Haworth Sees Better Year Ahead
How much and when sales will increase are the unknowns for Haworth and the entire office furniture industry that has been mired in what many executives now openly refer to as a period of depression.
Holland-based Haworth is seeing increased, albeit tentative, activity in the wake of an improving U.S. economy, President and Chief Executive Officer Robert Krasa said. The key to a sustained sales recovery in 2004, he said, remains white-collar job growth and how quickly the economy improves.
“How that translates into furniture purchases is more a question of when, rather than whether, it will happen,” Krasa said.
Krasa, who took over as Haworth’s chief executive a year ago, anticipates “modest growth” for the company in 2004, reversing the tide of sales decreases that beset the industry and company three years ago.
The family-owned Haworth last week announced 2003 sales of $1.23 billion, a 6.8 percent decline from the $1.32 billion in 2002 and more than 40 percent off the peak of $2.06 billion in 2000. The company does not disclose annual earnings.
As Haworth’s 2003 sales followed the industry downward, the company managed to make “substantial progress” globally on internal issues: manufacturing productivity, new product development and introductions, and extending its capability and broadening the product mix to meet changing market dynamics that require office furniture makers to produce more than just office furniture these days.
“Despite a continuing weak economy, we strengthened our global position in 2003,” said Calvin Kreuze, Haworth’s chief financial officer and vice president of global finance.
Haworth in October acquired Interface AR, a Grand Rapids-based maker of raised flooring in commercial buildings. The raised floors carry data and power utilities throughout an office and house heating, cooling and ventilation systems.
The Interface AR acquisition, combined with the 2000 acquisition of SMED International, a Canadian-based maker of moveable office walls, is transforming Haworth from a global manufacturer of “work stations” to a maker of “work space,” Krasa said.
“We feel as good about what we accomplished in 2003 as any year in a long, long time,” Krasa said. “We feel we’ve made substantial progress in every geographic region and just about every function.”
Globally, Haworth had a tough sales year in Europe, where sagging economies are “still seeking a bottom,” and Asian markets performed well, Krasa said. Haworth has two plants in China and one in Australia, a market where growth is accelerating, he said.
“It’s the growth leader of the world right now,” he said.