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 Fortunes Improving...

A survey by Michael A. Dunlap & Associates LLC, indicates that the Office Furniture Industry is slowly crawling off the bottom. The MADA / OFI quarterly survey measures activity of the office furniture industry and associated suppliers.

The April 2010 reading of 51.51 is an incremental increase from the January 2010 reading of 50.64. For context, the highest reading of 59.72 was recorded in July of 2005, the lowest reading of 41.45 was recorded 12 months ago in April of 2009.

Interesting points from the survey:

• New Product Development soared to 65.71, above the 24 survey average of 63.54.
• Raw Material Costs and Employee costs have risen...

This last point is a big one, and echoes what I heard in vendor meetings last month. Inflation, driven by commodity prices, energy prices, and health care costs, is definitely on the radar screen of the industry. Inflation concerns in conjunction with an improving outlook, means a high probability of steady price increases over the next 18 months.

Some "Positivity" for the Office Furniture Industry...

A recent survey from office furniture analyst Michael Dunlap indicates that the fortunes of the office furniture industry might finally be turning positive.

Dunlap's October survey average was 51.45 (with 50 being neutral) - the best reading since July of 2008. In an interview with industry newsletter The Monday Morning Quarterback, Dunlap said, "A few sectors, though improved, are still below 50...More than 42 percent reported they are optimistic about the future. It was only 25 percent in April..."

This technical result ties in nicely with what we have been seeing "on the ground", with consistent increases in floor traffic and sales activity from our retail (small business) showroom, as well as increased project activity from our contract (corporate accounts) division.