Earlier this year, Canada’s national newspaper, The Globe and Mail, wasted few words in describing that country’s economy.

“The current state of the Canadian economy can be summed up in one word,” it said. “Mediocre. It’s not bad, and it’s better than most. But it’s not even close to very good.”

• Unemployment at seven percent remains a bit high.
• The currency exchange rate, at .92 cents to the U.S. dollar, may provide a boost to the Canadian economy.
• The Bank of Canada has signaled it isn’t raising interest rates – at least for a year or slightly beyond.
• The average price of a Canadian home is now $401,585, an increase of five percent over the past year; if you own a home in Vancouver, it just appreciated by $50,000.
• As of the beginning of the year, there were 130 highrise buildings under construction in Toronto, which is more than any other city in North America
• Approximately 92 percent of those buildings are residential condominiums, as opposed to highrise buildings in the U.S. which are mainly rental apartments.

 

The word “stable” is a bit synonymous with “flat,” which is basically how FPI’s business went last year. It was up a bit, but a very little bit. Not so in the U.S. “We had a tremendous year in the U.S.,” says Glen Spinelli. The cold weather drives our business much more than I like to admit. When it’s cold and snowy, people go out and buy wood stoves and gas inserts. Last year was tremendous and this year is looking even better.”

According to Spinelli, high-end new construction is fueling a lot of his business in Canada. Regency is not in the low-end builder grade fireplace market; it’s in the higher end where consumers are building million dollar homes and “putting five and six fireplaces in their home. There are a lot of big houses being built here,” he says, “and they all have fireplaces in lots of different rooms.

“It’s predominantly gas products,” he says, “but very contemporary with clean lines. It’s not a traditional market even in eastern Canada. We now even have a contemporary wood line, and our contemporary linear products sell really well in Canada.”

Spinelli appears to be prepared for whatever the coming New Source Performance Standards (NSPS) mandate. The company has developed a line of hybrid wood stoves and wood inserts called the Pro Series. “People up here are very eco-conscious,” he says, “so it’s an easier sell. It’s very cold here, so if you only have to load your wood stove twice a day, that resonates quite well in the colder Canadian markets.

“We’re prepared for the NSPS, no matter what happens, but we think it will change the industry because wood stoves will go up in price if they eliminate the non-cat stoves by regulation. At retail, it will add from $500 to $1,000, and that will eliminate a number of lower-end customers.”

The word “stable” is a bit synonymous with “flat,” which is basically how FPI’s business went last year. It was up a bit, but a very little bit. Not so in the U.S. “We had a tremendous year in the U.S.,” says Glen Spinelli. The cold weather drives our business much more than I like to admit. When it’s cold and snowy, people go out and buy wood stoves and gas inserts. Last year was tremendous and this year is looking even better.”

“Housing in Canada did flatten out for the last three or four years,” says Alan Murphy, “and pricing suffered maybe five to 10 percent, depending on the regions. Notable exceptions would be Victoria, Vancouver and Toronto, and this year we’re experiencing price increases in those major centers.”

Blaze King’s business doesn’t include new construction; it tends to be in renovations. “Which is another reason why we were slightly immune from the downturns,” he says. “People will spend money on their existing home rather than thinking about building a home when things are not as good.

“We’ve seen huge increases in our wood products,” says Murphy. “We’re up in the double-digits. We’ve seen good growth in Ontario and BC experienced single-digit growth over the last two years. The Maritimes have been flat.”

Murphy’s sales are mainly in wood, while a lower percentage are gas products. Generally, sales are more in the rural areas. Last winter was one of the worst winters in living memory, he says, and the increase costs of propane also drove people to wood.

The Blaze King line is one of the cleanest-burning in the industry – that’s according to EPA testing. The company has a loyal customer base, a variety of new products and a new corporate ID. “We’re a little bit unusual,” says Murphy, “in that we have been gaining market share all along; we do have something special here, and our market in Canada has been increasing year-over-year for the last three years.

“The U.S. business was very difficult over the last few years, although we were an exception to that with the dramatic changes we’ve made in the organization. This summer the U.S. business never stopped. We had one of the strongest early-buys we’ve ever had and probably 80 percent or more was cash upfront. That tells me these dealers had a great winter.

“The companies that survived the recession are strong and well-financed. They are good business people with business plans. They worked their way through all those early-buys and are now buying more stuff.

“Early-buys on the Canadian side were very soft. Canadians were more conservative in their buying process, but the season has kicked off and some of my retailers have already done more business already this year than they did in all of last year – and they only started buying a month ago.”

 

Data from Canada Mortgage and Housing Corporation.

 

Data from Multiple Listing Service/Canadian Real Estate Association.

Retailer Comments

Alberta: “Outdoor (living products) seem to be growing, but with lots of competition and too many product choices now. Construction is strong along with remodeling in our area, and the economy seems to be humming along pretty good. We had to raise prices because all our costs are increasing. The high prices of fireplaces are driving people to other comforts like home theaters and hot tubs.”

Alberta: “Hearth products are up due to tremendous growth in high-end new home construction and an incredible amount of renovations. Patio products are sold primarily through Big Box stores.”

New Brunswick: “Poor economy in Province of New Brunswick, and hearth sales were down the last two years due to low housing starts and ductless heat pumps cutting into stove sales. Reason for the increase this year – tropical storm Arthur had 100,000 homes without electricity for an extended period.”

New Brunswick: “Seems to be more showroom traffic than normal for this time of year.”

Nova Scotia: “The economy is stable. New construction is down a little. Wood-burning product sales are being impacted negatively by heat pump sales. Our electric utility and all our (friendly) hearth distributors have been promoting the heat pumps consistently for two years and that is the greatest impact on our sales. Still trying to figure out how we can counter that as a small hearth store, but we will.”

 

At the end of August, 60 percent of Canadian specialty retailers were up in sales of hearth products; 70 percent were up in patio furnishings sales, and only 44 percent were up in sales of barbecues.

Ontario: “The economy has stabilized, but not recovered. Lots of competition from Big Box stores and www.costco.ca. It’s important to buy well and be as efficient as possible.”

Ontario: “In new condominium construction, builders now choose electric fires over gas. In basement renovations, contractors see advantages of electrics on price-point, plus advances in technology are making the flames more realistic. The economy has been improving in the construction industry. Homes being built are now over $1 million; this is the norm, not the exception.”

Ontario: “Very cool summer and very little spring weather.”

Ontario: “We have noticed a steady increase in hearth sales since September 2013; it has been driven by a harsh winter and skyrocketing heating fuel prices.”

Ontario: “Last year’s long cold winter was great for business this year; we have been busy all summer long doing hearth products. People seem to be doing renovations and building new homes, spending money again.”

Ontario: “New construction is up about 20 percent. We substantially upgraded our website which contributed considerably to our increase in all areas. Custom home starts are up considerably but renovations are about the same. Outdoor Room sales are flat in our area.”

Ontario: “In 2013, the combination of (a poor) economy and bad competition on pricing, created the worst summer ever; we barely held on. Then we had the best winter ever, with sales not stopping through all of 2014 – up 15 percent. We’re looking forward to our best year ever due to home renovations and the positive attitude of consumers.”

Ontario: “Anything outside got rained out. It was too cold to even think about enjoying outdoors. Last winter’s spike in propane fuel costs sent us into solid fuel overdrive. After all this time it was a great benefit to be The Solid Fuel Specialists. We were booked all spring, all summer, and now right into the fall.”

Ontario: “A cold spring certainly slowed down the sales of grill products, and the hot tub market remains flat. However, with the cold weather arriving, hearth product sales are providing a refreshing boost to the sales total. We’re looking forward to perhaps showing a profit this year!