Office Furniture Industry May See Best Year in a Decade Thanks to July Improvements

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Several office furniture industry experts report increases in production and earnings for the month of July and all of 2014. In fact, they even say that sales and production of office furniture could be better than it’s been in the past decade.

“We’ve been building momentum in 2014 and our 4th quarter forecast will set the tone for a strong 2015,” says John Kiel with Precision Office Installers.

One survey, by Michael A. Dunlap & Associates (MADA) in Holland, is just one source that reports a projected increase in the office furniture market. Michael Dunlap himself stated that his firm was “confident that the industry is still on course to achieve its best year in the more than a decade.”

The Business & International Furniture Manufacturers Association (BIFMA) also predicts a good year for the industry in the United States. The BIFMA forecast predicted back in June that the industry would produce $9.8 billion in products this year; that number reflects a 4.8 percent increase over 2013.

The industry survey by MADA on Office Furniture Industry Trends asked office furniture company executives questions covering 10 different business activities. The executives were chairmen, CEOs, COOs, and presidents of their organizations.

The July 2014 MADA/OFI Trends survey was taken by more than 750 of these executives and individuals, including manufacturers and suppliers from Africa, Asia, Australia, Europe, North America and South America. Each company had sales ranging from under $10 million to more than $1 billion.

The survey’s answers were then compiled as index scores, with July posting negative trends in only two of those categories.

The survey for July is the 40th since 2004.

The overall July index score is 55.62. The figure has increased steadily since April, when the score was 54.6, and January, when it was at 54.36.

The record score was 59.72 in January 2005; the lowest was 41.45 back in April 2009, shortly after the U.S. recession hit.

The average, throughout the survey’s history, is a overall index of 54.37.

Gross Shipments increased several points, from 53.48 in April to 61.96 in July. The average for the industry through all 40 surveys was 57.36.

Order Backlog rose from 62.89 from 56.12 in April; the all-time average was 56.60.

Employment Index rose to 54.22, well above the survey average of 51.90. The Hours Worked Index fell to 53.41, however — below the average of 55.21.

Capital Expenditures was another score to fall: it’s now at 54.32, below the average of 55.36. Tooling Expenditures rose to 56.82, above the 55.64 average.

New Product Development increased to 64.19, almost a full point more than the survey average of 63.35.

Raw Material Costs had a significant improvement to 46.36, over the survey average of 44.20; Employee Costs improved to 44.50, although the survey’s average is above that by over two points at 46.83.

Finally the Personal Outlook Index measured how each executive views the market. The July score was 62.22 — up from 60.80 in April and far exceeding the average of 56.90.

Dunlap stated that he was extremely pleased with the Personal Outlook score, and added that the increases in Gross Sales and Order Backlog were also important figures to pay attention to.

The Materials Costs and Employee Costs are both below 50, however, and reflect common concerns that these manufacturers have related to health care costs and the cost of materials such as steel and wood.

However, Dunlap is optimistic. “We maintain the opinion that the industry will continue on its steady growth in mid-2014, then accelerate during late 2014 into early 2015,” he said.

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