Office furniture dealers experience sales rebound: Better economy, more moves give industry a boost

September 18, 2006

Indianapolis-area office furniture dealers are awash with business, following a robust national trend that has lifted the industry beyond its lows of a few years ago.

As businesses have begun to move into bigger quarters since 2003, they've naturally ordered desks, chairs and filing cabinets to fill the bigger space, local dealers said.

"The industry is closer to where it used to be, but I don't think we'll ever again see the kind of activity we had in the mid- to late-90s," said Dennis Sponsel, president of RJE Business Interiors.

His perception is backed up by statistics from the Business and Institutional Furniture Manufacturer's Association, or BIFMA, a Michigan-based trade group.

The office furniture industry grew 12 percent from 2004 to 2005, to nearly $12 billion, the group said. That's strong growth, especially after double-digit decreases in 2001 and 2002, but still well below the $14.9 billion worth of office furniture U.S. companies bought in 2000, before the recession hit.

There's still room to grow, though: BIFMA predicts U.S. companies and institutions will boost the industry another 10 percent in 2006 and 2007.

Locally, nearly all the city's 15 largest office furniture dealers reported revenue increases between 2004 and 2005, according to IBJ research.

One of the differences between the market now and in 2000, Sponsel and other local dealers said, is that middle-market business furniture has rebounded the most. Companies are looking for quality, but not at a premium price. Businesses and organizations are still cautious with their money, they said. Universities and health care organizations, generally not known for flashy furnishings, are also buying.

However, there has been some growth in premium lines as well, driven in part by companies' willingness to again hire architects and designers to help with space planning-something they weren't doing a few years ago, Sponsel said.

RJE's business has more than doubled since 2002-partly due to the economy and partly because of its relocation in 2003 from the northwest side to a new, larger showroom on East Ohio Street, Sponsel said. The firm carries nearly 100 product lines, but Pennsylvania-based Knoll Inc., Ohio-based Hann Manufacturing Inc. and Huntingburg-based OFS are some of its biggest sellers.

Although the furniture industry is still adjusting to a flood of import competition from China, furniture manufacturers are rebounding as well. Jasper-based Kimball International, for instance, reported a double-digit increase in sales of its office and hospitality furniture lines in its fiscal quarter ended June 30, compared with a year earlier.

Profit doubled in Kimball's furniture and cabinets segment during that period, boosted by restructuring efforts at the company.

Kimball CEO James Thyen called trends in the furniture and cabinet business "exciting" in the news release announcing the quarterly results, and singled out the strong growth in office and hospitality furniture.

So what are companies buying? They're still buying furniture systems-the industry word for cubicles-but not the Dilbertesque cubicle farms of old, Sponsel said. The trend is toward open layouts with lower cubicle walls.

"Most of our clients have the private offices in the center [of the floor layout], letting the natural light to the masses," he said.

There's more of a focus now than there used to be on using office furnishings as a tool to attract and retain good employees, Sponsel said. Businesses are willing to invest in more modern furniture systems to keep employees happy, he said.

Companies are also investing in creating shared workspaces, where small groups of employees can meet quickly to share ideas, then retreat to a more private desk setting, said Bill Grace, vice president of business development at locally based Business Furniture Corp.

Some of Business Furniture's clients have even converted large conference rooms into two or three "enclaves" where smaller groups can meet, he said.

"There's a lot more interaction happen ing" between workers, Grace said. That doesn't always mean creating separate rooms for employees to work together, though-often it's as simple as having a shared table between two desk cubicles.

Firms are also doing more with the office furniture they already have. Service of existing furniture is a growing part of Business Furniture's business, Grace said.

Additionally, when companies or individual departments reorganize or downsize, they are more likely to rearrange existing furniture and cube walls, adding only a few new pieces, Grace said.

When companies do move to new offices or rearrange work spaces, they frequently call the dealer for help with space planning.

"It's been good business for us," he said.

Most companies also are buying office furniture that lends itself to rearrangement-panel walls with sections that can be removed or added to change the height, for instance.

"You don't want to 'future-proof' the client," Grace said. "We don't sell them products they can't change in the future."
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