BIFMA Halves Sales Growth Projections
GRAND RAPIDS — The U.S. economic slowdown prompted an industry trade group to cut in half this year’s projected sales growth for office furniture manufacturers.
The Grand Rapids-based Business and Institutional Furniture Manufacturers Association (BIFMA) was anticipating a 5.6 percent growth in industry sales for 2000, to $14.1 billion. Citing present economic conditions, BIFMA last week revised that forecast downward to a 2.7 percent growth rate, to $13.28 billion.
BIFMA Executive Director Tom Reardon attributed the downward revision to growing concerns about the U.S. economy and the potential of a recession that has corporations holding off purchases.
“Things have slowed down a little faster and a little deeper than we anticipated three months ago,” Reardon said. “I think it’s an erosion of the confidence more than it is an erosion of the real business climate. There’s so much talk about a slowdown, people are taking a wait-and-see approach.”
While the industry enjoyed a healthy 8.5 percent sales gain in 2000, to $13.2 billion, growth slowed late in the year as the economy softened. Industrywide sales growth “hit the brakes” in December, and January has been “very, very slow,” Reardon said. January sales figures are due out next week, he said.
Reardon remains cautiously optimistic, although he worries that fears about the economic slowdown and whether it may turn into a recession could become self-fulfilling.
“The psychological implications could be daunting,” he said. “There is some caution out there, but hopefully we can avert something serious.”
On the plus side, many of the industry’s economic indicators look favorable — white collar employment growth, corporate profits and new office construction look relatively sound, Reardon said.
The association projects that the industry will experience flat sales for the first quarter of 2000, compared to a year earlier. Sales will pick up during the second half of the year, as recent interest rate cuts stimulate the economy and corporate earnings improve, BIFMA projects.
After lowering expectations for this year, BIFMA revised its sales forecast upward for 2002 from a 3.1 percent to a 5 percent gain over 2001, although the actual dollar figure for next year is slightly lower, at $14.3 billion.
Until business picks up, the flat sales will likely trigger increased pricing pressures for office furniture makers and their suppliers, as customers seek and manufacturers offer larger discounts, Reardon said.
“Any time the market gets soft, it makes competition. People do discount prices,” he said.