This category describes establishments primarily engaged in the manufacturing of office furniture, except furniture chiefly made of wood. Establishments primarily engaged in manufacturing safes and vaults are classified in SIC 3499: Fabricated Metal Products, Not Elsewhere Classified. The products manufactured by the industry include office benches, bookcases, chairs, cabinets, desks, filing cabinets, modular furniture systems, panel furniture systems, office partitions, stools, tables, and wall cases.
337214 (Nonwood Office Furniture Manufacturing)
According to the U.S. Census Bureau, shipments for the nonwood office furniture industry totaled $8.93 billion in 2000, compared to $8.34 billion in 1997. Nonwood office furniture accounted for more than one-third of total office furniture industry sales. Although nonwood office furniture shipments grew steadily throughout the late 1990s, employment in the industry decreased from 45,803 in 1998 to 43,215 in 2000.
West Michigan—most notably in and around the cities of Grand Rapids and Holland—was home to office furniture manufacturing giants Steelcase Inc., Haworth Inc., and Herman Miller Inc., as well as a number of other firms. (Product lines at both Haworth and Herman Miller tended to focus more on wood office furniture, although the companies did produce nonwood pieces as well.) As a result, the area boasted facilities that produced about 65 percent of all office furniture manufactured in North America.
When wood was still the material of choice for most manufacturers, stationery stores and office equipment dealers handled sales of office furniture. The concept of "office design" was unheard of; companies purchased desks and other pieces as needed, setting them up in rows in big, open spaces, creating an office environment that very much resembled a classroom.
Later, as the demand for office furniture (including new nonwood products) increased and the market became more specialized and sophisticated, the major manufacturers developed their own sales staffs and dealer networks to handle large-scale orders. In addition, the introduction of new products such as computer desks and "systems furniture" (consisting of panels and other pieces that could be easily moved and reconfigured to accommodate changing needs) generated a need for office designers. So the bigger firms began to offer design assistance to customers eager to get the most out of their furniture purchases. Smaller companies that were unable to support their own sales and design staffs turned instead to manufacturers' representatives to provide the same services to customers.
In the 1990s, while a few manufacturers still sold directly to customers, most relied on other means of distribution. For example, contract office furniture dealers—those specializing in large-scale orders placed with industry giants such as Steelcase—handled nearly 65 percent of all office furniture sales in 1994, according to a joint survey conducted by BIFMA and the Business Products Industry Association (BPIA). The remaining 35 percent of sales were divided fairly evenly among six other categories: budget to mid-market furniture dealers; office product dealers; superstores, warehouse clubs, and other mass merchandisers; wholesalers; government; and mail order, direct sales, and other channels. Superstores, warehouse clubs, and other mass merchandisers showed the strongest growth from 1993 until 1994, increasing from 2.8 percent of the total to 4.1 percent.
Office furniture manufacturers of all kinds showcased their newest products and services at a number of trade shows around the country, most notably the NeoCon World's Trade Fair. Held annually at the Merchandise Mart in Chicago, it was billed as North America's largest commercial interiors exposition.
Until the 1930s wood dominated the office furniture market. Then metal filing cabinets and desks emerged as popular, cheaper substitutes for the old wooden models. The military's need for steel briefly interrupted this trend during World War II, but in the postwar years, the metal office furniture industry launched an aggressive marketing campaign touting the advantages of its products, emphasizing durability and safety (offices filled with wood furniture posed a fire hazard). The rivalry between the two camps gradually eased, however, as wood office furniture manufacturers began to incorporate steel parts in their designs, and metal office furniture manufacturers began to feature wooden tops.
As recently as the 1950s, American offices and office furniture were generally drab, stark, and purely functional. Beginning in the late 1960s and early 1970s, however, office design, layout, and furniture began to be influenced by modern ideas of worker productivity and the realization that a link existed between employee performance and the quality of the office environment.
From the late 1970s through the early 1980s, office furniture sales grew by an average of 19 percent annually, according to BIFMA. The boom was fueled by the rapid growth of the white-collar workforce, especially in the computer industry and other information-related fields. These sales were largely driven by the demand for "systems furniture," or mix-and-match cabinets, desks, and wall panels or partitions. Changing work habits created a need for such products. For example, the rise of computers and related hardware helped spawn new types of workstations, printer tables, and movable walls and partitions that made it easy to reconfigure office space. Prewired partitions, which first appeared in the mid- 1970s, facilitated wiring and networking of computers.
Beginning in the late 1980s, however, the entire office furniture industry felt the impact of white-collar downsizing at many firms. A recession in 1991-92 also hit furniture manufacturers extremely hard. From 1986 until 1992, average annual sales growth stood at just under 3 percent. Shipments for the metal office furniture manufacturing industry fell from $6.2 billion in 1989 to $5.6 billion in 1991. Exports, which had doubled between 1988 and 1989 from $86.7 million to $170.8 million, fell during this period as well.
The recession led to even more layoffs among office workers as one company after another downsized. Office space, which had mushroomed during the boom years of the 1980s when demand was high, sat vacant. As a result, few new offices were built during the late 1980s and early 1990s, which meant less demand for new office furniture. Corporations desperately searching for ways to save money began to regard new office furniture as a luxury item rather than a necessity. The weak economy eventually forced some office furniture manufacturing companies out of business, especially those that specialized in high-end products. To remain competitive, surviving manufacturers were forced to reduce their own staffs and increase productivity.
The economic picture began to brighten a bit in 1993, when office furniture sales hit $8.1 billion, a 5.1 percent increase over the previous year's sales figure of $7.7 billion. The improved fortunes of office furniture manufacturers in the mid-1990s reflected an overall upswing in the economy, including a surge in nonresidential building starts and falling unemployment rates. No one, however, envisioned a return to the boom years of the early 1980s.
Ready-to-assemble (RTA) furniture captured the attention of some industry leaders in the early 1990s. In late 1993, for example, Haworth purchased Globe Business Furniture, an RTA supplier specializing in partially assembled chairs. Globe's sales grew an average of 25 percent between 1981 and 1992, making it an attractive acquisition for a company such as Haworth that was intent on broadening its product line to include lower-priced furniture. Industry experts expected the trend to continue, but they warned producers against moving to RTA as a quick-fix method for regaining market share, in part because RTA required an entirely different cost structure than that used by traditional office furniture manufacturers.
In the mid-1990s office furniture manufacturers became increasingly apprehension about the effect of ongoing environmental legislation on their bottom lines. In their factories, they already incurred increased costs for disposing of hazardous wastes generated by the furniture-finishing process. In the marketplace, they faced mounting concerns about the effect of various pollutants on indoor air quality. Among the most common offenders were formaldehyde (from pressed-wood products), adhesives, and paints and other finishes. To address these problems, some U.S. office furniture manufacturers switched to different kinds of finishes and alternative glues, although some of these substitutes performed poorly.
The U.S. Environmental Protection Agency (EPA) launched two major studies of indoor air quality in the mid-1990s to gain a better understanding of the problem in both public and private buildings. Results were not expected until the end of the 1990s. The EPA was expected to use those findings to develop a set of proposed national guidelines and standards for acceptable levels of indoor air pollutants.
At the turn of the twenty-first century, analysts expressed guarded optimism about the future prospects and performance of the office furniture manufacturing industry. Falling interest rates helped to offset a declining economy, and low inflation seemed conducive to a sustained period of modest sales gains in the range of 2 to 5 percent. Yet the industry continued to suffer from too many suppliers competing for increasingly few customers. In fact, manufacturers were routinely forced to discount their prices by as much as 50 percent or more on high-volume purchases in order to win lucrative contracts.
Because most manufacturers realized that they could not necessarily compete on product alone, they began coming up with ways to provide more services to their customers. Terms such as "value-added partnering" became part of the industry lingo. This was just one way that the higher-end manufacturers tried to distinguish themselves from their lower-end rivals.
Another change that took place throughout the 1990s focused on distribution. Many of the industry leaders, including Steelcase, Haworth, and Herman Miller, switched to dedicated dealers. Others, including HON Industries, moved in the opposite direction and distributed their products through office supply superstores and other discount outlets.
One lucrative market niche in the late 1990s was ergonomically designed office furniture that offered maximum comfort and flexibility. As people became more aware of computer-related, white-collar occupational hazards such as repetitive strain injury, carpal tunnel syndrome, backache, and other ailments, they demanded furniture that would prevent or lessen the severity of these injuries. Office furniture manufacturers were at the forefront of the drive to design and produce ergonomic office furniture that their customers hoped would increase productivity, curb health care costs, and reduce the threat of lawsuits from employees with work-related disabilities.
Sales of high-end products—such as workstations that adjusted to let users sit or stand while they worked, and computer monitors and keyboards that could be positioned at various levels—helped to propel growth in the industry. Demand for less-expensive ergonomic furniture was also strong. Small companies concerned about liability for their employees' work-related injuries were often unable to afford traditional high-priced ergonomic furniture. Companies responded to this dilemma by coming out with new mid- and lower-priced lines that offered some adjustability.
Among the more pressing issues faced by the office furniture manufacturing industry in the late 1990s was the growth of Federal Prison Industries (FPI), a program that employed prisoners to make various kinds of products, including office furniture. By law, whenever the federal government was in the market for office furniture, it had to give preference to FPI and its prison-made products, regardless of cost. As a result, U.S. manufacturers lost tens of millions of dollars in sales every year. With BIFMA, office furniture manufacturers joined together to fight for legislation to end the competitive advantage enjoyed by FPI over private companies.
Other challenges office furniture manufactures faced at the turn of the twenty-first century included dealing with continued corporate downsizing and developing more products for home use in a market that was increasingly dominated by ready-to-assemble furniture companies such as O'Sullivan Industries, Sauder Woodworking, and Bush Industries. On the labor front, they were also concerned about the need to work more efficiently to cut manufacturing costs.
The top company in the U.S. office furniture manufacturing industry was Steelcase Inc., which posted sales of $2.4 billion in the first nine months of 1999. This gave Steelcase a 25 percent share of the entire domestic office furniture manufacturing market that year. It had 49 production and service facilities worldwide and employed 21,500 people worldwide. Although it specialized in nonwood office furniture, Steelcase also manufactured wood office furniture, panels and partitions, lighting systems, and customized millwork. It even produced computer software that aided in designing office environments.
Steelcase's chief rivals in the high-end office furniture industry were Haworth and Herman Miller. In 1998, Haworth, a privately held company, posted nearly $1.6 billion in sales and employed 11,000 people; Herman Miller reported just under $1 billion in sales for the last six months of 1999. Other leaders in the metal office furniture market included HON Industries Inc., the Knoll Group, HMK Enterprises, and Krueger International.
Since 1988 employment in all sectors of the office furniture manufacturing industry has steadily declined, with the wood segment experiencing the most significant losses. When a recession struck in the early 1990s, it forced the industry's corporate customers to rethink their priorities and postpone furniture purchases that could be considered luxuries rather than necessities. Office furniture manufacturers responded by targeting their own payrolls for cutbacks. Since then, increased automation and efficiency also contributed to a reduction in the work force (especially in production), adding to the likelihood that those lost jobs would never be replaced.
At its peak in 1989, the office furniture industry as a whole employed 71,300 people. This fell to 68,000 in 1990, 62,600 in 1991, and 61,900 in 1992. Among production workers in particular, jobs dropped from 52,900 in 1989 to 50,600 in 1990, 46,100 in 1991, and 45,800 in 1992. By the middle of the 1990s, total employment in the metal office furniture segment of the industry appeared to have stabilized at about 33,500.
Since then, the decline in employment slowed somewhat, with job losses in the office furniture industry as a whole totaling about 2,200 from mid-1995 through mid-1996. The remaining work force in 2000 consisted of nearly 43,215 people, almost 31,372 of whom were production employees. Average hourly wages for production workers in mid-1996 stood at $15.93.
The disquieting loss of job security coupled with a new emphasis on bottom-line issues helped spark unionization drives during the 1990s at several West Michigan office furniture manufacturers, whose employees traditionally shunned unions. In 1993, for instance, the United Steel workers tried to organize at both Steelcase and Haworth without much success. In 1997, however, the United Auto Workers mounted a campaign at Haworth that attracted far more attention and support.
With little hope of a rise in demand for their products in the United States any time soon, the country's biggest office furniture manufacturers bolstered their presence overseas. Results were lackluster at best; as of the late 1990s, the major firms had yet to see much in the way of profits from their foreign divisions, often because of economic and political instability in certain markets.
The passage of the North American Free Trade Agreement in 1993 opened the doors to anticipated heavier volumes of office furniture imports and exports. Overall, however, imports and exports of nonwood and wood office furniture continued to make up a fairly small percentage of total industry shipments. According to BIFMA, U.S. office furniture imports in 1998 totaled $1.5 billion and exports totaled $410 million. The top importing countries were Canada, China, Taiwan, Mexico, and Italy. The top countries that the United States exported to were Canada, Mexico, the United Kingdom, Japan, and Hong Kong.
In response to management trends stressing teamwork, ongoing corporate downsizing, concerns about occupational-related injuries, and the increasing number of people working out of their homes, office furniture manufacturers were devoting many of their research dollars to the development of multifunctional, ergonomically designed products. In larger offices, for example, cubicle clusters and movable panels were being replaced by a more open, less isolated environment that encouraged people to work together and made it physically easier for them to do so. Also growing in popularity were adjustable work surfaces and components that could serve more than one use, so as to accommodate workers whose jobs were no longer quite so narrowly defined. Designing all of these products to work better with rapidly changing computer technology was also a top priority.
Ergonomics was in the forefront, too, as employers and manufacturers both sought ways to comply with federal mandates (some resulting from the 1990 Americans with Disabilities Act) and ward off lawsuits filed by workers suffering from job-related aches and pains. It was felt that ergonomically designed furniture could increase worker productivity by 15 percent. The emphasis was on adjustability, such as motorized tables with multiple height settings to accommodate a person who was standing or sitting, and chairs that came in several sizes to fit a wide range of body types.
The need many people had for a comfortable and functional home office also led to creative new products from the design centers of U.S. manufacturers. Flexibility and good looks were especially important to this market, given that home office space might be very limited and any pieces had to blend well with home furnishings. So manufacturers were putting work centers and other components on wheels for portability, inventing desks that folded out or swung open for working and then closed up to hide office equipment, and creating adjustable tables that could do double-duty as coffee tables or typing tables.
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