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Furniture Growth Quickens
The Business and Institutional Furniture Manufacturer’s Association (BIFMA) International’s office furniture data for the first quarter of 2005 show shipments increased 17 percent from the year-ago quarter to $2.29 billion from $1.96 billion, far surpassing industry expectations.
In economic consulting organization Global Insight’s latest industry forecast for the rest of 2005 and 2006, however, shipment growth is expected to continue but at a much smaller rate.
For the balance of calendar year 2005, Global Insight projects quarterly growth in a range of 8 percent to 10 percent. BIFMA said that on an annualized basis that should translate to a shipment value exceeding $9.9 billion and growth of about 11 percent over calendar year 2004.
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According to BIFMA, service sector employment growth and increasing investment in new office building construction are the primary factors driving the expectations for furniture industry growth over the next 18 months.
Global Insight anticipates a growth rate of about 7 percent for calendar year 2006, to a level of $10.68 billion.
Michael A. Dunlap & Assoc. LLC released the fourth edition of its quarterly MADA/OFI Trends Survey last week.
Designed to measure the current activity of the office furniture industry, the survey focuses on 10 key business activities, with respondents rating each area on an ascending 10-point scale. The result of each survey is an Industry Index Number, based on an ascending scale of 100.
The IIN for the April 2005 survey was 56.04, a surprising decline from 57.55 the previous quarter. That marks the lowest response to date, below the 57.37 in August 2004 and 56.16 in October 2004.
Gross shipment of office furniture and supplies to the industry, order backlog and incoming orders declined slightly, respondents said. Employment levels and tooling expenditures remained steady and new product development activities continued to increase, as they have in each quarter since the index began.
Capital expenditures are weakening and have diminished in each of the survey periods. Hours worked are down slightly from 60.09 in January 2005 to 57.95.
Although the higher costs of raw materials — particularly steel, plastics and other petroleum-based products — remain a major concern, the index showed some relief, rising from 34.12 in August to 39.57.
Respondents reported continued enthusiastic support for the industry, as the Personal Outlook Index has risen to 62.43 from 61.88 in August. Outlooks were rosier in January, however, at 63.97.
The consensus is that continued fears are that low-cost Asian competition, high health-care related costs, fuel costs and the declining value of the dollar are major threats to the industry. Nearly 80 percent of respondents indicated these concerns.
“The survey confirms that the industry continues to be on solid footing,” said Mike Dunlap, the firm’s principal. “But the higher costs of materials and individual employee costs put such a damper on the other positive performance.”
Over 45 percent of the responses are from top management, such as chairman, CEO, COO, and president. Responses came from Asia, Europe and