Office Furniture Industry Future 'Not All That Bad'

August 18, 2008
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GRAND RAPIDS — Although the future of the office furniture industry has become more difficult to foresee, Mike Dunlap believes that, despite the down economy, the industry has some bright spots ahead.

“Due to shorter lead times and higher levels of productivity and market demands by the furniture manufacturers’ customers, you just don’t have the long-range visibility that the industry once enjoyed,” said Dunlap. Still, he believes the industry will see some “up-tick” in the second half of 2008.

Dunlap is owner and principal of Michael A. Dunlap and Associates, a business consulting services company that focuses on issues involving the office furniture industry. The company conducts a quarterly survey that marks the trends of the office furniture industry.

“We’re getting a lot of news on how bad the economy is. Late last fall and even early winter, there was a lot of talk in the office furniture industry that things were going to get bad. When I get done with a survey like this … there are indications that things might not be all that bad and, quite frankly, things are actually a little bit better.”

Gross sales, order backlog, employment, hours worked, capital expenditures, tooling expenditures and product development activity are all positive, said Dunlap. A major contributor to the negative side, however, is the cost of raw materials. Dunlap said the primary materials — steel, aluminum, foam, plastic and copper — make up roughly 80 percent of the materials the survey reported on. Their high cost plays a big role in the fact that suppliers to the industry have a worse outlook than manufacturers have.

“Suppliers are not able to be compensated by their customers for their material cost increases that they’ve had to endure,” said Dunlap.

He said that many suppliers are small companies that don’t carry much clout. He calls it “Murphy’s Golden Rule”: He who has the gold makes the rules.

The outlook for industry suppliers in the survey was as low as 22 on a 100-point scale. Manufacturers were above 30.

As for the future, Dunlap said: “This quarter has shown the improvement that we have been predicting since early this year, and I think it will continue into the third and fourth quarters, but at a reduced pace.” 

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