By Matt Warnock and Wade Vonasek
Despite the current economic conditions in the United States, the office furniture industry has taken the steps necessary for achieving moderate growth.
|Some office furniture manufacturers have diversified their product offerings into other markets, such as healthcare (above) and education.
Photo courtesy of Steelcase Inc
There is no sector of the woodworking industry that is not affected by the current economic crunch plaguing the United States today. Every sector has had to overcome the weak dollar, high fuel costs, rising material costs and government legislation. However, despite the current economic turmoil, much of the office furniture industry is experiencing moderate growth.
âWhile our sales continue to show modest growth, we are facing ongoing challenges from increasing fuel and materials costs, as well as competitive market pricing pressures,â says Jeff Fenwick, vice president/general manager of Kimball Office.
To overcome the difficulties in the current market, office furniture manufacturers say they are intensifying their efforts at reducing expenditures while capturing more market share.
âIt seems that furniture companies that have diversified product lines and/or diversified their vertical markets stand the best chance of weathering the anticipated economic downturn,â says Tom Reardon, executive director of the Business & Institutional Furniture Manufacturers Assn. âPursuing a corporate strategy around sustainability could also help a manufacturer differentiate themselves from offshore competition and potentially appeal to different market segments, as well as build in long-term operational efficiencies that will ideally lead to increased profitability.â
âWe are aggressively looking at ways to reduce cost without compromising our quality and service levels,â says Shawn Green, KIâs vice president of product management. âWe will continue to look for creative ways to produce, package and ship our products to offset the inflationary pressure of the market.â
âIt is times like this when the opportunity to create excitement with great product introductions and new showroom openings can capture exceptional attention,â adds Mike Wagner, senior vice president of sales and marketing, OFS Brands.
Another area where office furniture companies are stepping up their efforts is in customer service, while also eliminating complexities and redundancies from the company.
âOur strategy is to remain focused on meeting the needs of our customers, and continue aggressively reviewing our processes and entire cost structure to eliminate complexity, redundancy and inefficiencies,â says Fenwick.
In addition to driving growth through product diversification and an intensified customer focus, office furniture manufacturers are focusing on the issue of sustainability to drive down costs, attract customers and be more environmentally responsible.
Environmentally friendly business practices, including the use of sustainable materials, are nothing new to the office furniture industry.
Green â the New Black
Many companies in the office furniture industry have been adhering to the principles of sustainability for some time, while others are just now jumping on the green bandwagon.
âThe desire to produce high-quality products from environmentally friendly materials in a manner that is healthy for our employees and the environment is not a new concept,â says Green.
âWe certainly believe in the positive effect on the environment, but we can also make a very stong case that itâs actually positive from a business performance standpoint,â says Mark Schurman, director of external communications for Herman Miller Inc.
âGreen is definitely becoming the new black â and has evolved from a niche concept to a mainstream movement,â comments Jerry Dittmer, president, The HON Co.
In many cases, the sustainability issue is driving the office furniture industry in terms of design and material use.
âLEED has driven our industry to be more innovative in our approach to product design â from the materials we choose to the processes we use, to designing products that are simple, flexible and durable for long life. Movement towards greater environmental sensibility benefits us all,â says Tim Ruffini, izzy designâs director of brand management.
âRecycled content, recyclability, clean materials and plant efficiency all factor into our design and manufacturing strategies,â agrees Fenwick.
Not only does going green mean saving the environment, but it also means better business practices and an improvement in the cost of doing business.
âStrategic partnerships with suppliers who help support the effort have been critical to the success and speed of the environmental evolution,â explains Wagner. âTwo significant aspects of being green are to eliminate waste and to change behaviors to those that are healthier for society. As more people adopt these practices, the long-term benefits should be a reduction of overall cost and an improvement in our living conditions.â
âThe USGBC and LEED, as well as other building rating protocols, have brought increased attention to the environmental impact that construction projects can have,â says Reardon. âThese are positive developments and have created opportunities for manufacturers to provide more sustainable product solutions for these projects.â
|New designs in office furniture, and new product lines, can enhance market share. Photo courtesy of Kimball Office|
What Lies Ahead
In regards to the year ahead, there are numerous challenges and opportunities for the office furniture industry and the companies that comprise it. Many of those interviewed pointed to various costs, as well as the economy as a whole, as significant challenges.
âI think the biggest challenge for any manufacturer is going to be trying to contain costs in this inflationary environment,â says Reardon. âI see the cost of commodities, energy, employee benefits, etc., all rising very rapidly.â
âItâs probably twofold,â say Schurman. âOne, obviously there are still a lot of economic crosswinds that no one can really say, with honesty, that they can discern what will be going on six months from now. The economy broadly, both domestically and internationally, is a big question mark. The other, which we do have a better sense for, is commodity costs.â
Greg Evans, director of Wood Solutions Business Group North America for Haworth Inc., offers another perspective. âThe challenge lies with balancing design communication needs and desires with cost and budget reduction restraints of a project,â Evans says.
There are positives as well. Being longtime leaders in the green movement, the office furniture industry sees considerable opportunities in this area.
âWith the impending release of a furniture sustainability standard, the industry has an opportunity to harmonize on a common method of evaluating the sustainable attributes of furniture products,â says Reardon. âAnd also to begin to implement more sustainable processes and design elements that have the potential to reap long-term rewards through more efficient use of materials and resources.â
âRelative to the environment, the elimination of formaldehyde from all of our materials [is an opportunity],â says Kuske. âI believe the biggest opportunity is for education and open standards This is both for manufacturers and for consumers. There is so much information available, it is very hard, as a consumer, to filter through and understand what is truly sustainable and why the tradeoffs are important.â
In addition to the increasing emphasis on sustainability, Dittmer says there are a number of opportunities on the horizon. âInnovative solutions that adapt to our changing workplace and workforce,â he says, âand significant advances in making office furniture easier to specify, buy and install â specifically innovative advances that demystify the furniture buying process.â
Schurman adds international growth and vertical markets to the list of opportunities. âWeâve got manufacturing up and running now in China for the last 12-18 months and weâre adding more product to that production to serve China and Greater Asia,â he says. âWeâre very excited about those kinds of emerging markets, likewise Russia and Eastern Europe, as well as India and Brazil.
âThe other opportunity would be vertical markets: healthcare, education and some of those other segments, both domestically and internationally, that we see as fairly insulated from the office market.â
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