More Sustainable Standards for Furniture

First came LEED certification, next came the CALGREEN requirements (for those of us in California), now we can all breathe a sigh of relief because ANSI (American National Standards Institute) has approved and released the ANSI/BIFMA e3-2010 Furniture Sustainability Standard.

The e3 standard defines the technical requirements of the Level product certification program. The Level program is actually a useful tool, in that it provides the industry a standard benchmark to evaluate whether or not office furniture is manufactured in a sustainable manner using sustainable materials. This separates the truly sustainable products and organizations from the posers.

If past history is guide, the larger manufacturers will conform to the Level product requirements, and the smaller manufacturers (and specifically import manufacturers) will not.

BIFMA Revises 2010 Office Furniture Forecast

The Business and Institutional Furniture Manufacturers Association (BIFMA), has revised their 2010 forecast (again), now looking for a -5.1% decline in shipments for the year, versus the -3.8% decline they revised back in March (BIFMA Updates 2010 Office Furniture Forecast). BIFMA is now looking for 2010 production of $7.45 billion. For some historical perspective, BIFMA records go back to 1991, and only 1991 had lower production numbers than the current forecast for 2010.

The silver lining in the cloudy forecast is that Office Furniture is mirroring Commercial Real Estate (CRE Forecast - 2010 BAD - 2011 - Better...), which is looking for a strong rebound in 2011. BIFMA is calling for a sharp +11.1% increase of Office Furniture production in 2011, to $8.27 billion. While any increase is welcome, a quick check of the historical data shows that we have to go all the way back to 1993, to find lower production numbers than the current forecast for 2011.

Office Furniture Industry - Down 6% Rocks!

How bad are things when down 6% is actually good? Seems we are going to find out, because according to office furniture analyst Budd Bugatch, February's office furniture orders decline of 6% marks the smallest monthly percentage decline since October of 2008. Bugatch was commenting on the release of the Business and Institutional Furniture Manufacturers Association (BIFMA) February 2010 market statistics; February orders down 6% vs. February of 2009, and February shipments down 15%.

Bugatch went onto say that "Net-net, the February statistics were encouraging, and consistent with our view that the industry is approaching a meaningful trough." Bugatch is backing up his belief with reaffirmations of his earlier upgrades:

• Herman Miller: Reaffirmed Market Perform
• Knoll: Reaffirmed Strong Buy
• HNI (parent of Allsteel); Reaffirmed Outperform

Importantly for those of us in the industry who are still hanging on, Bugatch also commented; "we believe we are at the headwaters of multiple years of revenue growth and margin expansion".

Budd, I hope you are right!

BIFMA Updates 2010 Office Furniture Forecast

The Business and Institutional Furniture Manufacturers Association (BIFMA), issued their January 2010 statistics for office furniture orders and shipments. January 2010 orders declined -15%, and shipments declined -12% versus the prior year.

Officeinsight (an industry trade publication), quoted industry Analyst Budd Bugatch of Raymond James, "the year-over-year rate of decline for both orders and shipments showed slight improvement and comparisons will continue to get easier as the year unfolds."

BIFMA updated its 2010 forecast in February, now calling for a -1.5% decline in orders (versus previous -2.3%), and a -3.8% decline in shipments (versus -4.6% previous).

Office Furniture Industry down 30% vs 2008 -

Full year 2009 results for the furniture industry are starting to trickle in, and boy are they ugly. Knoll announced a Q42009 sales decline of 33.4%, and full year sales of $780 Million, representing a decline of 30.4%. It was reported in industry trade journals that Haworth (which is a privately held company), announced sales of $1.1 Billion, representing a decline of 32%.

The Business and Institutional Furniture Manufacturers Association (BIFMA) released their December 2009 market statistics, estimating an overall decline in orders and shipments of 30% (compared against slight decreases in 2008, and slight increases in 2007).

To reset the "hierarchy" of office furniture manufacturers (based on previous 4 quarters revenue):

1. Steelcase: $2.4 Billion (-30% vs. 2008)
2. HNI (parent company of Allsteel and HON): $1.56 Billion ( -25% vs. 2008)
3. Herman Miller: $1.34 Billion (-32% vs. 2008)
4. Haworth: $1.11 Billion (-32% vs. 2008)
5. Knoll: $780 Million (-30% vs. 2008)

I predict that HNI will rebound the strongest in 2010. My reason for this prediction is that HNI's largest operating company, HON, serves the small business niche. With the current focus of Washington on small business, HNI is well positioned to take advantage of any government aided small business expansion.

(Full disclosure, my dealership is aligned with Allsteel, also one of the HNI operating companies).

Is your furniture certified green?

The Business and Institutional Furniture Manufacturer's Association (BIFMA), has been implementing its "level" sustainability standards program since mid-2009, and has now certified over 200 office furniture products, according to a recent article on greenerbuildings.com.

As defined on their website, the level program is "a multi-attribute, sustainability standard and third-party certification program for the furniture industry. It has been created to deliver the most open and transparent means of evaluating and communicating the environmental and social impacts of furniture products in the built environment." In plain English, level was developed to implement an industry standard by which to measure and verify manufacturer's claims of product and practice sustainability. This will also go a long way to cleaning up the "green-washing" or misleading claims regarding the "green" story of certain products and manufacturers.

Industry leaders such as Allsteel, Gunlocke, Herman Miller and Steelcase, have already had a full range of products certified. If you are a specifier, or purchaser of office furniture, make sure to ask if the products you are looking at have been level certified.

For a list of products that have received certification, click (HERE), and to view the level website, click (HERE).

Office Furniture Orders Down Again...Bottom in sight

The Business and Institutional Furniture Manufacturers Association (BIFMA) issued its monthly check-up for the office furniture industry, once again affirming we still aren't healthy.

BIFMA estimates that November orders dropped 18% , against a 21% decline in November of 2008. Sounds really bad...however industry analyst Budd Bugatch of Raymond James & Associates noted:

"November's order decline of 18% was the smallest decline year to date, and...November's shipment decline of 29% was the smallest since July". Mr. Bugatch summarized his review by stating "we may not have hit the bottom, but we can see it from here".

BIFMA revises their industry forecasts (again...)

A broken clock is right twice a day... In my 9/3/09 post (BIFMA Office Furniture Forecast - More Contraction) about the Business and Industrial Furniture Manufacturer's Association (BIFMA) forecast for 2010 office furniture production, I commented "I would assume we will see several downward revisions before we get to 2010". Hey what do you know -- I was right...

BIFMA released their most recent forecast for 2010 this week - and they have revised their forecast for office furniture shipments down by a pretty hefty 4.6%. BIFMA estimates that the industry will ship $7.43 billion in domestically produced office furniture in 2010, down from their forecast of $7.79 billion for 2009 (which is down 30% from 2008 actual shipments).

I'm going to go out on a limb and say I expect more revisions -- BUT, I actually think we may see future revisions going the other way. From the indications I am seeing - we have been scraping the bottom since early summer, and I believe conditions have improved. BIFMA's forecast is generally a "lagging" forecast (somewhat of an oxymoron) - and I believe we will see positive revisions coming.

BIFMA Office Furniture Forecast - More Contraction

Not surprising, BIFMA (Business and Institutional Furniture Manufacturer's Association), has issued a forecast of $8.9 Billion for total office furniture consumption in 2010 (click HERE for the forecast). This is down 1% from the forecast of $9.0 Billion for 2009, and down a whooping 31% from the $12.9 Billion of 2008.

Click on the Chart above for link to the source document

It should be noted that BIFMA historically has not had the most accurate forecasts, and I would assume we will see several downward revisions before we get to 2010.

This contraction is consistent with what we are seeing in the market place. A general note on the state of the office furniture industry - It appears that all the major factories are well positioned to weather this storm. All of them have taken significant capacity off-line (by closing factories and laying off workers). Pricing is extremely competitive (the most competitive I have seen it in my 18 years in the industry). From all discussions I have had with dealers and manufacturers across the country, I believe we are at the bottom right now and I don't believe we will see pricing go appreciably deeper than the current levels.

More on Sustainable Office Furniture

Well no one can say the office furniture industry isn't concerned about the environment. The Business and Institutional Furniture Manufacturer's Association or BIFMA is beginning to certify products under their recently released sustainability standard:

BIFMA e3-2008 Furniture Sustainability Standard

BIFMA is the the industries independent governing body (the one that sets universal standards in place for products), so this certification should have some "heft" to it. I would say it will be a short period of time until this standard becomes the standard for environmentally acceptable products.

To see a recent article on who is being certified click here.