Industry demand will rise as unemployment falls and business require more furniture
Los Angeles, CA (PRWEB) April 30, 2013
The Office Furniture Manufacturing industry has suffered during the five years to 2013 as businesses cut back on expenses in the midst of the recession. With declining demand, companies within the industry were forced to lower prices to remain competitive, hampering industry profit. Furthermore, the surge of low-cost imports continues to adversely affect the industry. “Countries like China have lower labor and overhead costs allowing they to offer lower prices on comparable products, effectively eroding domestic demand for US-made products,” IBISWorld industry analyst Brandon Ruiz says. Consequently, industry revenue is expected to decline at an average annual rate of 4.1% in the five years to 2013.
Volatile input prices have also adversely affected the Office Furniture Manufacturing industry. The price of steel, a major input for office furniture, plummeted 25.1% in 2009 and jumped 16.0% in the following year. “These price fluctuations made it difficult for manufacturers to anticipate future spending and control costs,” Ruiz says. Furthermore, as a result of declining demand and prices for new office furniture, profit decreased from 3.3% of revenue in 2008 to 1.9% in 2013. Consequently, many firms were forced to exit the industry completely. Despite these challenges, IBISWorld expects industry revenue to grow a modest 0.4% to $23.2 billion in 2013, fueled by US enterprise growth and the expansion of corporate profit. The more businesses there are, the more office furniture is needed.
During the five years to 2013, the number of office furniture manufacturers decreased. Overall, the Office Furniture Manufacturing industry has low market share concentration. In 2013, the industry’s three largest players are Steelcase Inc., HNI Corporation and Herman Miller Inc. The remainder of the market is captured by a large number of small and privately owned businesses that successfully supply the local community's retail demand.
As the number of US businesses increases, industry revenue is forecast to rise in the five years to 2018; however, some mitigating factors will remain. Higher import penetration will lower domestic demand and increase price pressures on domestic manufacturers, which will slightly constrict growth. Also, raw material prices are projected to continue increasing, which will adversely affect profit in the same period. Manufacturers can pass the additional costs on to buyers, but in doing so, they risk losing business to low-priced foreign imports. For more information, visit IBISWorld’s Office Furniture Manufacturing industry in the US industry report page.
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IBISWorld industry Report Key Topics
The Office Furniture Manufacturing industry produces a wide range of office furniture, including bookcases, cabinets, chairs, desks and filing cabinets. It also manufactures office and store fixtures, such as cafeteria countertops (except kitchen and bathroom), furniture parts and partitions. Furniture may be ordered predesigned or customized, and may be sold assembled or unassembled.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.