- change ups
Survey office furniture stays steady
The Michael A. Dunlap & Associates survey of office furniture companies and their suppliers in January has generated an index of 54.46, compared to 56.36 in October.
“Although this represents a slight decrease, it is very modest,” said Dunlap, an office furniture industry consultant. “The steady index during the past 12 months indicates that the industry is still on solid ground and on a positive track.”
The index was 55.57 in July and 55.38 in April 2011.
This is the 31st quarterly edition of the MADA/OFI Trends Survey, which is designed to measure the current business activity of the office furniture industry and its suppliers.
The survey focuses on 10 key business activities, with respondents rating each activity level on a scale of one to 10. The activities are: gross shipments, order backlog/incoming orders, employment levels, manufacturing hours (overtime versus reduced hours), capital investment, tooling expenditures, new product development activity, raw material costs, employee costs, and the respondents’ personal outlook on the industry.
The highest recorded index was 59.72 in July 2005; the lowest was 41.45 in April 2009. The average overall index is 54.36 since the survey started in August 2004.
The January survey highlights are:
- Gross shipments measured 57.60, nearly equal to the overall average of 57.78, and order backlog recorded 53.06, somewhat below the average of 56.78.
- The employment index dipped slightly to 52.20 but is above the overall average of 51.61. Hours worked also dipped to 56.19, but is also above the average 55.64.
- The capital expenditures and tooling expenditures both held steady at 57.83 and 55.61, respectively, compared to their overall averages of 55.38 and 55.77.
- New product development improved to 62.50 but is below the 63.51 average.
- Raw material costs improved to 47.61, the best since the 48.33 index in January 2010. The average is 43.36. Employee costs slipped to 45.63; the average is 46.93.
- The personal outlook index improved to 56.42, just slightly below the average of 56.59.
“The weaker gross sales and order backlog index values are of some concern to me, as both have declined during the past two quarters. I am not worried about the very slight dip in the employment or hours worked index values because both manufacturers and suppliers are hiring on all levels,” said Dunlap.
“The steady performance in capital expenditures, tooling expenditures and new product development are encouraging, too. I am excited to see the steadiness in raw material costs. Higher employee cost index values are always a concern and never seem to show a lot of improvement. Although still in the 40s, they are much better than I had anticipated.
“The increase in personal outlook is very encouraging,” said Dunlap, noting that the majority of the respondents cite increased energy costs, material costs, and increased health care costs as the “largest cost threats to the industry.”
Dunlap said that “steady improvements during the past 21 months demonstrate that the industry is on solid footing. The mixed indexes and the ‘flat’ overall index confirm that the industry is in a ‘slow’ or ‘no growth’ period.”
But even that is good news, he said.
“We came out of this recession more rapidly than some previously predicted. I think it remains led by the health care and education markets, as the office market still trails behind these two. I expect this to continue into 2012 and perhaps into 2013,” he said.
The January survey was sent to more than 600 individuals involved with office furniture manufacturing and suppliers from Asia, Europe, North and South America, and from companies ranging from more than $1 billion in sales to less than $10 million. Nearly 70 percent of the responses came from top executives, according to Dunlap.