The recession is finally over. This has proved to be a boon to the office furniture industry, which is seeing an exponential rise in profits. Business grew 6.4 percent from a year earlier to $2.58 billion in 2014’s 3rd quarter alone. Orders in the period increased 9.5 percent to $2.48 billion and year-to-date, shipments increased 3 percent to $7.17 billion.
Business and Institutional Furniture Manufacturers Association (BIFMA) projects shipments to grow 4.0 percent in 2015 to $10.1 billion. So what’s causing all this growth? BIFMA Executive Director Tom Reardon chatted with Mark Sanchez of MiBiz about all the cool trends to look out for in 2015.
Read the entire interview here. Also reprinted below:
As we head toward 2015, how do you sum up the state of the industry?
The strong second half of 2014 gives us some good momentum moving into 2015. Generally speaking, I think there’s a degree of optimism out there among the manufacturers I’ve been talking to. There are a lot of projects and the anecdotal indicators bode well for 2015.
What’s playing into the industry’s favor?
The primary drivers of business for us, and the ones lending the most positive momentum and influence on the forecast, are service-sector employment growth. It’s been painstakingly slow coming out of this last recession. Things crashed in 2008, and 2009 and 2010 were kind of slow. Here we are a good four, five years coming out of this recession and it’s just been so slow, particularly the employment growth. Now we have a good probably six, seven months of relatively consistent employment growth. That consistency is a good sign. It’s not really strong job growth, but it’s stronger than we’ve seen in a long time and it has been consistent. It’s kind of a slow-and-steady increase in white-collar employment growth and that is giving some positive lift to our forecast.
Are any other factors helping out your forecast?
The indications are that non-residential construction, or office building construction, will rebound in 2015, too, and that should also lend some positive momentum for our industry.
What’s the industry’s biggest opportunity next year?
We’ve seen a rather concerning increase in imports. We call that consumption, or how much furniture is the U.S. market consuming, and buyers will consume that product from both domestic suppliers as well as imports. For a number of years, the percentage of domestic consumption that was attributed to imports kind of plateaued. It was right around 20 percent, or 21 or 22 percent, and it held there for five years. For the last two years, for 2013 and 2014, it’s been on the increase again, and I think it’s at about 25 percent of consumption right now. If we can reverse that trend, that would be an opportunity.
What’s a trend that you saw emerge for the industry in 2014 that will continue in 2015?
The pendulum seems to be swinging back from the very, very open office plan and the benching systems and the minimal privacy. One of the things I saw at Orgatec this year – the trade show in Germany (held in October) where U.S. and North American trends often come from – was a move to more visual and acoustical privacy. Lounge seating with kind of wrap-around backs that would provide some degree of acoustical privacy and even visual privacy were everywhere. There were lots of felts and fabrics and sound-absorbing materials to kind of minimize that noise that people are complaining about in more of the open-plan work space. We have already started to see that (in the U.S.) at NeoCon (in 2014). I would expect that we’ll see a lot more of that coming into our product development.
What’s something that could occur in Washington that could help the industry?
I’m a small government guy. The government that governs best governs least. So I’m all for just reduced regulation and restrictions and promoting more of the free market economy. Let innovation and free market creativity flow and less taxes and less burden on business. I hear a lot from manufacturers that health care costs are just going crazy and it’s a real impediment to hiring.
Any other predictions for 2015?
I would not be surprised by a correction in the stock market at some point during 2015. We’ve had a good five, six years of a bull market run without a correction. But overall, there’s relatively good economic health ahead. (image via Shutterstock)