Innovation Will Fuel Recovery

March 10, 2003
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The "news" from the furniture industry last week was regarded much the same as the lion-like start of the month of March. A continued pattern of chilling effect, but one that all know will change.

Steelcase is using its most creative method for dealing with the continued industry downturn, advising that all 15,000 North American workers will be "idled" the week of spring break; a holiday week off, without pay. And while another 250 hourly workers were given advance warning of a possible layoff this spring, the company widely regarded as paternalistic among this labor force is as focused on the future as any world-class company.

The lessons of lean manufacturing cannot be escaped by the smallest, nor largest, of this corporate community. Nor can the lessons of diversification, to which Steelcase is more recently paying homage. The Big 3 furniture makers are, and have been, dynamic international leaders in innovation and will continue to be, especially with the experience of that legacy. Far more manufacturing firms have yet to learn about the "creative class" (so, too, does area media).

Former Haworth CEO Jerry Johanneson, who retired the first of February, told the Business Journal he thought the industry-wide forecasts for 2003 were optimistic. Johanneson believes third quarter gains are within reach, though annual earnings would be regarded as flat. Haworth and Herman Miller managed to retain or regain profitability in 2002 even with a 23 percent fall in sales revenue. It is likely that inventory levels also will hamper an awaited recovery.

But this business community also must acknowledge that Steelcase broke traditional paradigms early this year, when it announced a deal with neighboring Johnson Controls for automotive seating. Such examples of continued innovation are assuredly what makes this industry exciting, anticipated, and forecasts longevity.

The story on page 1 reporting industrial investment increases across the state is likely a precursor of similar patterns of innovation. While the report provides a measurement only by those companies requesting tax abatements, it is especially interesting to note that Walker saw $42.7 million in such investment, creating 191 new jobs. Kentwood and Wyoming follow closely. It is noteworthy to highlight that while Kent County led all Michigan counties in the number of abatements approved, Grand Rapids approved just five of the total. One of those (with city complaint) was an abatement for Steelcase that amounted to a $14.7 million investment that retained 91 jobs.

While governmental units are only now feeling the same pinch borne by business and industry for two years, the obvious benefit of continued cooperation helps assure a spring-like recovery.           

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