U.S. office furniture production in 2012 flat, at best
Pete Daly

Growth in consumption of office furniture is predicted by BIFMA International to level off at around 9 percent during 2012, but the consumption number reflects both U.S. imports and exports. The shipments number pertains directly to U.S. production — and that prediction is flat, at best.

“The forecast is calling for flat to minus 2 percent shipment growth (in 2012), so that is a concern, if that does come to pass,” said Tom Reardon, executive director of BIFMA.

“No growth to slightly negative growth (will not be) welcomed by the industry,” he added.

He attributes the slowdown in the world office furniture market to continuing high unemployment and “everything that’s going on in Europe with their debt situation, and political uncertainty here … in an election year.”

“Quite often you see our customers and potential customers take a little cautious attitude in an election year, waiting to see how things turn out,” he said.

Shipments in 2010 were an increase of 6 percent over the grim year 2009 – when the office furniture industry sales declined by about 30 percent.

Reardon said calendar year 2011 appears to have ended with overall shipment growth of 13 or 14 percent, compared to 2010.

The year 2011 “started off very, very strong, talking about shipments,” said Reardon. He cited shipments growth in the first quarter of almost 26 percent, compared to the same quarter in 2010.

“It was 20 percent in the second quarter, 11.5 in the third,” he added.

BIFMA did not have the December numbers yet when he spoke to the Business Journal last week, but he said that based on October and November, shipments for the quarter appeared flat, “definitely decelerating in volume as we go through the year.”

When asked if the commercial office space market in the U.S. was improving, Reardon said he believes it is still “trending down. I don’t think we’ve seen bounce-back in commercial real estate yet.”

New England is one example of the weakness in the office space market. The Hartford (Conn.) Courant reported in early January that the commercial real estate market there continued to be very weak, although office space vacancies are dropping in other New England cities. In downtown Hartford, according to CBRE-New England, the vacancy rates remained at more than 30 percent in 2011, for the second year in a row. About 2.4 million square feet are empty.

Commercial office space was looking better in Boston, where 11 office towers changed hands last year, nearly four times the number in 2010.

Meanwhile, BIFMA continues to see growth in its members’ involvement in the ANSI/BIFMA e3 Furniture Sustainability Standard that BIFMA launched a little over two years ago, along with its certification program called Level.

“The companies that have certified products continue to move their products up in the standard, to higher levels of conformance, and we’re getting more and more companies coming on board with their initial product certification. So that’s encouraging,” said Reardon.

In November, BIFMA representatives participated in the GreenGov Symposium in Washington sponsored by The White House Council on Environmental Quality and the Association of Climate Change Officers. At issue was implementation of Executive Order 13514, which includes sustainable planning, fleet management, clean energy and climate risk and resilience.

One of BIFMA’s goals at the symposium was to determine the government’s approach to sustainability issues, compared to the office furniture industry’s new sustainability standard.

According to the BIFMA quarterly newsletter released last week, the federal government’s response to e3 and Level “has been very positive to date, (but) there may be areas where the standard could be enhanced to communicate more effectively with federal customers looking for more sustainable products.”

An immediate focus is on the accounting of greenhouse gases. The e3 Standard has a greenhouse gas section with points for conducting inventories, making reductions in greenhouse gas and voluntary reporting. However, the credit could more clearly harmonize with national and international conventions and is being reviewed by BIFMA to determine how that might be done.

BIFMA is also interested in the timetable for adoption of e3 and Level by the General Services Administration and hopes to see progress on that early this year.

An old issue with GSA that was touched upon again in January by BIFMA is the fight to open up all government purchasing contracts to the private sectors. Reardon said he believes the GSA reserves about 10 percent of its budget for purchases from the federal prison system, where inmates produce a wide variety of products that range from office furniture to bicycle helmets. U.S. Congressman Bill Huizenga, R-Zeeland, who represents the 2nd District of Michigan, has joined with others in Congress to push for legislation that would allow the private sector to compete on an equal footing for contracts with the federal government.

Under proposed H.R. 3634, Unicor, the government-owned corporation that employs federal prisoners to manufacture goods or perform services to fulfill contracts with federal agencies and departments, would be required to submit a detailed analysis of the impact to the private sector before entering into new product markets, and would not be able to sell products commercially or internationally. The only customer could be the federal government. It also prohibits agencies from contracting with Unicor in which inmates would have access to sensitive or classified information.

Huizenga said the bill would force federal agencies “to bid for fair and reasonable prices and for products that best suit their needs. The bill preserves market access for these products or services to the hard-working men and women of our districts. This is simply one more easy, common sense way to preserve jobs and help restore economic security for America.”

Reardon noted that Pete Hoekstra, who represented the 2nd District before Huizenga, had long championed the push to open up all federal contracts to the private sector.

“Rep. Huizenga has taken over that role, supporting his constituents in the district,” said Reardon. Those include, of course, hundreds of people who work at Herman Miller and Haworth in the Holland/Zeeland area.