Question
How has Palliser competed internationally? How have its location strategies helped it?
Pallise? Furniture is the largest furniture manufacturer in Canada, but it grew out of the basement of its founder, A. A. DeFehr, who made simple wood products in Winnipeg in the 1940s. It grew steadily until 1963 when it moved to a 40 acre site in McLeod Industrial Park in northeast Winnipeg, the location of most of its current plants. Palliser’s revenue was approximately $50 million and it employed approximately 800 workers in 1963.
The growth was steady but the furniture market in Canada was limited. In 1968, Palliser bought a bankrupt furniture upholsterer in Airdrie, north of Calgary, and started selling in the United States. However, it did not have much success there. In 1981, Palliser opened a furniture factory' in Fargo, North Dakota, near Winnipeg, to make selling in the United Stares easier. In 1985, seeing the surge of cheap imports from Asia, Palliser got into wholesale trade by creating the World Trade division which bought furniture from the Far East and sold it to North American furniture retailers.
Later, Palliser opened a particle board plant on its site in Winnipeg, becoming more vertically integrated in order to control quality and costs. In 1991, Palliser bought a bankrupt North Carolina furniture plant. Later, seeing the attractive prices for leather sofas and chairs, it started making more leather furniture. It also started a line of furniture for children’s bedroom, called Logic. Palliser had grown to 1,800 employees and $200 million revenue. After NAFTA, ini 994, Palliser took advantage of free trade with the United States by doubling its sales and employees. It also built a plant in Mexico to reduce its costs and to get closer to the southern U.S. market for leather furniture. Mexico was chosen over a plant in China because Palliser chose to follow the customization and fast (’2—4 weeks) delivery strategies, knowing that the transport time from China would be 6-8 weeks for its competitors, even though labour cost would be cheaper there. Also, because of NAFTA, there would be no duties for goods produced in Mexico.
In 2001, Palliser introduced a line of trendy furniture for youth, called EQ3, and got into retailing furniture. Later, the rising Canadian dollar and cheap imports from China put pressure on solid wood furniture business, forcing Palliser to differentiate itself by making veneer products on machine-driven processes in Canada, but buying labour-intensive traditional wood products from the Far East. To reduce costs, Palliser built more factories in Mexico, and shifted more of the production of leather furniture from Winnipeg to Mexico. Currently it has 4 factories in Mexico employing approximately 1,400 employees and 4 factories in Canada employing approximately 2,800 employees.