Published in Manufacturing

Reardon reflects on industry peaks and valleys during tenure at BIFMA

BY Sunday, July 05, 2020 02:39pm

When Tom Reardon rose through the ranks of the Business and Institutional Furniture Manufacturers Association (BIFMA) 22 years ago, the trade association was operating in the red. Fast-forward more than two decades later, and BIFMA now enjoys all-time high marks in membership, dues revenue and total revenue. Reardon is set to retire this month, making way for new President and CEO Dierdre Jimenez to step into the organization. Reardon spoke with MiBiz about his time with BIFMA and the volatility in the office furniture industry.

You were at BIFMA to witness three major industry downturns. How do they compare?

The industry peaked in sales in 2000 — and 2001, 2002 and 2003 were three consecutive years of consecutive decline. So, the cumulative effect of that three-year decline was about a 40-percent drop from the peak in 2000 to the bottom in 2003. It was protracted, just really dragged out. It was unprecedented. In the time that BIFMA has been tracking industry sales since the early ’70s, we never had more than one year of decline. So, three years of decline, and to the magnitude that it was, it was devastating. … Then the financial downturn (hit in) late 2008. It was calendar year 2009 for our industry that we again experienced a 40-percent drop in sales, but it happened in one year. It was just as devastating at the previous one, but much quicker. We’ve been growing. The economists have sort of called this the ‘jobless recovery’ and our industry was negatively impacted by that. Companies weren’t adding heads. But we slowly grew out of it and for a number of reasons.

And now the COVID-19 pandemic — any parallels with the others?

Again, very, very quick — almost like turning off a faucet. All of a sudden, all businesses are closed and everyone’s working from home. We don’t know what the end looks like yet; we’re in the midst of it right now. Sales went negative in March and again in April. We’re expecting May is probably going to show negative numbers as well. Where’s the bottom and what will the rest of this year look like remains to be seen. … These have been three very different recessions.

Can we expect the pandemic to definitively shape the future trends in office furniture?

I’ve joined in on a number of webinars hosted by different design firms. Everyone is trying to figure that out. Virtually overnight, we went from what we knew was normal, whatever that was. It was mostly working together, collaborating with your colleagues. That was, is and will continue to be a thing. Virtually overnight, we had to abandon that work style and go work from home. … Literally overnight, we had to change the way we worked. Before, those changes were much more gradual and much more evolutionary rather than the drastic change that occurred all at once. But we adapted.

What has changed since 2000 and how has that affected the industry’s fight to return to its prior peak?

There are a number of reasons for the industry not having recovered to our peak in calendar year 2000, one being that imported product from outside of the U.S. has increased dramatically over the last 20 years. In the ’90s, U.S. exports of office furniture were roughly equal to our imports. They were almost a wash in the early ’90s. Exports started increasing in the late ’90s and continue to increase and accelerate. Even if our market were consuming the same amount of product, the domestic sales are going to be less because there is more coming from offshore.

Under your guidance, BIFMA has championed sustainability in the industry. How has that met the needs of industry professionals?

What was happening back in the mid 2000s (is that) sustainability was starting to become much more of a priority for a lot of clients. The LEED green building rating system was driving a lot of that change and customers were starting to specify (sustainable products). Everyone was defining sustainability differently with their own lens and own priorities. The industry was trying to respond to those and oftentimes being pulled in different directions depending on the customer they were talking to. What BIFMA did in establishing a sustainability standard, it was written specifically for furniture. Rather than being generic, it was much more relatable to the products our industry produces. It gave the entire industry one set of guidelines, one standard to point to and work toward. The industry was quick to embrace it.

Was it your mission to come in as executive director and put BIFMA on stronger financial footing?

We were operating in the red. The board at that time said, ‘Tom, we want to give you this leadership position, but you need to understand that we cannot tolerate any more budget deficits. You have to turn this organization around financially.’ Those were sort of my marching orders. … Through a combination of cost cutting and revenue generation, we very quickly turned the organization around and started operating in the black and have rebuilt the accumulated surplus. … But, we’ve done a lot of other good work. We accomplished a lot on behalf of the industry and invested a lot in the industry over that time.

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