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Monday, 19 March 2012 10:08

Office furniture expected to dip in 2012

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WEST MICHIGAN — After posting strong growth for 2011, the office furniture industry will experience a small decline this year and then pick up again in 2013, according to a new forecast.

The updated quarterly outlook prepared for the Grand Rapids-based Business and Institutional Furniture Manufacturers Association projects a 2-percent decline in North American shipments for 2012 to $9.2 billion. BIFMA’s previous outlook, issued in early December, predicted a 1.7-percent decline for this year.

Thomas Reardon“It’s not a significant revision for 2012. We’ll have to see how it pans out,” BIFMA Executive Director Tom Reardon said.

Any dip in business that does materialize this year will come following a continued solid rebound for the industry in 2011 coming out of the recession.

North American shipments grew 13 percent last year to $9.37 billion, though growth waned throughout the year and turned negative during the final three months of 2011. Shipments for the fourth quarter alone dipped 0.5 percent to $2.35 billion, according to BIFMA.

Orders grew 8.2 percent for all of 2011 to $9.38 billion, but declined 5.2 percent in the fourth quarter alone to $2.40 billion, signaling a potentially soft start to 2012.

The erosion of growth is partly due to exhausting the pent-up demand following the recession, Reardon said.

“That is a contributing factor,” he said.

The quarterly BIFMA outlook, prepared by IHS Global Insight, projects North American shipments to grow 6.8 percent in 2013 to $9.8 billion.

Flat to slow business conditions for the office furniture industry were reflected in responses to economist Brian Long’s monthly survey of industrial purchasing managers in West Michigan.

Brian LongLong, director of supply chain management research at Grand Valley State University’s Seidman College of Business, sees steady but slow growth for the U.S. economy in 2012. Two key drivers for the industry, new office construction and white-collar employment growth, will remain slow as well, Long said.

He expects GDP growth of 3.4 percent to 3.5 percent for the first quarter and a similar rate for the second quarter.

“I expect the sluggish growth to continue, probably over the next six months or so,” Long said. “We won’t have a boom economy, but we will have a good, solid economy.”

The major uncertainties are Europe’s debt crisis and resulting economic problems as well as Iran, both of which are generating uncertainty and holding back the U.S.

The U.S. economy should accelerate in the latter half of the year “if Europe and the Middle East don’t upset our proverbial apple cart,” Long said.

“Uncertainty inhibits business investment. It’s that simple,” Long said.

An indication of the industry’s performance in early 2012 comes this month when Steelcase Inc. and Herman Miller Inc. report sales and earnings for their latest quarters.

Brokerage analysts expect Steelcase to report a 10-percent increase in sales from a year ago to $688.7 million with net income of 16 cents per share, according to average estimates by Yahoo! Finance. The Grand Rapids-based Steelcase reports results March 22 for the fourth quarter of its 2012 fiscal year.

Analysts on average expect Zeeland-based Herman Miller to report a small 1.2-percent decline in quarterly sales to $409.6 million and net income of 27 cents per share, according to Yahoo! Finance. Herman Miller reports results March 21 for the third quarter of FY 2012.

Read 1658 times Last modified on Sunday, 12 August 2012 10:46

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