Government regulations top office furniture manufacturers’ concerns

Government regulations top office furniture manufacturers’ concerns

Sean Derning

Environmental regulations are the top concern of respondents in the sixth annual WOOD & WOOD PRODUCTS Top 25 Contract Furniture Manufacturers survey

Environmental regulations affecting the woodworking industry, such as wood dust and VOC emissions, rated as the highest concern of contract furniture manufacturers, according to a recent survey completed by WOOD & WOOD PRODUCTS. Also, environmental regulations ranked number one as a concern for the industry’s future.

When asked to rank their concerns on a scale of 1 to 10, with 1 being “unconcerned” and 10 being “extremely concerned,” eight of the 26 respondents, or 30.7 percent, gave government environmental regulations a perfect 10 rating.

TOP INDUSTRY CONCERNS

Q: Using a scale of 1 to 10, with 1 indicating “Unconcerned” and 10 indicating

“Extremely Concerned,” how would you rate your level of concern for each of

these issues?

Q: Compared to a year ago, are you Less Concerned, About the Same or More

Concerned?

Composite Less About More

Issues Rating Concerned the Same Concerned

Government Regulations

(Finishing, Wood Dust, Etc.) 8.2 0% 40.7% 59.2%

Workmen’s Compensation/

Employee Health Benefit Costs 7.8 11.5% 34.6% 53.8%

Wood Supply Issues 7.5 3.8% 42.3% 57.6%

U.S. Economy 7.4 7.6% 57.6% 34.6%

Price Cutting by Competition 7.3 3.8% 53.8% 42.3%

Employee Skills 6.5 0% 73% 23%

Foreign Competition 4.7 11.5% 34.6% 53.8%

Based on 26 responses.

“Over the next five years, we think government regulations will be the gravest TABULAR DATA OMITTED challenge to our company,” said Rob Ginn, vice president of marketing with Muscatine, Iowa,-based HON Ind. “We plan on meeting this challenge by forming a better liaison between the government sector and the manufacturing sector.”

The environmental regulation response (8.2 composite rating; see Top Concerns chart on page 63) breaks the grip of the industry’s concern over the economy, which had been ranked number one in the 1991, 1992 and 1993 Top 25 Contract Furniture Manufacturers surveys. Even more interesting, the economy ranked fourth (7.4 composite rating) among industry concerns, falling behind workmen’s compensation/employee health benefits costs (7.8 composite rating) and wood supply concerns (7.5 composite rating).

Environmental regulations

In last year’s survey report, one respondent mentioned, “The environmental issue is important, but the (Clinton) administration change could put those issues on the back burner.”

But how time can change trends. A little over a year since President Clinton took office, it appears that contract furniture manufacturers are not taking the possibility of stricter environmental restrictions lightly.

“What we’ve seen in the last six years has been increased attention by government regulatory committees toward the wood-working industry,” said Terry Bosch, vice president of marketing with Green Bay, Wis.,-based K.I. and a Business and Institutional Furniture Manufacturers Assn. (BIFMA) government affairs committee member. “This abnormal amount of attention and resulting legislation could impact the industry as far as what materials, equipment and other manufacturing components we can use. These rules have the potential to change the way the industry does business.”

Staying on top of current environmental regulations has become a full-time position for many companies. Not only are regulation supervisors responsible for keeping abreast of the wide variety of regulations confronting the woodworking industry, but also other jobs such as data logging, plant testing and disposal.

“Ten years ago, our human resources person was in charge of handling our environmental control in conjunction with other human resources duties,” said Joseph Steurer, chairman and CEO of Jasper, Ind.,-based Jofco Inc. “Today, we have two full-time employees who handle the data sheets, keep track of regulations and inspections. It seems like this regulation issue is suffering from overkill.”

To comply with environmental regulations, companies have often been required to modify existing equipment or purchase new equipment. Failure to meet current standards can result in costly fines from inspectors. One example of a manufacturer purchasing new equipment is Leeds, Ala.,-based Office Group America, which has been installing powder coating finishing equipment for metal parts in all of its plants to replace wet high-solids systems. “We have spent millions of dollars in spray booths, ovens and spray guns to switch to powder coating,” said president James Ritchey. “But the benefit has been a better finish, lower cost to finish and no VOCs.”

Workmen’s compensation

Moving up from third place on last year’s survey results, this year’s second place concern was workmen’s compensation/health care issues facing contract furniture survey respondents. The President and First Lady have made it clear that they are setting their sights on deflating the skyrocketing cost of medical care.

Many contract furniture makers have adopted the “watch and wait” philosophy before making a judgment on health care reform. But just because companies are waiting to see what happens, don’t think they aren’t keeping up with the latest information.

“We have one of our employees in human resources monitoring this area closely,” said Ritchey. “It is a critical issue not only to our company, but to employers all over the country. As the issue moves on, we’ll keep open communication with our legislators.”

One unique program that takes a different angle toward medical coverage has been the program adopted around Jasper, Ind., an area that contains a high concentration of wood-working manufacturers.

“Our program was modeled after the Cummings diesel plant program that originated in upstate Indiana,” said Steurer. “Our hospital now offers an industrial medicine branch that handles everything from work-related injuries to pre-employment physicals to drug testing. This way, employees from all the participating companies don’t have to run all over for their medical treatment because it can be handled in one facility.”

Because many woodworking company executives serve on the hospital board, the hospital works with the industry to keep costs down.

“The result is good, responsible medical coverage,” said Steurer. “We buy new medical equipment that is necessary for accurate diagnosis and treatment, and since our industry members are on the board, wasted costs are reduced.”

Wood supply concerns

Due to rising lumber prices that have only just recently stabilized, contract furniture manufacturers named wood supply (price, quality and availability) as their third biggest concern.

“The greatest challenge for us with wood supply is continuing to source sustainable woods from reputable suppliers and to use the most environmentally-sound manufacturing methods available,” said Coco Kim, director of press relations for The Knoll Group. “In addition, we would like to increase our yield of wood so we are as efficient as possible, keeping costs down while maintaining a high quality product.”

The cost of escalating raw materials has even caused some manufacturers to see if solid wood components can be replaced with laminated or veneered components while still keeping the products cost-competitive.

“We are establishing partnerships with both suppliers and customers, sharing information to streamline processes and eliminate non-value added products,” said Tom Carrigan, marketing manager with Hunt Mfg. Co.

Economy and market

The recession may be over, depending on who you talk to and where you are in the country. But “mergermania,” growing office space vacancy, more employees working at home and other factors have forced contract furniture manufacturers to rethink their products and how they market them.

“What we will have to do to survive is add products that can be made for a competitive price that still feature good design and good value,” said Alan Severance, vice president of operations with New York, NY.,-based Vitra Seating Inc. “We think there’s going to be a shift towards low-end pricing for high-end, high-quality products.”

The “mergermania” trend has facilitated this, giving larger manufacturers the ability to fill in niche markets by acquiring smaller companies already manufacturing products for a certain market. The smaller contract furniture manufacturers that have survived the fallout have had to maximize their resources in order to stay afloat with increased competition in their markets.

“Larger manufacturers are selling lower-priced product in markets where smaller manufacturers are currently selling product,” said Chris Burgess, vice president of Gardena, CA.,-based Arcadia Chair Co. “Today, it has become necessary for us to become a better niche marketer of our own products through

stressing quality, customization of products and flexibility.”

Quality control has been a popular buzzword with manufacturers, especially those that are interested in expanding their markets globally. Programs such as the ISO 9000 series of quality control systems have been implemented by many industry participants. But making a quality product isn’t where the program stops.

“We want to eliminate non-value adding activities and costs from our product not only in the workplace, but in the vendor, sales and distribution process as well,” said Pamela Grove, vice president of sales and marketing with Haskell of Pittsburgh Inc. “We are implementing a total quality management system throughout our organization, from sales through distribution.

Conclusion

A host of responsibilities including government regulations, workmen’s compensation, wood supply and the economy/marketing have made it difficult for manufacturers to juggle all of these concerns while still trying to remain profitable.

Interaction between contract furniture manufacturers, something that has been rarely practiced in the industry, could be a solution for companies trying to reach common goals such as reduced or limited legislation on certain topics. The term “strength in numbers” seems to be one of the industry’s best defenses against over-regulation. Participation in various organizations also can help.

“Because of the broad spectrum of regulations facing our industry, we could be distracted from our primary goal of making a product that is a good value for the customer. Reduced legislation would allow us to extend that level of customer attention,” said Ritchey. “We belong to many groups including BIFMA, the U.S. Chamber of Commerce and the Business Council of Alabama. These groups are receptive to our needs and are willing to challenge legislation in ways that no single company could.”

COPYRIGHT 1994 Vance Publishing Corp.

COPYRIGHT 2008 Gale, Cengage Learning