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Haworth’s NeoCon showroom was a hive of activity as people stopped in to try out the new or revised product offerings first hand. PHOTO: JOE BOOMGAARD

By Joe Boomgaard and Nathan Peck | MiBiz
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CHICAGO — The worst may be over.

If foot traffic and rising numbers of orders are any indication, West Michigan office furniture manufacturers should see a rosier picture in 2010. As the economy gains momentum, many see pent-up demand fueling growth through the end of the year.

Still, the industry is climbing out of a big hole, after manufacturers saw a 30 percent drop in sales in 2009, bringing revenues to levels last seen in the early 1990s.

“We’re seeing signs the economy is improving, and the customers we’re meeting with have projects that they’re working on actively or agendas that are much more concrete,” said Jim Keane, president of the Steelcase Group. “Their projects are actually planned and people are starting to

make decisions.”

The number of buyers setting meetings was up from over a year ago for Vanerum Stelter, a small, niche manufacturer with design and production facilities in both Belgium and Grand Rapids. Buyers are looking to be more economical as they meet with suppliers, said Jim Stelter, CEO of Vanerum Stelter.

“Our traffic has been great — we are up a little bit,” Stelter said. “Customers are sending fewer people this year. Companies are sending a couple of people whereas it would have been four or five in the past.”

West Michigan offers the five-year old company unique access to sales channels, suppliers and manufacturing expertise, said Gert Van Erum, CEO of Vanerum Group.

“One of the great things about West Michigan is there is so much knowledge about the industry here,” Vanerum said. “Within 100 miles (of Grand Rapids) everything we need is there. This was the ideal situation for us.”

A similar story occurred with Configura Inc., a Swiss headquartered space-planning software developer with operations in Grand Rapids. At NeoCon, the company announced a new contract with Green Bay-based furniture manufacturer KI.

However, where West Michigan and Europe are lacking is in software developers, said CEO Johan Lyreborn. “It’s one of our real challenges,” Lyreborn told MiBiz. “If you control the creative process, so much is possible.”

For Grand Haven-based Light Corp., the slowdown in sales in the office furniture industry has been offset partially by sales for its Kanepi lighting control systems and fluorescent high bay lighting. The Kanepi system utilizes wireless controls to give users the ability to manage their lighting precisely, and can reduce power consumption by as much as 70 percent. As industrial users seek efficiencies in their operations, sales of lighting systems are up 50 percent over the same period a year ago.

“We are seeing more decision makers coming through, which is good for us,” said Thomas Michele, VP of Light Corp.

The office furniture industry is cyclical in nature, but Haworth Inc. chairman Matthew Haworth said companies like his can’t afford to back off in lean times.

“We’re seeing the changing nature of work continue to evolve, and the way people want to work is changing,” Haworth told MiBiz. “We’re cognizant of that, and we want to learn about (the changes) and to add value (to people’s experiences). … We have the infrastructure to deal with those changes. We’re very optimistic.”

Haworth sees opportunities for innovation in every market the company serves, which drives its product designers and engineers to pay attention.
And, to twist an old adage, necessity can be the mother of innovation. At least that was the case with Industrial Woodworking Corp.’s Knú Healthcare, which debuted Knook, a combination bedside table and over-bed table for an acute care setting. When a major client took its time renewing a contract with IWC, owner and designer Brad Davis got to work on designing a new piece that the company could market on its own. When conversations with hospitals revealed that the company’s traditional casegoods for healthcare might soon be a product of the past, Davis realized IWC needed to think differently and take a new approach.

“When you go to the OEM well and the water’s low, you’ve got to make a game-changing product and own the intellectual property for it,” Davis told MiBiz, noting the company had many meetings with buying groups and reps from healthcare organizations. “If it takes off, it could create 150 jobs and we could sell 30,000-60,000 a year. It’s not about the (profit) but employment and jobs in Michigan. We’re excited. It could change the company for the better. The response has been significant.”

Meanwhile, as the credit markets begin to loosen, so too do purchasing decisions, said Robert Von Kaenell, Jr., senior VP of sales and distribution for Herman Miller. Through the acquisitions of Nemschof and Bandrud and its new line of modular wall components for the healthcare industry, Compass, Herman Miller Healthcare has been working to “acquire a critical mass in terms of the products, people and manufacturers to capitalize as money is freeing up,” said Von Kaenel.

As the healthcare industry’s future comes into focus after the passage of healthcare legislation, the uncertainty that had frozen capital expenditures over the last 18 months has passed and large healthcare systems around the nation are reinvesting in their operations while pursuing mergers and acquisitions.

“With the economy starting to improve and the passage of healthcare reform, healthcare systems know the bookends, the parameters they have to work under,” Von Kaenel said. “Strong healthcare systems are saying that they have to move forward. (Consolidation) is an advantage to companies like Herman Miller; we can provide broader solutions to large organizations.”

But not all news out of Washington, D.C. has helped the industry, said Don Heeringa, chairman of Trendway Corp. While the company has been successful in securing government contracts especially throughout the recession, Heeringa would like to see more private sector purchases. From a philosophical perspective, he’d like to see less growth in government and major changes in the House and Senate.

“I think a lot of businesspeople are like me in that they need to get stronger confidence before (they start hiring and buying),” Heeringa told MiBiz. “Enough people have the feeling that there’s too much spending and borrowing. (Washington) needs to give businesses a sign to hire and expand.”

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TAGS:

• chicago
• configura
• furniture
• haworth
• herman miller
• industrial woodworking corp
• knú healthcare
• light corp.
• manufacturing
• neocon