News

Don Crosby

Walkerton, ON

Furniture maker Bogdon and Gross is bucking the trend in the manufacturing  sector of declining sales and layoffs by making timely investments and taking calculated risks. It has paid off with a 30-40 % jump in  demand for its products in 2009.

The company hired eight new workers last year and plans to take on five to 10 more skilled workers in the next couple of months if they can find them, said company president Adam Hofman.

“There may be people who are working jobs they don’t want to work in and may want to come back into furniture industry and think it’s a dead industry, but it’s not,” said Hofman

“ We have good jobs for skilled craftsmen. We need people with experience. We don’t have time on our side where we can take two or three years to train them.”

About 40 retail stores across Canada handle about 80% of company sales along with a couple of U.S. customers.

Hofman says the furniture industry is undergoing a rapid evolution driven by the cheap high volume off shore imports that devastated the large manufacturers in the past 20 or so year. Out of that has come small volume niche markets that have produced a few new trends.

One is the revival of small to medium size manufacturers with 10-100 employees.

“That’s where the growth will be. I don’t think we’ll see the 3,000 employees growing at a rapid rate. We’re going to see the small value added manufacturing companies grow,” said Hofman.

“They are more agile, more flexible to adaptable to market changes. The can change with the markets more easily. Big companies that mass produce furniture that’s been taken over by imports,” he added.

Hofman credits the boost in sales during the recent recession to consumers who are buying smarter and see the advantages of buying Canadian made quality furniture.

“This last recession was an opportunity for people to say If I’m going to spend money I want to buy something that will last . . . buying an item and throwing it away tomorrow doesn’t fit an ever increasing smarter consumer,” he said.

While offshore Chinese made products continue to dominate the market they aren’t as much of a bargain anymore.

“At one time an occasional table made by us might be five or six times more expensive than an import; now it might be only 30-40 % more. People are now recognizing the difference between the imported product and Canadian made solid wood. The Canadian made product has value and worth the extra cost,” Hofman said.

With recession and its effects on manufacturing came government grants.

 Five small area furniture makers formed an alliance last spring and applied for provincial funding under the Rural Economic Development program.

The money is used to invest in market growth and green technology, information systems and branding to develop and strengthen these five companies.

“Some things we’re working on together and some things we’re working on separately but we’re sharing that information. It’s much better if you work together as an industry,” Hofman said.

The total investment is $1.5 million with the five companies share about 54 %.

Bogdon and Gross also received federal funding in the form of three grants for the company and one for the furniture industry. That money is used to hire an intern in marketing, business development, and pay for skills development.

The total investment in this program is $80,000-$100,000 shared with the federal government.

“It would have been hard for us to do it by ourselves,” said Hofman.

The company employs close to 90 people.

No employees were laid off during the recession. And that decision ran counter to the advise of company’s former financial advisors which was to pull back on costs, reduce research and development spending.

“We didn’t do that. We actually increased our research and development, we spent more funds on market development to make sure that we would end the recession stronger. By the fall of last year our demand was going through the roof and everything we did in the first six months paid off to the point that demand grew by 9% over 2008,” Hofman said.

“ We had to leave the bank because we didn’t follow their advice and had to get funding elsewhere,” he said.

“ I don’t have a lot of respect for the Canadian banks. They take care of themselves and certainly through this recession we paid our bills and always honoured our commitments. It is disappointing that traditional banks are in favour of you in good times and when time are tough you fall out of favour,” he added.

Hofman said he has the benefit of having been through three recessions and he’s seen Asian imports peak and start to level off in recent years. He ‘s also noticed a change in buying patterns even before the onset of the recession for with a demand for   better quality solid wood furniture.

“We took a chance and believed that the market would come back and if we invested in products not supplied by other manufacturers . . . then we provided excellent delivery and service. We knew retailers didn’t have the cash and the risk appetite to bring in container loads of furniture and sit in inventory. They were being constrained by their banks,” Hofman said.

The company makes dining room, bedroom, occasional, entertainment and office furniture.

The company’s newest line the GrandVille collection targets consumers who want a contemporary, simple style product made to order and high quality.

Hofman says it appeals to the Generation X who grew up on the knock down Ikea style furniture but now can afford something more substantial yet with the same clear simple lines.

It all adds up to a promising future for the company in the near future.

“I see the next five to 10 years quite rosy for those who have survived,” Hofman said.