Recently, the Canadian Kitchen Cabinet Association received the results of a survey of their members for an in-depth look at pricing and profitability, collecting payments, and outsourcing manufacturing. Below, we have a look at the data collected from the outsourcing portion of the survey.
“Many define the current situation as the ‘perfect storm.’ No matter what label you use, the bottom line is you’re in business to make money, and remaining profitable in this environment can be difficult,” said Sandra Wood, Executive Director is CKCA. “These are challenging times to be in our industry, and you have done an amazing job of operating despite the many obstacles faced. Supply chain, Covid-19, health and safety, labour shortage, increased business operation costs, to name a few. You’ve done it all in addition to managing a surge in demand for your products. The goal of this survey is to arm you with benchmarking data to help you plan business for 2022 and beyond.”
The kitchen cabinet industry generates an estimated $1.5 billion in annual sales and employs more than 25,000 Canadians in an estimated 4,000 SMEs. CKCA is the only national association focused on the kitchen cabinet industry in Canada and needs members to respond to their surveys to gather essential data like this.
The main question with regards to outsourcing was: “Are you outsourcing more of your cabinet manufacturing?” Approximately 18% of respondents said yes, about 13% of respondents said they were considering it, while around 69% indicated they were not outsourcing more of their cabinet manufacturing. For those who stated they were outsourcing more, amounts ranged from 2% to about 80%.
“We’ve always made some doors and outsourced others, but we are now outsourcing all the doors because we are so busy,” explained one respondent.
While most respondents indicated that their need for outsourcing comes from the lack of labour and bandwidth, others indicated that a lack of materials necessitates the outsourcing.
“We had to outsource our doors as our primary door material is in short supply,” explained another respondent. “We have an alternate supplier, but we can’t use them as their lead times have gone way out as well.”
It’s a big challenge because while shops may not have the capacity to do the work themselves, outsourcing can be a high cost. Some companies said that “the problem is outsourcing companies want more than what we sold it for,” while others explained that there are “too many delays with outsourcing and it’s too expensive.”
The two aspects of manufacturing that respondents indicated that they outsourced the most were doors and finishing, unsurprising as these elements are often outsourced, to begin with.
“We’ve always made some doors and outsourced others,” explained one respondent. “But we are now outsourcing all the doors because we are so busy.”
For others, finishing takes up so much time, space, and labour that it’s better to outsource.
“We are outsourcing to a company to help with preparing cabinet parts for finishing,” said a respondent. “Finishing is always our biggest bottleneck.”
However, several companies were experiencing the other side of this, being the ones to whom the work is being outsourced.
“We actually make a lot for other shops,” and one respondent. And another: “We are the manufacturer that other cabinet shops outsource to.”
“These are difficult times to run a business and yet also an exciting time because there has been a surge in work,” said Wood. “The comments and ideas expressed in this survey illustrate the complex world of manufacturing. But they also show how our industry responds and its ability to stay the course with great resilience.”
The CKCA publication with the survey results offers some benchmarking data that they hope members will find helpful as they navigate their business into the future.
“We do expect the supply chain will settle down as the world returns to a new level of normal later in 2022/2023,” said Wood. “The demand and expectations for products will level off. There is no doubt that with current trends, our industry will continue to be kept busy in the foreseeable future — this is good news! But the difficulty around the labour shortage poses the biggest hurdle we have ever faced. This industry-wide challenge will require more creativity and tenacity than ever before. As an industry, we are working together on this unifying issue with other organizations because we know that to affect change, we must collaborate and innovate together if we want to see this industry thrive and prosper.”
To access the complete survey and other important information related to the cabinet industry in Canada, consider becoming a member of the Canadian Kitchen Cabinet Association.