Steelcase Entering A Growth Sector

August 30, 2004
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GRAND RAPIDS — A new partnership that Steelcase Inc. signed with a nationwide distributor of medical supplies and equipment follows the company’s pursuit of the burgeoning health-care market.

Steelcase is joining its rivals in the office furniture industry in giving greater attention to the health-care market.

The market is an economic sector that’s expected to double in the next decade and is one of the few within the construction sector that is experiencing solid growth.

Under their deal, Henry Schein Inc. will distribute Steelcase furnishings for medical, dental and veterinary offices through its distribution network in North America and Europe.

The distribution agreement provides Steelcase access to 450,000 health-care providers that Henry Schein serves and “enable us to reach customers we are not currently serving,” Steelcase North America President Frank Merlotti Jr. said.

It represents our continued focus on penetrating new markets, creating new products and developing new approaches that strengthen our business,” Merlotti said.

Henry Schein — based in Melville, N.Y. — is the largest distributor in the United States of supplies and equipment to medical, dental and veterinary offices.

The firm recorded 2003 sales of $3.35 billion.

During the NeoCon trade show in June, Steelcase dedicated a portion of its showroom at the Merchandise Mart in downtown Chicago to health-care furnishings designed for use in patient and visitors areas and by medical staff.

The products came from the Steelcase Design Partnership, a collection of subsidiary companies that focus in niche markets.

As the office furniture industry recovers from a rough three-year downturn, manufacturers like Steelcase and rivals Herman Miller Inc. and Haworth Inc. are putting a greater focus on new markets in order to grow.

And it’s hard to find an economic sector growing right now like the health-care industry, which is expected to continue expanding for years to come.

Spending on health care in the United States is projected to reach $3.4 trillion — 18.4 percent of the GDP — by 2013, according to the federal Centers for Medicare and Medicaid Services.

From 2002 to 2013, health-care spending is projected to grow 7.3 percent per year on average, according to estimates the agency published earlier this year.

The continued growth of the health-care economy has fed a boom in the construction of new medical and health-care-related facilities.

Through the first six months of 2004, public and private sector construction in the health-care sector was up 8.7 percent, to $16.1 billion, over the same period in 2003, according to U.S. Department of Commerce data released in early August.

The only sector growing faster than health care was residential construction.

In 2003, health-care construction grew 6.9 percent nationwide, to $29.4 billion.

Like Steelcase, Herman Miller has targeted health care as a key growth market for the future.

“We already do a fair amount in that market segment. Hopefully, with the focus, it’ll be bigger,” Herman Miller Chairman Michael Volkema said.    

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