For the first time in its history, the U.S. office furniture industry surpassed $10 billion in sales, according to the latest figures released by the Business and Institutional Furniture Manufacturers Assn. -- International.

In 1996, the value of office furniture shipments in the U.S. jumped by more than 6 percent to $10.04 billion. Sales are expected to continue to grow and are projected to reach $11 billion in 1998. If inflation is factored into the equation the industry, "is not going gangbusters like in the 1980s, but it is still good," said Russ Coyner, executive director of the Business and Institutional Furniture Manufacturers Assn. -- International.

Coyner explained that there are several reasons for the "continuing strength" of the office furniture business. The growth of mid-size and small businesses is one reason, and the "further recognition that office furniture can be a real key to productivity in the office," is another reason, Coyner explained. "People are picking up new furniture components to aid in their business efforts," he said.

Mirroring the office furniture manufacturing industry as a whole, nearly every respondent to Wood & Wood Products' Ninth Annual Survey of the Contract Furniture Industry said they had a good year in 1996 and are expecting 1997 to be even better. (The survey looked at companies thought to have at least $30 million in sales and who produce office, institutional, hospitality and other contract furniture.)

In 1996, domestic and international sales from the industry's Top 25 companies in this year's survey totalled more than $9.6 billion. Last year, the companies in the survey had sales of approximately $8.6 billion. Company sales were up almost across the board from large companies on down.

The top five companies had a combined sales growth of approximately $820 million, with Steelcase growing 4 percent, Herman Miller up 27 percent, Haworth up 19 percent, Hon up 18 percent and Knoll up 10 percent. In fact, Herman Miller and Hon Industries said they each had their "best year ever" in 1996. In 1997, Hon is predicting to once again have a best year ever and Herman Miller, hedging its bets a little, said it predicts it will have a "very good year" or another "best year ever" in 1997.

Overall, 69 percent of the contract furniture executives surveyed felt that 1996 was either a "very good" year or their company's "best year ever." Eighty-one percent of responding companies said that they were predicting either a "very good" year or their "best year ever" in 1997.

COMPETITION FROM BEHIND PRISON BARS
While the industry is seemingly on a high, there are concerns, the top one being increasing competition from the Federal Prison Industries system. Some 73 percent of those surveyed said that they were either "very" or "extremely" concerned about growing prison industries sales, and half of the respondents said they were more concerned about the issue than they were one year ago. Using federal prisoners, the FPI system produces a variety of products, from furniture to missile parts, and by U.S. law federal agencies must purchase these products from FPI in a no-bid process if that item is produced and is available.

This high level of concern probably stems from FPI's aggressive expansion plans. In December 1996, the FPI board of directors voted to increase production of office case goods such as desks, credenzas and bookcases. Production of office case goods would rise from $30.3 million in 1995 to approximately $80 million in 2001. This increase follows other expansions in the furniture sector approved in 1996 including the expansion of systems furniture products from $70 million in 1997 to $150 million by the year 2000.

The second biggest concern identified by respondents to W&WP's survey dealt with price cutting by the competition. Sixty percent of the executives said they were either "very" or "extremely" concerned about this issue.

The third biggest concern deals with the skill level of current and future employees. Fifty-three percent of those responding said they were very or extremely concerned about this issue.

The issue of least concern identified by the responding executives was foreign competition. The reason for this apathy may be that some of the top companies, such as Steelcase and Haworth, have facilities in different parts of the world, but many others do not.

While for the most part this issue is greeted with little concern, the office furniture trade gap is growing. Since 1990, the trade deficit has widened 183 percent from $229 million in 1990 to to $648 million in 1996. In the last six years, imports of office furniture into the U.S. have grown by nearly 117 percent while exports have grown by some 46 percent. In the last year alone, imports of office furniture to the U.S. have increased 21.5 percent and are nearing the $1 billion mark. In contrast, 1996 exports, while growing 7 percent after a down 1995, remain near 1994 levels and have grown less than one percent since 1993.

From new projects to new plants, 1996 brought many changes for the Top 25 companies of the contract furniture industry. Here are some highlights.

â?¢ In 1996, Haworth established a new company, the Haworth Furniture Company Ltd., to manufacture and market Haworth furniture in China. There will be a sales office, showroom and manufacturing facility in Tianjin, near Beijing. The company also opened an office and showroom in Bangkok, Thailand.

â?¢ Herman Miller experienced seven straight record quarters for sales, orders, earnings and cash flow. It also had a stock split and increased dividends. It is reorganizing its international operations. In 1997, a new plant is scheduled to come on-line.

â?¢ Herman Miller and Hon Industries entered into a distribution agreement whereby Hon will supply certain products, primarily metal case goods and desks, which will be sold through Herman Miller's SQA division, (Small, Quality and Affordable).Tom Miller, vice president of marketing, said that the agreement is still in the early stages but it "seems like it is in the best interest of both companies."

â?¢ GF Office Furniture Ltd. introduced its GFX, a new panel system, and Goodform II seating.

â?¢ In 1996, Falcon Products of St. Louis, MO, experienced record sales, earnings and earnings per share for the fiscal year ended Nov. 2, 1996. Other company moves included the acquisitions of a manufacturing facility in Tijuana, Mexico, and seating manufacturer The Chair Source of Anaheim, CA.

â?¢ American of Martinsville, a LADD company, won the LADD's Chairman Award based on overall 1996 performance. This is the second year in a row the contract furniture company won the award. The company also announced an agreement with Beverly Enterprises to supply case goods to all 600 of Beverly's long-term care nursing facilities. To meet production requirements, a plant in Chilhorview, VA, was transferred to the company from another LADD company.

â?¢ Trendway Corp. launched a Web site, www.trendway.com. The site, which features animated and colorful building blocks, includes a password-protected area that will allow dealers and reps to obtain current pricing and product information.

â?¢ Geiger Brickel entered the mid-priced furniture market in 1996 with the introduction of its Keyeira collection. New seating designs allowed for reduced prices. It opened new showrooms in San Francisco and Toronto.

â?¢ OFS/Styline Industries introduced its AddTo Modular Casegoods line.

â?¢ Hunt Manufacturing announced April 8, 1997, that it was planning to sell its Bevis Furniture business as part of a reorganization. In 1996, Bevis exhibited at the Neocon show for the first time, where it introduced the acoustical version of the company's Convergence panel system and the Essential Foundations training room furniture line.

â?¢ WinsLoew Furniture Inc. introduced nine new seating collections, including the award-winning Breeze metal stacking chairs, and four collections of wood occasional tables. It also experienced record year-end operating results and announced a share repurchase.

â?¢ Integrated Furniture Solutions is the company spawned from the purchased of Vogel Peterson in December 1995 by the owners of the EckAdams Co. The company combined had a record year in 1996 and is anticipating a very good year in 1997.

â?¢ In 1996, JOFCO Inc. said it placed a major emphasis on new products in the case goods and seating categories. This included the CaseWorks Studio Collection, a collection of "space conservative office environments."

â?¢ Haskell of Pittsburgh Inc. introduced new products in 1996 including its Workplaces2 line of systems work environment, and Progeny and ReSource Seating. It also started a fabric program that allows end users to select any upholstery from Maharam for Haskell's seating styles.

â?¢ In 1996, Indiana Furniture Industries began selling its product to the federal government. It also introduced two new lines, the Saratoga and the Campton.

â?¢ DARâ?¢RAN FURNITURE Industries introduced its 5000 Series Conference collection and new slat wall options with a variety of accessories. It also acquired a new showroom at Chicago's Merchandise Mart.