- people on the move
- Click here for COVID-19 updates
Office furniture industry continues to improve
Analyst predicts 2014 will be the best year in a decade.
The latest survey of the office furniture industry by Michael A. Dunlap & Associates in Holland indicates it is on a “very steady and improving trend line.”
“We are confident that the industry is still on course to achieve its best year in more than a decade,” said Michael Dunlap.
The Business & Institutional Furniture Manufacturers Association is also forecasting a good year for the U.S. office furniture market. The BIFMA forecast was updated in June to predict $9.8 billion worth of products will be made in 2014. That is a 4.8 percent increase over last year.
The MADA/Office Furniture Industry Trends survey poses a series of questions to industry executives on 10 different business activities. Answers are compiled as index scores, with the results in July showing a downward or negative trend in just two of the categories. The July survey was the 40th completed since it began in 2004.
The overall July index score is 55.62, which Dunlap said is significantly higher compared to the April overall score of 54.6. In January, it was at 54.36. The highest recorded overall index was 59.72 in July 2005; the lowest was 41.45 in April 2009. The average overall index is 54.37.
“The industry continues to move on a very steady and improving trend line. This is good news. The overall index continues to remain well above 50 and is definitely above the 40-survey average,” according to Dunlap.
In the latest survey, Gross Shipments jumped to 61.96 from 53.48 in April, significantly higher than the 40-survey average of 57.36. Order Backlog rose to 62.89 from 56.12 in April, well above the 40-survey average of 56.60.
The Employment Index of 54.22 is well above the 40-survey average of 51.90, although the Hours Worked Index declined slightly to 53.41 and is slightly below the long-term average of 55.21.
Capital Expenditures slipped to 54.32 and Tooling Expenditures rose to 56.82. These compare to their long term averages of 55.36 and 55.64, respectively.
New Product Development improved to 64.19, above the 40-survey average of 63.35.
Raw Material Costs improved significantly to 46.36, much better than the survey average of 44.20. Employee Costs improved to 44.50, while the survey average is 46.83.
The Personal Outlook Index, which measures how each executive views the market, rose from 60.80 in April to 62.22 in July, well above the average of 56.90.
“I am delighted to see the strength of the index in Personal Outlook Index,” said Dunlap.
“The increases in Gross Sales and Order Backlog index values are very significant,” he added. “Both have been improving since the first half of 2013, but these larger increases are not a common occurrence. They are on a very solid path to improvement. The shifts in Employment Levels and Hours Worked index values are additional positive signs that hiring new employees is offsetting overtime.
“The modest changes in Capital Expenditures and Tooling Expenditures are mixed when comparing them to their 40-survey averages, while New Product Development remains strong. Both manufacturers and suppliers are reporting similar experiences,” said Dunlap.
“The improvements in Raw Material Cost and Employee Cost index values are always a welcome sign that cost controls are working. They rarely show much improvement,” he added.
Only Material Costs and Employee Costs are below the 50 score.
The most frequently cited perceived threats to the industry’s success, according to the surveyed executives, are health care costs and cost of materials, especially steel and wood.
“We maintain the opinion that the industry will continue on its steady growth in mid-2014, then accelerate during late 2014 into early 2015,” said Dunlap.
Dunlap said more than 61 percent of the responses came from executives who are the chairman, CEO, COO or president of their organization. The July 2014 MADA/OFI Trends survey was sent to more than 750 individuals involved with office furniture manufacturing and suppliers from Africa, Asia, Australia, Europe and North and South America.
The companies range from more than $1 billion in sales to less than $10 million in sales.