Waiting for the upturn
BC’s Canwood Furniture is adding equipment and capacity in anticipation of an upturn in the furniture market.
By Paul MacDonald
The manufacturing process at the Canwood Furniture plant in Penticton, BC could easily be a logistical nightmare. At any point in time, over a thousand pieces of solid wood furniture—from small night tables to full size entertainment centres—are being produced at the plant. And each individual piece of furniture can easily have dozens of components that need to be packaged together. When you multiply that out, and add in the supply of pieces at each machine centre, the piece count is staggering.
But work proceeds smoothly on the plant floor, with pallets of parts clearly labeled and the work areas planned out in a logical fashion. “The number of pieces we deal with is pretty incredible,” says Canwood production manager Bob Bird. “But we had some good help from German consultants Ferrostaal when our system was originally set up, and we married that with North American know-how and flexibility,” Bird explains. “And we have some very good people in our engineering and scheduling departments.” They’ve also been at it for quite a while. Canwood first started operations back in 1986, and has grown since then to become one of the leading furniture manufacturers in western Canada.Although they originally started out producing furniture for Swedish retailing giant IKEA, these days Canwood has its own brand name line of Ready-To-Assemble furniture, produced from the lodgepole pine so plentiful in BC’s southern interior.
And although the Canadian furniture industry is facing some tough times these days, with a high Canadian dollar and mediocre American market, Canwood is forging ahead with some major investments in new equipment and a 30 percent increase in production capacity. The company recently installed one Koch drilling centre, and a second machine will be added later this year. And further improvements are to come, says Bird. “Equipment like the Koch allow us to take three of our processes that we were doing separately before, and put them on one machine. It saves us time and manufacturing costs to be able to be drilling from the ends of pieces, the top, and the leading edge, all at one go.” Being resourceful, they took the drilling equipment that had previously been doing this work and have re-worked it elsewhere into the production system. Going ahead with this kind of equipment addition may seem like a gutsy move at this down point in the market, but it’s also a smart move.
Kemp admits that in dealing with IKEA, it was difficult for Canwood to achieve the margins they needed to be viable. IKEA has a reputation for being extremely cost driven, and sources its product from all over the world. North American suppliers are often competing against wood product manufacturers from low wage nations in Eastern Europe and Asia. “But they were an excellent partner in many respects, in terms of systems, quality control and technology. They worked with us in developing those areas. A lot of what we achieved, especially in those early years, can be attributed to the relationship we had with IKEA.” Rather than being dependent on one large customer, they decided to develop their own product line, and a sales organization that would ultimately represent Canwood to the conventional furniture retail sector.
But they arrived at that point only after a period dealing directly with another set of retailers. They initially targeted the DIY sector, the large hardware store chains, a sector which represented opportunities for big production runs and large volume business. At the time, they produced a narrow product line, which was sold through retailers such as Home Depot. “That was the phase which followed IKEA,” says Kemp. “ It gave us the foundation in terms of products so that we could target the more conventional furniture sector, the retailers, which is where we are now.” That switch caused some issues at the time.
The plant had been set up to do large production runs of a smaller number of items. And all of a sudden, they were branching out into producing smaller runs of a greater number of items. “We didn’t have the large production runs any more,” says Bird. “That meant a change in philosophy, and moving to quick set-up times, and that doesn’t come easy with large pieces of equipment that are tough to change over. We had to become flexible and be able to change gears very quickly, and that tends to be the opposite of what you have in a very automated plant, and the type of work we had been doing.”
They could not simply replace all the equipment—which had been purchased for millions of dollars only a few years before. So it came down to being resourceful, and working with what they have. They are now far down that road, and despite the present challenging markets, Canwood has been successful. And clearly—with the latest equipment additions—they see more opportunity to come. “Now is the time when you want to make changes, add equipment and do the training that go into the manufacturing process,” says Bird, “rather than when you are busy, when doing all those things would be harder.” This kind of move should position the company well when the US market, which is responsible for 25 per cent of its sales, starts to pick up.
They also need to stay competitive in the very dynamic value-added sector. The furniture making process at Canwood still involves a good deal of labour, with 150 employees working in the 86,000 square foot plant in Penticton. Their main focus is on being able to respond quickly to customers, without having a huge inventory of finished products on hand tying up working capital. “The best way to do that,” explains Bird, “is to have the right people and make the right equipment purchases—to buy equipment that is quick in doing changeovers so we can run smaller batches through the plant more efficiently.” Not so long ago, furniture manufacturing could be characterized by long production runs of perhaps four or five different items. “But these days, when you have 200 different SKUs, you have to be able to quickly move from product to product to satisfy customers,” says Bird. “Customers are not coming to Canwood looking for one piece. They want a variety of pieces, they want you to have them all and they want them as soon as possible.”
You can call it almost just-in-time delivery, lean manufacturing or perhaps some other buzz term, but this way of operating is now a fact of life. Once the wood comes into the plant from Canwood’s kilns (see sidebar story for kiln details), it enters into the myriad of woodworking machinery, of which the Koch machine is the most recent addition. That’s where the scheduling and organization comes into play, with literally tens of thousands of pieces of wood on the production floor. “The scheduling department has things happening on the production floor that keep things together,” says Bird. “The system was evolved over the years, and we’re always working on it. It will never be finished.”
From the time dried dimension wood enters the plant to when it leaves as finished packaged knock-down furniture, the elapsed time is usually about 10 days. “But we can also red flag some production, which means it can be in and out in a couple of days.” Canwood’s dealings with IKEA when they first started out left the company with a good foundation in terms of production and quality. “At the time, IKEA was aggressively pursuing alternate sources for their products, and pine furniture was considered one of their signature products,” says Canwood president Mel Kemp. The relationship with IKEA ran from 1986 to 1993.
IKEA represented almost 100 per cent of production volume at the start, and about 20 per cent in 1993. “It was an amicable parting of the ways, with both IKEA and Canwood seeing their futures elsewhere,” says Kemp. “Canwood started to take a different path, and developed a more conventional approach to manufacturing for the furniture industry.” Kemp feels they are positioned well with the unique appearance of their products, all of which are manufactured with local lodgepole pine. “It gives us a distinctive look compared to other products.” They have only one finish: clear lacquer, which accentuates the knots and grain of the lodgepole pine.
Partnering arrangement with Weyerhaeuser works
Canwood has a partnering arrangement in securing the timber for its furniture. For the past 15 years, they have been in business with Weyerhaeuser Canada, bidding on timber sales through BC’s Small Business Enterprise Program. The company was one of the first to get a timber sale for the value-added sector of the BC forest industry. “It’s worked for everyone,” says Canwood production manager Bob Bird. “It’s worked for Canwood, Weyerhaeuser and for the government, who had been looking to encourage added-value manufacturing.” Weyerhaeuser handles the harvesting and forest management part of the job. Weyerhaeuser pulls rough-green furniture grade dimension wood for Canwood at the company’s Okanagan Falls sawmill, 20 miles away.
The company is looking for tight-grained wood with small knots, free of stain, which typically describes the lodgepole pine product. There is really no shortage of this type of wood, since lodgepole pine is the most abundant type of tree in this part of BC. Canwood does the drying, down to 8.5 per cent, with its own kilns. The three kilns, two of them from Salton and the other a specially engineered German unit, can handle up to 150,000 board feet. To help the process along—and help reduce the number of wet pockets in the lodgepole pine—they usually have about a million board feet on the site, air drying. They try to have a fairly consistent range of moisture for the wood going into the kilns, resulting in better control over the final moisture level for each batch of wood. “We like to touch the wood only once and to do that, we have to have to do it right the first time,” says Bird.
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