The U.S. office furniture business, which suffered a 3-year slump from corporate downsizing, is poised for a comeback as companies expand again, industry experts say.
The estimated $10-billion industry, which saw shipments plunge nearly 40 percent over the last 3 years, is likely to benefit from a rebounding economy and companies having extra money to splurge on office furniture.
"We feel the office side of the furniture business hasn't looked this good in years," said analyst Jerry Epperson of Ferris, Baker, Watts, Inc.
The reversal could happen quickly, he said. If offices suddenly start showing they're not so "chintzy with their pocketbooks," in 12 months some office furniture companies might not being able to meet demand, Mr. Epperson said.
Office furniture makers Hon Industries Inc., Steelcase Inc., and Herman Miller Inc. are among the companies set to benefit from business expansions, he said.
In a recent earnings statement, Stan Askren, president of Hon Industries, said the company was "cautiously optimistic that the office furniture industry will begin to rebound in the second half of 2004."
Some analysts say spending on big-ticket office products, which is closely watched for signs of the economy's health, has already begun.
Retailer Office Depot Inc. said it expects positive first-quarter sales at stores open at least a year for the first time in 16 quarters. The increase is driven in large part by sales of office furniture, the retailer said.
Late last month, the Business and Institutional Manufacturers Association (BIFMA) raised its estimate of growth in office furniture shipments in 2004 from 2.4 percent to 5.6 percent.
Still, the industry has a long way to recover.
Hon reported that its fourth-quarter profit fell, and Steelcase, said to be the world's biggest office furniture maker, announced it was closing two wood furniture plants and laying off 770 workers. (Reuters)
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