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George Armoyan has arrived on the scene at Shermag Inc. , and the sleepy little furniture company from Sherbrooke, Que., will never be the same.

"We have to stop the bleeding before it is too late," Mr. Armoyan, the colourful corporate activist and Shermag's largest shareholder, said in an interview after he joined the board of the crisis-ridden manufacturer.

"Costs have to be controlled. Some stuff has to be made in China.… To be in the furniture business without being involved somewhat in manufacturing in China, I don't think you can survive."

The appointment, which gives him control of the five-member board, sent Shermag shares up 34 per cent.

Even after that rise, they have lost 84 per cent of their value in the past three years, crushed by a high Canadian dollar, faltering sales, a crumbling market for new homes in the United States and shifting manufacturing patterns in the industry.

To make way for Mr. Armoyan, president and chief executive officer Jeffrey Casselman stepped down from the board, though he will stay as the top executive. Mr. Armoyan said that if the company had not made room for him as a director, "we would have asked for a special shareholders meeting."

As for the future of Mr. Casselman and other senior managers, Mr. Armoyan said: "We will work with them as long as they're willing to work with us. If they don't want to work with us, that's a different story."

Mr. Armoyan first showed up as a player in the summer of 2006, when his public holding company, Clarke Inc. , revealed it owned nearly 12 per cent of Shermag. He asked for a board seat right away and was denied, telling The Globe and Mail in an interview last year: "It's a typical French response, I guess — 'Monsieur Armoyan, you have to come for interviews, we'll consider you next year.' I'm a big shareholder, but they want to give me the runaround. I was not happy."

Clarke now owns 20 per cent of Shermag.

Tuesday, Mr. Armoyan said that after the initial rebuff, he decided not to "push hard" and to "see what the existing board and management was going to do." But several rounds of restructuring have not stemmed the red ink: Shermag lost $17.4-million in the fiscal year that ended March 30 — nearly as much as its shrunken stock market capitalization, now about $21-million.

In the past two years, Shermag has cut its work force by about 50 per cent and has closed no fewer than seven plants. Most of its manufacturing facilities are in Quebec and New Brunswick.

To stem the losses, it has been moving production to Asia. In fiscal 2007, 36 per cent of Shermag's revenue came from products that were "globally sourced" — a code phrase for Made in China. But is still behind many furniture manufacturers in following that trend.