There is growing concern among Canadian kitchen cabinet manufacturers about the possibility that wood products from China are being dumped into the North American market. To the extent that this is occurring, the Chinese products have a direct impact on the profitability, and perhaps the viability of the Canadian kitchen cabinet industry. CKCA is monitoring this issue and has been vocal arguing for fair trade practices with China as well as promoting our superior Canadian kitchen cabinet products.
From the early 2000s, China’s wood processing industry has expanded to the point that, today, China is a global leader and the largest exporter of wood furniture and products, with a vast majority of its exports headed to the United States. For a number of reasons Chinese kitchen cabinet makers can produce and sell cabinets at a fraction of the price compared to a North American business. In the U.S., kitchen cabinet imports increased from $372,764,214 in 2010 to $1,442,858,403 in 2018. In Canada, a strong growth trajectory has now surpassed U.S. imports into Canada.
The Canadian industry is wary of China dumping their less expensive kitchen cabinets and cabinet parts into Canada to undercut domestic manufacturers, some members telling us they are seeing prices as much as 40 per cent lower than Canadian products.
There are also Canadian and American cabinet manufacturers who assemble Chinese parts in their North American operations. Members are telling us that they are losing work to Chinese imports and not only is it frustrating, to see publicly funded organizations such as housing authorities purchase Chinese imported cabinets and not locally manufactured, it is unacceptable. Looking beyond the obvious economic impact, let’s not forget these items are shipped halfway around the world and there is no data available on the environmental impact.
Let’s be clear. There is no dispute over healthy and fair competition; this is welcomed, as it’s good for business and good for the consumer. Competition fosters innovation and continual improvement, but unfair competition undermines and eliminates the competition and results in a controlled market that is far from dynamic. We have all seen this time and time again in different industries that have faded away. CKCA has heard from frustrated members and that’s why we are hosting a panel discussion on this topic at the Eastern Regional Event in Quebec, May 13-15, 2024. We’ve invited CEO Betsy Natz from the KCMA (Kitchen Cabinet Manufacturers Association) to share an update on the work they are doing in the U.S. plus we’ll hear from CKCA member Tim Benson of Benson Cabinetry from B.C., who is watching work slip away to foreign imports on Vancouver Island. We hope you will join us. Just go to our website to register at ckca.ca.
As Tim Benson shared with us:
“Without a shred of doubt, there are more Chinese/Asian cabinets being installed in B.C. than locally manufactured ones. Without some form of outside intervention, I only foresee this trend continuing. Trying to compete against them is futile, which ultimately means there are less and less projects for local manufacturers to pursue which increases the intensity of competition among one and other, none of which is good. We need to be doing more to support one another, not work against each other, and in a lot of ways, it feels like we’re all being squeezed out of the market.”
Many of you may be aware that the KCMA has been pursuing this issue since 2019 and was successful in spearheading a trade petition to address dumping of Chinese cabinets into the U.S. market. They continue this work because of the alleged tariff evasion and other unfair trading practices by Chinese cabinet importers, which include items such as frames, doors, drawers and the component parts that go into making those products. KCMA is pleased with the results so far and estimates they have recovered more than $4.9 billion in illegally traded imports of Chinese-made kitchen cabinets, vanities and components from entering the US from 2019 – 2022.
In addition to factoring economies of scale, the cost advantages for Chinese manufacturers arise from their cheaper labour, lower environmental standards, and less stringent regulatory regime for the workplace. Each of these advantages, however, provides Canadian kitchen cabinet manufacturers with a compelling case for their cabinetry craft and products. Consider a few issues relating to environmental regulations, labour rights, and quality.
Consumers can be assured that Canadian kitchen cabinets are of high environmental standards and adhere to rigorous regulatory regime.
China has been condemned internationally for its human rights violations using enslaved labour. Recently, human rights activists for Uyghur Muslims have asserted “Canada remains a dumping ground for products made with forced labour.” In comparison, we can take pride in our Canadian workforce.
The economies of scale that are found in the mega furniture companies across China provide a distinctive cost advantage. However, with respect to quality, the attention to the craft by forced labour, the quality and composition of the wood used, and the consistency of the manufacturing process all factor into the greater value found in North American wood products.
And what is the elephant in the room? Imports from Italy. While Stats Can shows that Chinese imports have surpassed U.S. imports into Canada, Italy has also increased imports significantly. Italian-made is definitively a brand synonymous with quality. Whether or not the Chinese investments in Italy through the Belt and Road Initiative (BRI) since 2019 has had any impact on these import numbers is something for economists and politicians to debate. But if Italian-made is desired for its quality product, then we need to convince consumers that Canadian-made is equally as good, if not better.
Another member advised CKCA that while they manufacture kitchen cabinets, they also sell a line of Chinese made cabinets as part of their overall product line to consumers. The reason for doing this is to be able to offer a range of price points. As the only tariffs applied to offshore cabinets into Canada is 9.5% compared to the US who’s tariffs now range from 60 to over 200%, it’s no surprise that offshore cabinets can be a very appealing price point in Canada.
CKCA surveyed members on this issue in 2020 and while some said that Chinese imports were a concern, they did not feel it was a threat to the industry because many of our members have turned to custom and/or higher end cabinetry. In addition, there are advantages to using Canadian built cabinets. One example came from CKCA speaking with a dealer who exclusively sold Chinese imported cabinets. They admitted that servicing their products was their biggest challenge and they were considering bringing in some Canadian product for that reason. This was encouraging to hear and certainly speaks to “Why Buy Canadian” which is a list CKCA has compiled and is available on our website. We encourage industry to use this tool to further promote the benefits of purchasing Canadian-built. But realistically, members have told us that at the end of the day, price trumps and when product is sold 40 per cent cheaper from offshore even after the 9.5 per cent tariff is applied, it is easy to know what a purchasing decision will be.
The drive to innovate comes from knowing there is a future for the industry and our population growth trajectory certainly says there will be work for quite some time. But equally important is for industry to be confident in what they manufacture and to know they are operating in an environment where there is a level playing field for competition to remain healthy, dynamic, and fair.
