Consolidation in Office Furniture Industry Continues into 2011

Capacity reduction appears to be the theme for 2011 as major players in the manufacturing and distribution side of the office furniture industry continue to "right-size" their organizations.

Published reports this week detail that Steelcase Inc. plans to close three manufacturing facilities in North America (two in the mid-west and one in Canada), resulting in approximately 750 layoffs. There is speculation that some of the jobs (including the manufacturer of the high end Leap chair), could be moving south to Steelcase plants in Mexico.

Last week United Stationers, an office furniture and office supply wholesale distributor, announced a series of "Workforce Realignment Actions". These "actions" include a "voluntary early retirement program", and a "focused realignment in certain areas of the company". No further details were provided, however "Workforce Realignment Actions" seems like a nice euphemism for layoffs.

From the sidelines it seems a bit late in the cycle to be making these types of major operational changes...

United Stationers New Furniture Division - The final chapter in the Office Source Saga

The final page in the Office Source saga has been turned, and the book can now be closed for good. Loyal readers of this blog will remember that the Office Source story blazed through these pages over the 2nd half of 2009, first in July of 09; ( Office Source Sells Itself) and finally in November of 09; (Office Source Files for Bankruptcy).

To catch everyone up, Office Source spent the middle part of the 2000's "rolling up" small and medium sized regional office furniture wholesale distributors. Their goal was to become the third national office products and furniture wholesale distributor (behind Fortune 500 listed United Stationers and very large SP Richards). Now, I am not an expert in business strategy, but to paraphrase the former Chairman of General Electric, Jack Welch (who is an expert), be number one or number two in your industry / region / niche, or get out of the business.

Unfortunately no one who was involved with Office Source took Mr. Welch's advice, because there were a lot of "smart" people who sold/traded/gave their well run businesses to Office Source, for a combination of cash and (ultimately worthless) stock. History has shown that these "roll-ups" rarely end well (anybody remember United States Office Products - USOP), and Office Source was no exception. As documented above, management made a "hail Mary" pass to an Alaskan Native financial group (if you have to leave the lower 48 for financing, that might be a red flag...) -- but alas, it was not enough to save the company.

Insiders have told me that there was some last minute negotiating with United Stationers going on -- but United didn't get onto the Fortune 500 by being soft, and I'm sure they saw the obvious, which was they could simply let the company go into bankruptcy and pick up the assets they wanted without any of the liabilities.

Fast forward from the Office Source bankrupcty of November 09, to yesterday (March 4, 2010), and viola - United Stationers unveils their brand new stand alone United Stationers Furniture Division, complete with a number of the former Office Source "assets", running key parts of the division. I recognize some of the key names that made the transition, and I'm glad (and not surprised) that United saw through the smoke and mirrors, and picked up the right assets.

Moral of the story -- business basics never go out of style... (no matter how cool the website looks)...

Office Source files for Bankruptcy

Ok, the broken clock is right again... On July 15, 2009 I wrote about Office Source, an also ran in the national office furniture wholesale ranks. On that day with my posting: Office Source Sells Itself  I wrote about the then recent transaction in which Office Source sold itself to some Alaskan native investors. I took a "huge" leap of faith when I wrote:

"This "change" in control, with a new "financial" owner now in charge is most likely not a good sign regarding the viability for the Office Source concept. Candidly, There are already two National Wholesalers (United and SP Richards), so I'm not sure the world needs a third."

Well, maybe it wasn't such a huge leap... We received the "shocking" news today via emailed press release that Office Source had filed for bankruptcy protection late on Friday 11/20/2009.  The release went onto state that "As part of the bankruptcy case, upon approval of the Bankruptcy Court, United Stationers will acquire certain assets of Office Source, Inc. and hire certain employees, including key management of the company. We expect the sale proceedings to last 45 to 60 days."

And the consolidation continues...