Canwood closing operations this summer
By Michael J. Knell -- Furniture Today, March 24, 2008
Penticton, British Columbia — Solid-wood, ready-to-assemble specialist Canwood Furniture will close this summer, a victim of a tightening labor market, the rising value of the Canadian dollar, the surge of imports from Asia and a weakening retail environment in the United States.
"It is our intention to wind-up the business in mid-July," Canwood President Mel Kemp said. "Over the next 17 weeks or so we are going to provide every possible opportunity for our dealers to balance their inventory."
The company notified its 91 employees and its major customers about the closure.
Founded 21 years ago, Canwood specializes in solid lodgepole pine adult bedroom, youth bedroom, home office and wall systems in a natural finish. Earlier this year, it entered into a strategic alliance with Dakota Trading and added painted case goods to its offerings.
Kemp said the company isn't insolvent. "This is what accountants call an orderly wind-up," he said.
He said the company might have coped with many of the economic factors plaguing the industry, but that the labor shortage in the Okanagan region of British Columba really forced the decision to close.
"We have strong demand for our product," he said, adding the company has had a large backlog since last August, "But we haven't been able to meet it because we haven't been able to ramp up production to operate at a viable level."
In the red hot and natural resource-driven economies of British Columbia and Alberta, keeping a labor force intact is a challenge.
Like other furniture companies, Canwood has experienced highs and lows. Early in 2007, this necessitated a layoff to allow for a balancing between incoming orders and inventory. When the layoff ended, Canwood was unable to rehire its entire workforce.
"Given the tight labor market here, we didn't get all our staff back," Kemp said. He said that in the Okanagan region, unemployment is low, real estate is booming and Canwood's factory wages aren't competitive with those offered by the oil, gas and forestry industries.
"Even if we had been able to return to profitable production levels, we are still facing all of the other issues manufacturers are facing, such as the dollar, the rise of the imports and the (weak) U.S. economy," Kemp said.
He said Canwood's profit margins have been squeezed since the Canadian dollar started on its upward climb in 2002.
