OFI Needs Innovation, Globalization

October 14, 2005
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GRAND RAPIDS — Chuck Saylor, founder and president of Grand Rapids furniture-maker izzydesign, views the evolution of the office furniture industry not with fear, but wonder.

“I wish I were 20 years younger,” he said in the closing speech of last week’s 2nd Annual Global Office Furniture Symposium at DeVos Place. “It would be so exciting to be entering the industry today. … The world is re-conceptualizing itself for the next generation.”

Saylor talked about global design innovation, primarily focused on his company’s partnership with Norwegian furniture maker HAG. Through the venture, izzydesign added new product lines, enhanced its brand, and absorbed its partner’s North American manufacturing, giving izzydesign incremental volume and margin increases. For the first time, HAG saw a profit from North America, and its European growth boomed.

According to Saylor, “horizontal” strategic partnerships such as this will quickly make vertical integration antiquated by comparison, as companies from all sides of the world realize the benefits of leveraging capital investments and global sourcing collaboratively.

Companies are already changing within the global marketplace, he noted, with global brand awareness a unique byproduct of the new economy. BMW’s second largest market, for instance, is no longer Germany, but China.

“I can’t wait to sell chairs in China,” Saylor said. “Because they are going to buy a ton of them. And Europe, India, Russia and places I haven’t even thought of yet.”

During one of the day’s breakout sessions, Michael Dunlap, principal of Michael A. Dunlap & Associates, expressed concern with the preoccupations driving the domestic market. He said office furniture is taking cues from the auto industry — in all the bad ways.

Dunlap doubted assurances from representatives of the Big Three furniture makers in an earlier session that original equipment manufacturer procurement is not driven by price. Like auto suppliers, furniture suppliers should expect increasing price pressure and overseas sourcing.

Also, OEMs are doing little to support each other with partnerships of the sort Saylor suggested. Dunlap, a veteran of both industries, recalled the unified effort by Japan and Germany to expand their auto industries to North America.

And despite beliefs to the contrary, when compared to auto, office furniture is not innovative, lean or customer driven. Worst of all, innovation is especially lacking, he said, with few substantial design changes for some products since the 1800s. Herman Miller’s landmark Aeron chair was introduced in 1993.

“Would you drive a 10-year-old car? A 10-year-old computer?” Dunlap asked, rhetorically. “I’m not advocating designing obsoleteness, but product life cycles are too long.”

This is one reason for the lack of interface and partnerships with the office technology industry, Dunlap said. The future of the office lies between these two industries, and technology companies are becoming frustrated with the pace of integration. This could, in the near future, turn furniture OEMs into takeover targets by the technology industry, where most of the major players dwarf the office furniture industry as a whole.

In his keynote address, Theo Magermans, international business development manager for Dutch furniture maker Samas, agreed with the other speakers, dismissing fears of globalization and emphasizing the importance of innovation.

“Globalization is a historical process,” he said, “the result of human innovation and technological progress.”

Not only has technology created a flat world, it will continue to transform the office, making it increasingly personal and virtual.

For starters, with the rise of the virtual office, the need for the traditional office is suspect. The primary reason will be interaction, he predicted, but not only for teamwork. In 30 years, the number of single U.S. adults has increased from 12 percent to 32 percent. According to the U.S. Census, 26 percent of U.S. households are single-occupant. For many, the office will, or has already, become a “family replacing home.”

The balance of work and personal time will bleed together, Magermans said, and furniture designers should be ready to respond. Pay-per-use communal offices will emerge. For these, as well as traditional offices, users will expect customization and integration. Temperature, light, and ergonomic settings will be able to automatically adjust to each user’s settings.

Samas intends to test these “smart office” concepts at its new headquarters next year.

Also, this integration will help drive office furniture into the growing service sector, where 75 percent of U.S. GDP and 50 percent of European GDP is already generated.

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