Coaticook, Quebec – Cabico, a manufacturer of custom cabinetry, is implementing workforce reductions and exploring alternative work arrangements as it navigates the fallout from recently imposed and anticipated U.S. Tariffs, and a sluggish Canadian construction market. The company has filed a request for safeguard measures with the Canadian Minister of Finance and National Revenue, François-Philippe Champagne, seeking to address the influx of Chinese products into the Canadian market.
The situation began to deteriorate earlier this year when the United States initially postponed the imposition of a 50% tariff on certain goods, including those potentially impacting Cabico, until . Despite this delay, the market reaction was immediate and negative, according to Alain Ouzilleau, CEO of Cabico. “The market American est resté ébranlé et les commandes sont très très basses depuis le début janvier,” Ouzilleau stated, translating to “The American market remained shaken and orders are very, very low since the beginning of January.”
In response, Cabico is adjusting its production capacity and implementing measures to mitigate the impact on its employees. These include reducing the standard workweek from 40 hours to approximately 30 hours, and exploring the possibility of three-day workweeks. “Ça nous fait vraiment de la peine qu’ils soient obligés de réduire leur rémunération de la sorte,” Ouzilleau said, meaning “It really pains us that they are forced to reduce their pay in this way.” The company is also implementing a job-sharing formula, allowing two employees to share a single full-time position.
Cabico is actively seeking ways to minimize layoffs. Ouzilleau indicated the company is in discussions with another business in the Eastern Townships region of Quebec to potentially offer work to its employees. “On parle déjà avec une autre entreprise de l’Estrie pour voir si nos travailleurs ne pourraient pas aller les aider,” he explained, meaning “We are already talking with another company in the Eastern Townships to see if our workers could go and help them.”
However, the duration of these measures remains uncertain. Ouzilleau acknowledged, “On admet toutefois ne pas savoir combien de temps ces mesures pourraient être en vigueur,” or “We admit however not knowing how long these measures could be in effect.” The company is hoping for an increase in orders by the end of February, but acknowledges the difficulty in predicting the future. “On espère recevoir plus de commandes d’ici la fin du mois et on espère que tout ceci ne dure que quelques semaines, mais c’est difficile à prévoir,” Ouzilleau stated.
Beyond the U.S. Tariff situation, Cabico is also contending with a weak Canadian economy, particularly in Ontario, its largest Canadian market. “L’Ontario est notre plus gros marché au Canada et, pour la deuxième année de suite, ils sont les pires en termes de nouveaux chantiers de construction,” Ouzilleau noted, translating to “Ontario is our largest market in Canada and, for the second year in a row, they are the worst in terms of new construction projects.”
The company’s request to Minister Champagne seeks to challenge the increasing volume of Chinese products entering the Canadian market. Cabico is hoping to initiate a safeguard investigation at the International Trade Tribunal to impose temporary tariffs on unfairly priced imports from Asian countries. “On travaille très fort pour que notre dossier se rende au tribunal du commerce international pour imposer des tarifs temporaires sur les importations déloyales des pays asiatiques au Canada,” Ouzilleau said, meaning “We are working very hard to get our file to the international trade tribunal to impose temporary tariffs on unfair imports from Asian countries to Canada.”
A key argument in Cabico’s request centers on concerns that the United States may perceive Canada as allowing “dumping” of Asian products, which then cross the border into the U.S. “L’administration américaine se sert de ça pour dire que le Canada accepte le dumping asiatique et que ces produits traversent la frontière,” Ouzilleau explained. If the Canadian government and tribunals approve Cabico’s request, it could provide the company with leverage to renegotiate its position under the existing free trade agreement with the United States.
The situation highlights the complex interplay between international trade policy, domestic economic conditions, and the challenges faced by manufacturers navigating a volatile global landscape. Cabico’s actions represent a proactive attempt to mitigate the impact of these forces and protect its workforce, but the long-term outcome remains dependent on government decisions and market dynamics.
