Palliser Furniture issues temporary layoffs

Hey there, time traveller!
This article was published 12/07/2024 (518 days ago), so information in it may no longer be current.

Winnipeg-based manufacturer Palliser Furniture has temporarily laid off staff amid an industry-wide slowdown in sales.

The 80-year-old company has gained prominence for its upholstered leather furniture. It supplies retailers including EQ3, which it owns.

Some 40 workers have been temporarily let go. The layoffs, in a global staff of around 3,500, are a result of “lower orders that have been impacting the entire furniture industry,” chief executive Peter Tielmann wrote in a text message.

“Order levels have still not rebalanced since (a) COVID surge and post-COVID drop.”

Tielmann, who was travelling Friday, said Palliser expects to return to full capacity by late August in preparation for a busier autumn season.

A rebound in furniture sales could take longer, at least in the United States, predicted Ray Allegrezza, editor-in-chief of Furniture Today.

Canada’s southern neighbour has a presidential election to grapple with. The uncertainty causes some buyers to stay on the sidelines, Allegrezza explained.

Otherwise, Canada and the United States share hurdles to spending within the furniture industry — namely, a higher cost of living.

“Right now, when people are struggling to pay the bills and put food on the table, they’re going to postpone purchases of discretionary income items such as furniture,” Allegrezza stated.

The conservative spending comes after a pandemic-era boom in furniture purchases, led by people forced to stay home and flush with disposable income.

Some retailers misjudged the surge in business, thinking it would be “the new normal,” Allegrezza said.

However, furniture sales fizzled, and some shops have been left with an overstock of product, Allegrezza added. Statistics Canada data for April show a 1.8 per cent drop in year-over-year retail furniture sales.

The decline comes after a 6.3 per cent fall between April 2022 and April 2023. The previous year, furniture stores logged a 23 per cent jump in sales.

“I don’t want to be negative, but right now, the (industry) is challenging,” Allegrezza said. “Business is tough across the board.”

He pointed to United Furniture, a prominent manufacturer that shuttered in 2022. Klaussner Furniture wound down business earlier this year.

Still, Allegrezza believes the industry will bounce back as the economy improves. Furniture stores slow down as budgets get tighter, but everyone needs a bed to sleep in, he remarked.

The Winnipeg Chamber of Commerce’s president echoed that stance.

“As people feel more comfortable and confident in the economy … they’re more willing to invest in some higher-ticket items,” said Loren Remillard.

“We are seeing consumer confidence rise, but it has been battered and beaten down since the pandemic.”

The Bank of Canada trimming its key interest rate in June — for the first time since March 2020 — bolstered confidence, Remillard commented. Housing affordability and higher grocery bills remain an issue, however, he added.

Many Manitoba companies buy equipment and conduct business in the United States. The weak Canadian dollar, comparatively, further strains companies’ ability “to manage through difficult times,” Remillard said.

“I hope … that it’s either temporary or those individuals find themselves work,” he said of Palliser’s layoffs, adding there’s a need for workers in other Manitoba manufacturing plants.

The province’s unemployment rate was 4.9 per cent in May.

Palliser Furniture temporarily laid off some 500 factory workers and office staff in Winnipeg in March 2020. The company momentarily closed in response to the COVID-19 pandemic.

Two months ago, Palliser Furniture announced a new president and structure.

The company operates in Canada, United States and Mexico.

Palliser Furniture opened a flagship EQ3 at CF Polo Park shopping centre in Winnipeg three years ago.

gabrielle.piche@winnipegfreepress.com