As strong increase is projected by an updated outlook through next year, the office furniture business’s long term prospects are pegged to not economics but a continuance of office dynamics that is altering, executives say.
Industry motorists that were traditional – corporate profits, office vacancy rates, non-residential capital spending, building and white -collar job growth – are positive, said Steelcase Inc. Chief Financial Officer Dave Sylvester. But in the long run, increase hinges on non-economic forces which are changing the modern office, he said.
“The changing nature of work, we believe, is a larger driving force behind demand in our industry in relation to the play that is cyclical. Collectively, they compound each other and we believe it’s not rather uninteresting for the business today and into the foreseeable future,” Sylvester said last week during an investor conference hosted by brokerage firm Raymond James.
“lots of people get that the overall business drivers, from a macro perspective, have been quite good, they continue to be quite good, and the view on the U.S. market is relatively stable,” he said. We continue to consider what’s more interesting are the powers which are influencing work, although “So it ought to continue to facilitate increase in the market. It stays a fairly big deal in our industry.”
And the industry continues on sound footing.
The quarterly prognosis from the Grand Rapids-based Business Institutional Furniture Manufacturers Association jobs industry-wide shipments to grow 4.5 percent in 2015 to $10.2 billion, the same growth rate recorded for 2014. BIFMA’s outlook, prepared quarterly by IHS Global Insight, projects following shipment increase in 2016 of 6.4 percent to $10.9 billion.
Amid discussing the economics affecting the sector, Steelcase’s Sylvester used his presentation at the Raymond James conference to emphasize that for the last few years, the Grand Rapids furniture company has been predominantly focused on the drivers influencing the workplace today.
People can work virtually from anywhere with mobile technology and work more collaboratively, so that they do n’t demand a workstation that is long-lasting. At the exact same time, optimize and corporations are seeking to shrink their real estate.
Sylvester noted that many offices today still lack enough places for people to work in teams and that they’re mainly equipped with 1980s-style cubicles that are too big, inefficient and underused. Following the downturn, corporate executives have increasingly taken note of the demand to transform their offices to support greater employee participation and adjust to the cultural changes which might be afoot, Sylvester said.
It ’s in the way of what they’re trying to achieve,” he said of the old style office layouts.
The changes happening in the modern office have demanded furniture makers to change how they design and research products and strategy the marketplace.
“To do that, we had to do a reasonable amount of retraining of our salesforce and our dealers to say, ‘Don’t just sell on features and advantages until you’re down to the individual picking the product and wait. Talk to them about you’re going to help them create the future and get in early,’” Walker said in a presentation at the Raymond James investor conference. “It’s a pretty huge effort on training and education.”
Herman Miller releases closing quarterly sales and earnings figures followed by Steelcase on March 25.
The business expects a lesser growth rate in new orders, 7.1 percent to 8.2 percent, for the third quarter of its 2015 fiscal year.
In releasing amounts that were estimated only prior to the Raymond James conference, Herman Miller said that weakness in orders that began in the past quarter for the North American contract business continued in the December-to-February period. The firm continues to pursue numerous efforts to improve orders and sales, including focusing more on small and medium -sized projects.
Walker granted that Herman Miller needs to do reaching out to that segment of the market.
“The business has shifted to small to mid sized projects. Our competitive result around those was as bad as it needs to be,” Walker said to be honest. “Our competitive lens was as blunt as it needed to be on those small to mid sized jobs.”