Mr. Chair, committee members, ladies and gentlemen, good afternoon.
My name is Pierre Richard, president of the Quebec Furniture Manufacturers' Association and president of the Canadian Furniture Show. I am accompanied by Mr. Réjean Poitras, president of Amisco, a large furniture manufacturer in Quebec. He is also the vice-president of the board of directors of the Quebec Furniture Manufacturers' Association.
I am going to read our presentation, but Mr. Poitras will have very direct responses for you, due to his experience as president of a manufacturing company.
We wish to thank you for inviting us here today. We're pleased to present to you an overview of the Quebec reality, but also of the Canadian reality in furniture manufacturing. We have tabled a brief that gives you quite a bit more detail than what I will be presenting in the next few minutes.
Let's begin by presenting an overview of the Canadian furniture industry.
This industry is composed of manufacturers of residential, office and institutional furniture, related products, and kitchen cabinets. Canada is the world's eighth-largest furniture producer. It is distinguished by the superior quality of its products, components, finishes and assembly, their comfort, design, customization, customer service, and the great value-for-the-money aspect.
The Canadian furniture industry employs 63,300 workers, almost the same number of workers as the aerospace industry. The industry is largely composed of SMEs, with 97% of manufacturers having fewer than 100 employees. It is also the country's second-largest consumer products industry. Quebec and Ontario are the main furniture-producing regions: 36% of Canadian producers are in Quebec and 36% in Ontario.
In recent years, the Canadian furniture industry went through a difficult period due to three main factors: first, the proliferation of products imported from countries with low production costs; second, the rise of the Canadian dollar; and third, the economic and financial crisis of 2008-09. The furniture manufacturers who went through this period showed resilience and creativity by enhancing and increasing their efficiency.
Before I go further, allow me to say a few words about the Quebec Furniture Manufacturers' Association.
The QFMA was founded in 1942. We will be marking our 75th anniversary in 2017. It includes residential, office and institutional furniture manufacturers, as well as manufacturers of furniture components and industry suppliers. Most of the businesses are Quebec-owned.
The QFMA is also the owner and producer of the Canadian Furniture Show, created in 1972. This annual show is held in Toronto and, with more than 7,000 participants from Canada and other parts of the world, it is one of the five largest trade shows in the country.
Let's take a look at the impact of Quebec furniture manufacturing on the Canadian economy.
The Quebec furniture industry is a significant engine of prosperity. It generates annual revenues of $3.4 billion. Looking only at the sectors represented by our association, annual production expenditures total $2.3 billion. This amount generated close to $1 billion in wages, about $220 million in revenue for the provincial and federal governments, and $207 million in parafiscal revenue.
We note also that the Quebec furniture industry is the top client of the Canadian hardwood forestry industry. It accounts for 24,000 jobs, making it one of the seven-largest employers in Quebec's manufacturing sector.
We will now present a brief overview of the main issues and challenges in our industry, as well as our recommendations.
I will speak first about research and development.
As you know, R and D costs are extremely high, with no guarantee of success. For our industry, R and D activities include new product development as well as manufacturing innovation, and are seldom accompanied by the obtaining of patents. We suggest enhancing the accessibility of assistance programs allocated to R and D and ensuring their availability to guarantee ongoing innovation within our industry.
In terms of jobs, the furniture industry realized employment growth from 1997 to the turn of the millennium, peaking at 117,000 jobs in 2000. Since that time, there has been a significant drop. As of 2014, there were only 72,000 jobs in the industry, including self-employed workers. This represents a drop of 39% during that period.
The industry is also facing a shortage of specialized labour. This shortage has been amplified because of a negative perception fuelled by plant closures, which have drawn considerable media attention. Among our recommendations, we suggest that the government organize major promotional activities to create awareness of the industry and careers in this field.
I would like to say a few words on the subject of e-commerce.
Our industry is lagging in this area. Furniture manufacturers, which are mainly composed of SMEs, simply don’t have the means to develop tools to allow them to either work with the major online retailers or directly manage online transactions and relationships with consumers, in addition to marketing their products.
We suggest subsidizing the acquisition of the necessary equipment, providing financial support for the training of employees, and lastly, offering tax relief measures on the profits derived from e-commerce for manufacturers getting into this area for the first time.
Let us now move on to safety and environmental issues.
Public safety and environmental standards are continually going through a revision and updating process here in Canada, as well as in the countries to which we export. The QFMA and its members are obviously in favour of any measures aimed at improving public safety and environmental protection. This being said, we recommend ensuring that the implementation of new Canadian measures is done in collaboration with the industry and within a reasonable time frame and that, in certain cases, this implementation is accompanied by transitional measures.
Let us address exports, a very important field for our industry.
The United States is the favoured market for Canadian furniture manufacturers. In fact, for Quebec, 94% of our furniture exports are shipped to the U.S. In addition, furniture manufacturers have to constantly innovate and develop new products. They rely on Canadian and American trade shows, which are their main showcases to reach the major buyers.
Among our recommendations, we propose devising a furniture export strategy based on Canadian and American trade shows and providing financial support to take part in these shows.
With all these changes, it is clear that the Canadian furniture manufacturing and retailing industry has been transformed and that it is important to draw a precise profile.
The development of the industry, in Canada and internationally, requires a thorough knowledge of all of the stakeholders, which no one seems to have. To ensure the success of activities at the international level, the furniture industry needs to be able to develop a better understanding of its market and of the U.S. market. We suggest preparing a profile of Canada's furniture manufacturing and retailing industry, as well as conducting market intelligence, including analysis of the competition, the clientele, decision-making processes, and selection criteria.
In conclusion, the Canadian and Quebec furniture manufacturing industry has gone through a very difficult time. It had to enhance and increase its efficiency. The future shows modest signs of optimism with the emergence of new opportunities. Our manufacturers are now well-positioned to take advantage of these opportunities and continue to contribute to the wealth and prosperity of the country.
However, in a context of constant change and a highly competitive global market, we remain vigilant, since nothing can be taken for granted.
Ladies and gentlemen, thank you for affording us the opportunity to present to you the realities of our industry and some recommendations to consider. We offer you our full co-operation in the context of the development of the Canadian and Quebec manufacturing sector. We will be very happy to answer all your questions.