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Sunday, 24 June 2018 14:00

A Tale of Two Perspectives: Veteran office furniture execs differ on view of industry’s future

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Randolph and Keller Randolph and Keller

Veteran office furniture execs differ on view of industry’s future

Two perfectly logical people can share an experience and still come to two entirely different conclusions.

That’s something the recent viral meme featuring the “laurel or yanny” audio clip demonstrated, dividing married couples, friends and coworkers alike. It even drew the attention of Speaker Paul Ryan, who declared it was “just so obvious” that the voice said “laurel and not yanny.”

The clip serves as an example — albeit a whimsical one — that people can view the same facts and wholeheartedly disagree about what they observed.

That’s playing out to some degree among a pair of veteran executives at West Michigan-based office furniture OEMs. Despite many similarities between them and even the two companies they lead, Travis Randolph and Bill Keller differ greatly in their assessment of the state of the industry they have in common.

Randolph, the president of Zeeland-based Symbiote Inc., believes the industry is teetering at the precipice of a drastic downturn, driven both by economics and demographics. Yet Bill Keller, the newly appointed president of Grand Rapids-based Leland International Inc., cites those two factors as reason to be optimistic about the industry’s future.

It’s an interesting contrast given the firms’ similarities: Both companies fly under the radar in West Michigan, somewhat by choice. They each employ fewer than 50 people. As well, both rely heavily on contract manufacturers and focus on value-added aspects of the process.

What’s more, Randolph and Keller each have more than three decades of experience in the industry, including a turn at one of the “Big Three” firms in West Michigan.

Here’s a look at each of their outlooks.

VISIBILITY LACKING

Symbiote — a designer and engineer of laboratory furniture for life sciences, aerospace/defense and high-tech R&D environments — is coming off “the best year we ever had — by a long shot.”

That’s causing Randolph to worry.

The reason: In the company’s 30-year history, it’s experienced several economic cycles, each one of them punctuated by “one huge project” before the situation turns toward a recession.

For Symbiote, 2017 was a year for one of those huge projects, which Randolph said he couldn’t name because of a customer non-disclosure agreement.

Given his prior experience, he’s left wondering when the shoe will drop.

“I don’t know that anybody has broken ground on any new major projects that we’re going to be involved in. I’m sure they have, but I can’t tell you what the address is — before I could,” Randolph said. “What we’re doing right now is great; where we are next quarter is unknown.”

Randolph also questions how well other industry players are positioned to innovate through what he thinks could be a major economic disruption in the next two to five years.

“I fully believe that we’re going to have a tough economic situation coming up, and how those folks deal with the realities of that is hard for me to imagine,” he said.

Randolph has positioned Symbiote to gear its product innovation toward U.S. industries that cannot be shipped to other countries. Its three verticals — life sciences, aerospace/defense and R&D — also are adopting technology at a rapid pace, leading him to remain confident that Symbiote will be positioned well in the long run, even if the economy dips in the short term.

“The whole phenomenon of R&D is taking over the world, quite candidly. If you stop and think about it, there’s nothing more important than R&D,” Randolph said.

Randolph also is a student of demographics, noting that subsequent generations will not equal the cohort of Baby Boomers.

For example, adults aged 65 and older will outnumber children under 18 years old for the first time in 2035, according projections from the U.S. Census Bureau.

“You’ve got to deal with the size of the cohort of Baby Boomers — it’s just a huge number,” Randolph said. “It doesn’t take much offset to be into negative replacement, as opposed to positive replacement. That, to me, is really going to be one of the things that is going to significantly flavor economic success in the 2020s.”

In particular, Randolph doesn’t see most major contract furniture OEMs being very proactive about designing for future growth engines of the American economy. While they’re trying to break into the high-volume residential market or dabble in non-clinical health care settings, they’re leaving behind opportunities to serve companies’ changing needs that will be brought on by those demographic shifts, he said.

As the overall industry shifts, he expects some shrinkage to occur.

“The office furniture industry is smaller than the dog food business,” he said. “Dogs eat every day. You only buy furniture once every decade.”

CUSTOMIZATION AT WORK

Meanwhile, Keller at Leland International maintains a positive outlook.

The company continues to capitalize on the increasing shift toward customization in the office furniture industry. Within the company’s niche in guest seating and tables, that means keeping flexible to offer a range of colors, fabrics, finishes and other custom touches to meet customers’ expectations.

Believing that its “expertise is that last step in the process” of manufacturing contract furniture, the horizontally integrated company focuses on end-of-the-line assembly and adding the finishing touches to products before they’re placed in the box and shipped to customers.

The flexibility to accommodate customized orders has become increasingly important as customers design spaces that fit their individual companies and offer their generationally diverse workforces the variety of spaces they’re demanding, Keller said.

That’s particularly important as companies “transition from a Boomer workforce to a Millennial workforce and even younger than Millennials,” according to Keller. Offices are shifting to more comfortable spaces because that’s how younger generations want to work, he added.

“They are required almost to create a variety of spaces within a workplace for their younger workforce to work,” Keller said. “Because of technology, because of how the younger generations have grown up with technology, they can work no matter where they are. They don’t need to have a single desk, a single office, a single place. Their desire is to work wherever it is most comfortable for them and most productive for them to work.

“So designers are forced to create this variety of workspaces, whether it’s cafes, small meeting rooms, lounge areas — anywhere that has some comfort and has some privacy and is conducive to the work that the newer workforce needs.”

Importantly for smaller OEMs like Leland, the shift has led designers to change their buying habits to favor sourcing office furniture from a variety of companies, rather than just buying whole lines from a single manufacturer.

“On any given project, it’s not just one or two or three manufacturers providing solutions, it’s now from 20 to 40 manufacturers providing the eclectic solutions that designers want for their clients,” Keller said.

He remains bullish about Leland’s prospects as smaller companies have a better shot at being part of the diverse mix of OEMs in customer orders, especially given his projections for a strong economy in the years ahead.

“We are doing very well, as we’re having record production schedules. The market is good right now. Corporate America is doing well. Universities are spending money,” he said. “In this industry, you always have to prepare for changes. But today, things are going pretty well. I would say maybe they’re going better for some of us smaller companies than necessarily for the larger companies. We are growing, and I would say it’s better today than it was two years ago.

“A lot of that, for us, is these changes that are taking place within the design of the workspace. … As a smaller company, we have the opportunity to go in new directions quickly.”

Read 1923 times Last modified on Sunday, 24 June 2018 09:21

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