Ouch Office Furniture Orders Off 17 Percent In March

June 5, 2002
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GRAND RAPIDS — The office furniture industry saw orders plunge toward the end of the first quarter, as a weakened U.S. economy took its toll on sales.

Industrywide orders fell 17 percent alone in March, compared to the same period a year earlier, according to the Business and Institutional Furniture Manufacturer’s Association (BIFMA) International, the Grand Rapids-based industry trade group.

“That hurts,” Mike Regan, BIFMA’s manager of statistical services, said of the March orders figures. “That’s an ouch.”

For the first quarter in 2001, orders were down 9 percent from the same period a year earlier. BIFMA will use the figures from the quarter to revise its outlook for the industry.

While he’s unsure whether BIFMA will have to revise its forecast downward for the second time since the beginning of the year, the slide in business — particularly the March numbers — “don’t bode well” for a positive outlook, Regan said.

“We’re just riding the wave and the currents of the ocean. We’ll just have to wait until things get better,” he said.

BIFMA in February, citing the slowing U.S. economy, revised its 2001 industry outlook downward and forecast a 2.7 percent annual growth rate, to $13.28 billion, with business lagging during the first six months of the year before picking up in the latter half. That revision for moderate growth was about half the 5.6 percent growth rate that BIFMA initially forecast.

The present industry downturn generally follows historic trends that see office furniture sales experiencing about a six-month lag before they’re affected by changing economic conditions. Despite the industry downturn, many view the situation as only a reflection of present business conditions and not a fundamental problem within the industry, Regan said.

“We’re pretty much at the mercy of the general economy. We don’t see anything industry-specific going on,” Regan said.

In West Michigan, the industry’s Big Three manufacturers — Steelcase Inc., Herman Miller Inc. and Haworth Inc. — have begun to trim their staffs in response to the downturn.

Holland-based Haworth was the latest to cut staff with last week’s permanent elimination of 183 positions. The cuts were on top of temporary positions Haworth jettisoned in recent weeks, and represented the first time Haworth has ever laid off employees in its 53-year history, spokeswoman Kristine Vernier said.

Zeeland-based Herman Miller has temporarily laid off 150 people, most of them locally, on a voluntary basis for up to 30 days at a time, spokesman Mark Schurman said. The company employs about 5,500 people in West Michigan, and more than 10,000 worldwide.

“We’re going through specific areas of the business where business has been slow and asked for volunteers,” Schurman said.

In a statement released in late April, Herman Miller said recent business had been “choppy” and weekly order rates were still coming in at levels below that of the first six months of the company’s fiscal year. Herman Miller expects its fiscal year sales to come in at $2.17 billion to $2.19 billion. The company posted sales of $1.93 billion for the 2000 fiscal year.

Grand Rapids-based Steelcase also has sought volunteers among its employees to accept a temporary leave of 30 to 120 days. The company has about 7,000 production and professional workers in West Michigan and 21,000 worldwide.

The voluntary leaves are in addition to the possible 1,000 layoffs Steelcase previously stated it may have to make in June if business conditions continue to weaken. The latest move does not lessen or increase the likelihood that the layoffs will occur in June, Steelcase spokeswoman Heidi Hennink said.

“Things fluctuate week to week,” Hennink said. “We’re just continuing to watch our numbers to see how things end up.”

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