Tariff pressure crimps kitchen cabinet sector

Ralph Fehr knows operating costs: payroll, machinery upgrades, a mortgage on the Morden plant.

The $4 million tariff bill is new. And as U.S. tariffs on Canadian kitchen cabinets are set to double Jan. 1 from the current 25 per cent, Fehr is bracing for a future he calls “pretty much insurmountable.”

“I don’t think that it’d be possible to have U.S. sales with 50 per cent tariffs,” Fehr said.

He co-founded Elias Woodwork & Manufacturing Ltd. with his brother four decades ago. It’s grown to two sites — in Winkler and Morden — and, at one point, counted 500 employees creating parts for kitchen cabinets.

Most of the cabinet doors and mouldings travel south to the United States. The goods land in chains across the country, Fehr said.

His company started eating recent tariff costs. Twenty-five per cent tariffs on Canadian-built kitchen cabinets took effect in October; U.S. President Donald Trump cited a “flooding” of foreign-made goods harming American manufacturers. (Other countries’ kitchen cabinets have also been targeted.)

Within two months, Elias Woodwork’s cumulative bill has come to roughly $4 million, Fehr said.

“We want to keep the (U.S.) sales,” he said. “Our feeling has been that this is a temporary situation.”

The added costs have led to layoffs: Elias Woodwork’s employee count dropped to around 440 through a mix of tariffs and “efficiency” seeking. Last month, the company added robots for hand sanding and assisting with quality inspection.

“We’d be quite content to pay for labour if we could have the income to support it,” Fehr said, adding it’s been harder to keep immigrant workers on staff.

Similar layoffs have occurred in the sector across the country. The Canadian Kitchen Cabinet Association has clocked hundreds of jobs cut in Ontario and Quebec.

Manitoba has 69 companies in the household and institutional furniture and kitchen cabinet manufacturing business, federal government data show. Many sell within Canada and aren’t directly affected by U.S. tariffs.

Still, there could be indirect impacts, noted Carl Dueck, a salesperson with Silverpine Cabinets in Ste. Anne.

“There definitely are some price increases, but a person doesn’t know if that’s related,” Dueck said. “The prices go up and down.”

Nationally, the kitchen cabinet industry employs some 25,000 people. It draws $4.7 billion in sales, according to the Canadian Kitchen Cabinet Association.

The $600 million worth of goods shipped to the United States has “practically turned off,” said Luke Elias, the association’s vice-president.

As a result, Canadian companies that would normally export are looking inside Canada for customers, driving up competition. The housing market has been “soft” over the past couple years, Elias said, adding residential towers largely buy cheap imports.

“There’s been a lot of… rental apartments in the last couple of years. Especially in the Ottawa area, you’ll see cranes up all over the city,” said Elias, who is president of Ottawa-based Muskoka Cabinet Co. Inc. “We compete for that business, and we’ve lost millions of dollars in contracts.”

The United States imposed anti-dumping and countervailing duties on Chinese-sourced cabinets in 2020.

The American Kitchen Cabinet Alliance recently accused Canadian companies of shipping Chinese wares into the United States. It presented during public hearings in Washington ahead of Canada-United States-Mexico Agreement talks.

“China didn’t leave the U.S. market, it just changed the return address,” said Luke Meisner, who represented the AKCA. “We closed the front door for China. Canada and Mexico became the side doors.”

Canadian imports of Chinese-made cabinets rose 23 per cent in 2020-24, and imports of Chinese wooden materials jumped 84 per cent, according to Global Trade Atlas data the AKCA shared in its presentation.

It’s hard to tell how many kitchen cabinets are mislabelled as Canadian and shipped to the United States, Elias said. Below-market value imports are a threat to Canadian businesses, he added.

The American association called on government to make regulatory changes, including altering country of origin rules so at least 85 per cent of wooden materials should be harvested and milled in North America to qualify as a North American cabinet.

Canada and Mexico should be required to apply border measures like the United States, Meisner relayed.

Elias Woodwork procures its hardwood from the United States. Materials like drawer slides and hinges are hard to find within the continent, Fehr said.

“I kind of have my doubts that certain things will ever be made in (North America),” Fehr said, adding he ships some items from China.

He’s against the practice of importing Chinese cabinets and doing minimal work to the goods before shipping to customers. Fehr expects to scale back production if 50 per cent tariffs materialize.

Canada hasn’t placed a tariff on Chinese kitchen cabinet imports. Prime Minister Mark Carney and Chinese President Xi Jinping committed to growing the Canada-China relationship earlier this year.

The Canadian Kitchen Cabinet Association is lobbying for Canadian kitchen cabinets to be prioritized by the federal government’s new Build Canada Homes agency.

“Every home in Canada has a kitchen,” Elias said. “If you ever ask anybody to name a kitchen cabinet company, very few can. We are just forgotten.”

gabrielle.piche@winnipegfreepress.com