-wood specialist may be the largest casual dining producer in North America. Its merchandising efforts focus on three areas: Color Shop, a higher-end version of its Canadel Workshop customization program, and a private-label line for the Thomasville store network. This year, will invest C$10 million in a range of capital projects, including a new 100,000-square-foot manufacturing facility. Operates seven of its own factories. Including its network of dedicated suppliers, has 1.3 million square feet of production space. Shipments to the United States account for 88% of sales. | ||||
| 5 | Sealy Canada | $139.7 | $121.1 | 15.4% |
| Toronto www.sealy.com | ||||
| Owned by Bain Capital. Operates manufacturing facilities in Toronto; Edmonton, Alberta; and St. Narcisse, Quebec; and a distribution center in Vancouver, British Columbia. The company makes and markets all Sealy brands, including Posturepedic, the Crown Jewel Posturepedic Collection, the Palatial Crest Posturepedic and Correct Comfort Pocket Coil series. Key retail partners include Sears Canada, The Brick, Leon's, The Bay, Sleep Country Canada and the buying groups. | ||||
| 6 | Simmons Canada Inc. | $130.9 | $120.1 | 9.0% |
| Mississauga, Ontario www.simmonscanada.com | ||||
| A wholly owned subsidiary of the SCI Income Trust, this bedding specialist operates facilities in Delta, British Columbia; Brampton, Ontario; and Kirkland, Quebec; and a distribution center in Regina, Saskatchewan. Last year, sold its Simmons Upholstery Canada division to Superstyle Upholstery. Currently has 15 freestanding, independently owned stores and 55 in-store bedding galleries; the latest store opened in Victoria, British Columbia, in May 2003. The company holds a perpetual license agreement with Simmons U.S. It is active in the private-label market, manufacturing for such bedding brands as Sears-O-Pedic and Ikea, and makes and distributes the ObusForme line of mattresses and foundations under license. | ||||
| 7 | La-Z-Boy Canada Ltd. | $117.9 | $100.9 | 16.8% |
| Waterloo, Ontario www.la-z-boy.com | ||||
| A wholly owned subsidiary of U.S.-based La-Z-Boy Residential. Makes motion and stationary upholstery. Opened seven independently owned and operated La-Z-Boy Furniture Galleries stores in 2002 for a total of 20; believes the Canadian market can support in excess of 50 stores. Also has over 70 in-store galleries. Major retail partners include The Brick, Sears Canada, Dufresne's and Ameublements Tanguay. | ||||
| 8 | Magnussen Home Furnishings | $106.8 | NA | NA |
| New Hamburg, Ontario www.magnussen.com | ||||
| Family-owned company originally was a case goods manufacturer but has evolved into Canada's largest importer/distributor of furniture, including occasional tables, decorative accents, master bedroom, dining, entertainment centers and wall systems. Has additional sales offices and distribution centers in Riverside, Calif., and High Point. | ||||
| 9 | Gusdorf Canada | $105.0 | $94.0 | 11.7% |
| Montreal www.gusdorf.com | ||||
| Privately held, family-operated business, founded in 1977 as the Canadian branch of Gusdorf U.S.A. Acquired its parent's trademark in the early 1980s. Operates a 350,000-square-foot factory producing mainstream ready-to-assemble furniture such as TV/video stands, entertainment centers, home office, microwave stands and bookcases. Recently completed a major plant expansion to about 470,000 square feet. Currently imports about 15% of volume from China. Retail partners include independent furniture stores, mass merchants and electronics stores. Has sales offices in Montreal; Toronto; Vancouver, British Columbia; and St. Louis. | ||||
| 10 | South Shore Inds. | $100.0 | $100.0 | 0.0% |
| Sainte-Croix, Quebec www.freedomcollection.com | ||||
| Privately held, family-operated producer best known as a specialist in ready-to-assemble furniture, including bedroom, home office, wall systems and entertainment centers, although 45% of production is fully assembled goods, particularly adult and juvenile bedroom. Operates three factories and distribution centers in Ste-Croix, Laurierville, and Coaticook, Quebec. Sales currently divided equally between Canada and the United States. Major Canadian retail partners include Wal-Mart Canada, BMTC, Business Depot and The Brick. | ||||
| 11 | Durham Furniture | $91.2 | $80.4 | 13.4% |
| Durham, Ontario www.durhamfurniture.com | ||||
| This medium to high-end specialist in solid-wood bedroom entered the formal dining category at the October 2002 High Point market. Currently building a 150,000-square-foot manufacturing facility, which also will house a showroom and training center, in Chesley, Ontario, in support of its dining room effort; expected to be on line in mid-2004. Operates factories in Chesley and Durham as well as a distribution center in nearby Hanover. Sells primarily to large independents such as DeBoer's, JC Perrault, Coulters and Smitty's in Canada and Weir's, Mastercraft Interiors and Gabberts in the United States. Currently, U.S. retailers account for 79% of sales. | ||||
| 12 | El Ran Furniture | $90.2 | $70.1 | 28.7% |
| Pointe Clair, Quebec www.elran.com | ||||
| Family-owned specialist in fabric and leather motion and stationary upholstery. Major retail partners in Canada include the Cantrex, Mega and P.A.S. buying groups, Sears Canada and BMTC; in the United States, El Dorado Furniture, Seigerman's, HOM Furniture and FMG Group. Exports to the United States account for 28% of sales. | ||||
| 13 | Dutailier | $84.5 | $85.9 | -1.6% |
| St-Pie, Quebec www.dutailier.com | ||||
| Privately held glider rocker producer at retail price points from $399 to $999. Owns Towne Square, a Texas-based glider rocker producer. Acquired juvenile furniture maker E.G. Meubles in early 2003. Operates five factories in Quebec, Virginia and Texas and plans to add 80,000 square feet of distribution capacity this year. Markets primarily to independent furniture and juvenile products retailers in both Canada and the United States, which accounts for 70% of shipments, with another 11.5% exported outside North America. | ||||
| 14 | Distinctive Designs | $83.4 | $78.2 | 6.6% |
| Toronto www.distinctivedesignsfurniture.com | ||||
| Family-owned leather and fabric upholstery producer under the Distinctive Designs and Kroehler of Canada labels. Offers stationary and reclining models, sofa-sleepers and occasional tables. Operates three plants with a total of 340,000 square feet of production space; plans to add 120,000 square feet this year. Major retail partners include The Bay, Leon's and Today's Colonial in Canada, and Seaman's and Bay Furniture in the United States. Exports are growing, but Canadian shipments represent 92% of total volume. | ||||
| 15 | Sklar Peppler | $81.0 | $78.0 | 3.8% |
| Whitby, Ontario www.sklarpeppler.com | ||||
| Privately held stationary upholstery maker; imports occasional tables from China, Indonesia, the Philippines, the United States and other countries. In 2002, entered the leather upholstery arena, building a 35,000-square-foot factory in Toronto in support of those efforts. Also opened its first freestanding, independently owned and operated, dedicated store in the United States, in Boca Raton, Fla. Major Canadian retail partners include Sears Canada, The Bay, The Brick, Leon's, Sklar Peppler Showcase stores and Sklar Peppler Sofa Shop stores. U.S. retail partners include Schneidermans, Gottschalks, The Bon Marche and R.C. Willey. Currently, 15% of shipments are to the United States. | ||||
| 16 | Serta of Canada | $79.0 | $71.2 | 11.0% |
| Itasca, Ill. www.serta.com | ||||
| Operates four licensees in Toronto; Winnipeg, Manitoba; Vancouver, British Columbia; and Montreal. Serta Toronto has just completed a 150,000-square-foot factory, and Serta Vancouver moved into a 131,000-square-foot facility while opening a new warehouse in Calgary, Alberta. Serta Winnipeg and Serta Montreal also completed renovation/expansion projects last year. Each plant participates in joint marketing and sales activities, particularly for national retail accounts such as Sears Canada, Sleep Country Canada, The Brick, Mattress World and Furniture Plus. Projected sales for 2003, $87 million. | ||||
| 17 | Primo International | $73.0 | $53.0 | 37.7% |
| Montreal www.primointernational.com | ||||
| Family-owned and operated producer of a wide range of goods including midpriced to high-end mattresses and foundations, fabric and leather upholstery, metal beds and bunk beds, futons and dining in low to midrange price points, and is the North American distributor for Nieri Leather. Currently, 86% of its line is manufactured in China and the Pacific Rim. Operates a factory and distribution center in Montreal. Plans to add 100,000 square feet of distribution space this year. In Canada, its major retail partners include Sears Canada, Leon's, Brault & Martineau, Teppermans and United Furniture; in the United States, Raymour & Flanigan, Rhodes, FMG Buying Group and Nebraska Furniture Mart. Sales to U.S. retailers account for 48% of volume. | ||||
| 18 | Décor-Rest Furniture | $61.6 | $56.0 | 10.0% |
| Woodbridge, Ontario www.décor-rest.com | ||||
| Family-owned and operated stationary fabric and leather specialist with a 200,000-square-foot factory and showroom facility. Debuted the licensed Alexander Julian upholstery line at the High Point market in April 2003. Exports to the United States have grown to 25% of total shipments. | ||||
| 19 | Bedford Furniture | $56.0 | $54.0 | 4.0% |
| Toronto | ||||
| Privately held, family-managed bedding maker produces the King Koil and Restonic brands in Canada. Figures exclude sales of King Koil in Quebec, which is licensed to Mirabel Bedding of Lavel. Major retail partners include Sears Canada, The Bay, The Brick, Leon's, Bad Boy, Cantrex, Mega and Home Furniture. Launched King Koil's Spinal Contour tempered pocket coil and Perfect Contour foam-encased lines last year. | ||||
| 20 | Bestar | $50.4 | $59.1 | -14.7% |
| Lac-Megantic, Quebec www.bestar.ca | ||||
| Publicly held specialist in ready-to-assemble home office furniture. Hard hit by the decline in the U.S. office furniture market in 2002. Launched its Signature line of home-based office and entertainment furniture to gain access to new channels of distribution. Exports 70% of annual shipments to the United States. | ||||
| 21 | Amisco Inds. | $47.7 | $45.2 | 5.5% |
| L'Islet, Quebec www.amisco.com | ||||
| Publicly held producer of entry-level to midrange metal dining, beds, home office and seating. Recent expansions give its factory an annual capacity of C$75 million. Key accounts in Canada include Cantrex, Leon's, BMTC and Sears Canada, and in the United States include Sleepy's, Crate & Barrel and Room & Board. Exports to the United States currently account for 65% of sales. | ||||
| 22 | Superstyle Furniture | $42.0 | $38.0 | 10.5% |
| Woodbridge, Ontario www.superstyle-furniture.com | ||||
| Family-owned and operated producer of fabric upholstery at promotion to mass-market price points. Owns Trend-Line, a maker of contemporary upholstery. Last year, acquired sofa-sleeper producer Simmons Upholstery Canada from Simmons Canada. Key retail partners include Sears Canada, Teppermans, Dufresne, Leon's, The Bay, Cantrex and Mega Group. Does not sell in the United States but exports about 3% of volume outside North America. | ||||
| 23 | Stylus Made-To-Order Sofas | $41.5 | $37.5 | 10.7% |
| Burnaby, British Columbia www.stylussofas.com | ||||
| Privately held specialist in stationary fabric upholstery at promotional to mid-market price points. Operates factories in Burnaby and nearby Delta; plans to add 60,000 square feet to its manufacturing capacity this year. Retail partners include The Brick, United Furniture and Couch Potato in Canada, and C.S. Wo and Couch Potato in the United States. Currently, U.S. shipments account for 24% of volume. | ||||
| 24 | Jaymar Furniture | $40.0 | NA | NA |
| Terrebonne, Quebec www.jaymar.ca | ||||
| Makes stationary and motion upholstery in fabric and leather. In May 2003, was acquired by No. 3 Shermag, which will operate it as a stand-alone division with senior management intact. Sells independent retailers in Canada and the United States; the latter accounts for about 50% of current shipments. | ||||
| 25 | Coja Leatherline | $39.0 | $35.0 | 11.4% |
| Toronto www.coja.com | ||||
| Family-managed, privately held producer of leather upholstery at medium to medium-high price points. Major retail partners in Canada include Sears Canada, Cantrex and Mega Group. Currently, sales to the United States account for 37% of sales, with another 23% sold outside North America, primarily in Europe. | ||||
| Totals | C$3,235.5 | C$3,018.0 | 7.2% | |
