Why this local stove maker is hot

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Appliance manufacturing has all but disappeared from Canada, a victim of the high Canadian dollar and outsourcing, but it's going strong in tiny Elmira, Ontario, north of Waterloo. That's where Elmira Stove Works assembles stoves, refrigerators and microwaves, destined primarily for the United States. Vice-president Brian Hendrick says his company has remained profitable through the economy's slow recovery, though annual sales of about $5-million had been flat until recently. The prospect of a lower Canadian dollar makes him happy, but "we need to make our business as efficient as possible in these conditions," he says.

The past 10 years have seen several manufacturers–including Whirlpool, Camco, Electrolux and Heartland Appliances–end production at Canadian-based plants. But as you might have guessed, Elmira Stove Works is no ordinary appliance supplier. For one, it doesn't have a giant factory equipped with expensive laser machines and stamping presses that roll standard white goods off the line. Every order is custom-made by a staff of 17 people at Elmira's modest facility. And its products are expensive: Refrigerators typically cost between $4,000 and $5,000, while a stove can run $8,000.

What you get is a choice of styles: 1850s or 1950s. Elmira makes stoves modelled after 19th-century cookstoves that were once popular across rural Ontario. As well, it has a 1950s retro line of Northstar refrigerators and stoves that are heavy on the chrome and mirror-finish polished look, with distinctive colours. The fire-engine-red Northstar refrigerator in the window at the Sozio appliances store in Cambridge, Massachusetts, brings curious shoppers in off the streets. "They do stand out," says store manager Adrienne Smith. But, she adds, "you don't sell them every day."

Customers (including Oprah Winfrey) are often wealthy, but not always. "It's a statement, a piece of art," says Hendrick. "We say it's for true originals," and people who have enough technology in their lives. "People like the fact they're turning a knob and they know just what it will do."

Elmira started in 1975, after local Mennonites kept coming to the second-generation Home Hardware store that Tom Hendrick, Brian's father and the company's founder, operated, looking for spare parts for their ancient wood stoves. Hendrick decided to make the stoves himself, buying the castings from a foundry in Carleton Place, which had made its last one six years earlier, and building the ovens in a converted chicken coop. Elmira made 25 in its first year, 200 the next, added electric and gas versions and kept expanding. By 1986, when Tom Hendrick decided to sell, the company had 120 employees and sold more than 10,000 units a year, earning $12-million in revenue. The new owners tried to expand too quickly and the company fell into receivership. So Hendrick bought it back four years later, and began making retro appliances in 2001 as '50s-vintage antiques gained in popularity.

The guts of the appliances are modern machines supplied by KitchenAid, with convection heating and frost-free features. Elmira then builds the designed-to-order exterior. Most of those parts–including fabricated steel from Ontario–are sourced in North America. The business has built-in advantages: minimal inventory and fixed costs, a small, dedicated staff and close relations with local suppliers. "Everyone has had challenges, and they want to keep the business, so they're willing to sharpen the pencils," says Brian Hendrick. The company used to prepay freight to all dealers, but now it charges. It goes to show that companies in industries where competitive dynamics have shifted dramatically can still find ways to succeed.

Karen Fischer, a small business consultant based in Uxbridge, Ontario, says the fact that Elmira makes appliances in Canada is "definitely a plus" for marketing purposes. So has the company been tempted to move production offshore? "I just had an e-mail an hour ago from Brazil," the elder Hendrick says during a phone interview in April. "They want to build us a plant to sell products. We're not interested," he says in a matter-of-fact tone. "We'd like to continue the business in Canada."

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Nearshoring: The act of repatriating jobs to a company's home country
 

During its heyday in the '70s, GE's Appliance Park in Louisville, Kentucky, employed over 23,000 workers and manufactured 60,000 appliances a week. By 2011, only 1,863 employees were left. But in 2012, the park opened a new assembly line to manufacture water heaters, which previously had been made in China.