Office furniture industry: sees 'sustained' recovery: double-digit sales growth and the continued push for LEED credits highlight the office furniture industry's year.

For today's office furniture manufacturers, to "sustain" is to succeed. And succeeding they are.

For the first time in eight years, the U.S. office furniture market is projecting double-digit growth in both production and consumption for 2005. According to the Business and Institutional Furniture Manufacturers Assn., 2005 office furniture production will rise an estimated 12 percent over 2004 figures, to almost $9.995 billion. Likewise, consumption will show approximately 12 percent growth over last year's rates, to $11.910 billion.

While the industry still has a long way to go to get back to the record $13.285 billion it shipped in 2000, it is on the right track. The outlook for next year is positive, with experts projecting 2006 production and consumption to rise an estimated 7 percent and g percent, respectively. New office construction spending is expected to increase 3 percent for the first quarter of 2006, to $33.5 billion, according to the economic consulting organization Global Insight.

"All three of the primary drivers of furniture demand are trending positive for the current year," said Tom Reardon, BIFMA executive director. "Corporate profits are healthy, service sector/white collar employment is increasing and investment in new office construction is stable. All of these factors have a positive impact on furniture demand."

"The trend that I have seen in the industry is certainly the push for sustainability," said Gary Scitthelm, vice president of global sales and marketing at Haworth. "I think that North American customers, in particular, are quickly catching on to the benefits of it. Two or three years ago, people thought that sustainable design and sustainable approaches in the industry meant a premium and that you had to pay to follow that approach--you couldn't get your return on investment. The biggest trend that we're seeing now is that people are [finding] that sustainability doesn't cost more initially, and the ongoing benefits are enormous."

"I think it is certainly true that the environmental movement has been very, very big in growing consideration in the industry. And to some degree I think the industry can take a lot of pride in that," said Mark Schurman, director of external communications for Herman Miller. "On the other side of the equation, I would say that the architects and interior design professionals have been terrific advocates to influence our mutual customers in corporate America to look at these issues--not just as the right thing to do, or purely altruistic, but also because there are very sensible business advantages in terms of the quality of the environment, everything from indoor air quality to the experience of the interior space for the employees and customers."

"Environmental and sustainability issues are having a significant impact on the market and in shaping the association's agenda," Reardon said. "Fifteen years ago, our primary involvement in environmental issues was in the area of regulatory compliance. Now we are working to inform our members regarding the benefits of voluntarily embracing the principles of sustainability."

Office Industry Taking the 'LEED'

BIFMA says its voluntary Sustainability Guidelines, released in March, "serve as a road map for any office furniture manufacturer or supplier desiring to become a more sustainable company." As part of its sustainability initiative, BIFMA has developed a standard and a test method for measuring office furniture emissions, which is currently under review by the American National Standards Institute. According to BIFMA, the objective of the standard/test is to "provide an open, scientifically-based and harmonized test method acceptable to the U.S. Green Building Council as an option under the LEED-CI 4.5 credit." (For information on LEED-CI, see "LEED-CI: A PRIMER".)

"One of the two existing options available to earn the LEED-CI 4.5 credit is to test the specific product using the RTI/ETV test protocol," Reardon explained. "As the RTI/ETV protocol is not currently maintained by any entity and has a number of shortcomings, we envision that the BIFMA test method and standard currently going through the ANSI canvass (public review) process will prove to be a more suitable option to earn that credit.

"BIFMA's involvement in developing a furniture emission test method was motivated by several factors, including a GSA request from many years ago," Reardon continued. "The test method and standard are not designed to help companies using particleboard, MDF or any other specific material The standardized test method is intended to bring some commonality and consistency to this emerging field ... We have had several meetings with representatives of the U.S. Green Building Council and they are very supportive of our work."

Reardon added, "I envision that more architects, building owners, managers, operators and investors will see inherent value in 'building green: These market forces will continue to evolve and drive demand toward greater options in environmentally-preferable products."

"The more recent industry trends [for sustainability] are a great reflection of an industry-wide awakening ... that there really is a financial return on these things, and you have the added benefit of staying in front of government regulations," Schurman said. "It's always nice to be perceived as an advocate, as opposed to an opponent of such things."

Sandy Horton, director of product line management at Kimball Office, agreed. "As an active member of the U.S. Green Building Council, we help our clients achieve their goals for the environment and LEED-CI certification through products that incorporate design for the environment strategies, including cleaner materials, renewable materials, increased recycle content, and the ability to be easily reused, refurbished and recycled. We're also designing our facilities to meet LEED-CI criteria, including our flagship showroom in Jasper, IN, and our new Chicago showroom," Horton said.

However, whether the sustainability issue will impact the residential market still remains debatable. "I think the interesting question is when will this start to spill over into the consumer side and residential homes and the residential furniture industry?" Schurman queried. "I think the trend has been much less evident there, and I'm not quite sure why. It will be interesting to see if the USGBC can have as much influence on that side in the future. With an individual consumer, you can only influence a couple thousand square feet, so the cost per sale, so to speak, is higher."

Practicing What They Preach

While the USGBC and other green groups have drawn more attention to environmental building design, many major office furniture manufacturers, including Haworth, Herman Miller, Kimball Office and Steelcase, already have green policies in place.

Steelcase's commitment is perhaps one of the more well-publicized. The company made news in 2001 when its wood manufacturing plant in Grand Rapids, MI, became the first-ever LEED-certified manufacturing facility. (See Wood & Wood Products, January 2002.) In addition, the company has: eliminated virtually all VOCs from its Grand Rapids metal furniture plant, eliminated almost all hazardous waste generation; and announced that it will use certified woods and be PVC-free by 2012.

Herman Miller also has a well-publicized environmental philosophy, one which dates back to 1953. In addition to the company's commitment to LEED certification standards, Schurman said, "The big metric is that by the year 2020, we've said that as a company we will have zero environmental footprint--there will be absolutely no negative environmental implications of our business. It is a very, very aggressive target."

Similarly aggressive is Herman Millers push to follow the principles found in Cradle to Cradle, a novel by William McDonough and Michael Braungart that investigates the conflicts between industry and the environment, and maps a new set of design and production principles. All new Herman Miller products created since 2001 have to pass the Cradle to Cradle protocol Schurman said.

"The intent here is to create products with closed-loop lifecycles, so that any materials and processes that go into production end up as either organic nutrients that go back into the soil or technical nutrients that are benign to the environment, plastics and so forth, that can be recycled," he said.

Haworth, likewise an advocate of LEED and the Cradle to Cradle principles, also has a longstanding commitment to the environment and the organizations that support it. In addition to Haworth's efforts in day-to-day operations, the company's showroom space at Chicago's Merchandise Mart is LEED certified. Cementing its involvement, Haworth CEO Franco Bianchi was recently nominated to the USGBC board.

"The efforts that we go to for using sustainable products has been a big deal for us," Scitthelm said. "Part of Haworth's approach has always been about eliminating waste. ELiminating waste, whether it be scrap or packaging, translates into a better bottom line, which then translates into a better product as well Even lean manufacturing processes have been worked into this sustainability ideal--using less physical space for production."

Kimball is another company with a long-term commitment to the environment. What differentiates Kimball Office, however, is that its parent company, "Kimball International, is the only major furniture company to own timberlands, actively promoting research and education in sustainable forestry," Horton said.

"Our commitment to environmental stewardship began long before the green movement became popular," Horton added. "For as long as we've been around, Kimball Office has used conservation and sustainability to guide how we design, build and plan for the total life cycle of our products. Many of our programs and initiatives have been 'firsts,' and we continue to promote industry standards for the long-term protection of our environment."

Kimball's environmental policy includes, among other things, a strong emphasis on the use of sustainable products.

"We select materials that are as environmentally sensitive as possible, while still meeting the engineering requirements for the product's use," Horton said. "We try to use the smallest amount of dissimilar materials possible in our products for easier recycling, and we do our best to increase their already high recycled content."

Monitoring Imports for Sustainability

Tracking the sustainability of products produced in-house is one thing. When it comes to imported components, however, it becomes a little more difficult.

"Herman Miller certainly imports a lot of components and raw materials," Schurman said. "In terms of our international suppliers, we have a program that monitors their performance in a variety of aspects, and among them environmental factors play a part when we decide whether or not to continue business contracts."

According to Horton, Kimball Office has an Environmental Task Team that researches all of the components purchased from international suppliers. "We make sure the components are as environmentally sensitive as possible, while still meeting our stringent engineering requirements for product performance, durability and reliability," Horton said. "Our component specifications remain consistent, regardless of where they are sourced."

Like Herman Miller and Kimball, Haworth also has an internal certification process in place. "When these imports come to North America, we need to stay behind them and monitor them," Scitthelm said. "It's important that we have our own process in place to do so."

LEED-CI: A PRIMER

Developed by the U.S. Green Building Council, the LEED (Leadership in Energy and Environmental Design) program establishes a common measurement for defining the concept of a "green building." LEED-CI (Commercial Interiors) addresses the specifics of tenant spaces, typically in new or existing office, retail and institutional buildings.

The LEED-CI Green Building Rating System awards credits for the following categories: Sustainable Sites (7 credits possible), Water Efficiency (2), Energy and Atmosphere (12), Materials & Resources (14), Indoor Environmental Quality (17), and Innovation and Design Process (5). A minimum of 21 credits must be achieved to earn LEED-CI certification.

Although many believe the program has merit, it is not without its critics. Many wood industry groups, including the American Forest and Paper Assn., argue that LEED only offers credit for wood certified by the Forest Stewardship Council. Also garnering criticism by groups such as the Composite Panel Assn. is the fact that products that use urea formaldehyde in the binder, notably particleboard and MDF, are not acceptable under the LEED Indoor Environmental Quality criteria, despite their high recycled wood content.

Of special interest to contract furniture manufacturers is the criteria that systems furniture and seating must either comply with set emissions levels for formaldehyde, including 50 parts per billion and 25 parts per billion, respectively, or be Greenguard Indoor Air Quality Certified. Among those certified by Greenguard are: AIS, Allsteel, Bernhardt Design, Descor, Fixtures Furniture, Global Contract, Harter, Haworth, Herman Miller, Kimball Office, Knoll, Loewenstein, Milliken, National Office Furniture, Steelcase, Teknion, Teknion Wood, Trespa, Virco and Zoom Seating.

THE QUESTION OF FORMALDEHYDE

One of the arguments against LEED certification is that it does not give credit far wood products containing formaldehyde, including those made from particleboard and MDF, under claims of "non-compliant emission levels." In order to address these concerns, the Business and Institutional Furniture Manufacturers Assn. recently partnered with the Composite Panel Assn. and the American Home Furnishings Alliance to host a Formaldehyde Workshop in Chicago. An estimated 95 people attended the event.

"Customers of office furniture manufacturers are requesting reduced amounts of formaldehyde and other volatile organic compounds in products," said Tom Reardon, BIFMA executive director. "We seek to provide a forum where all members of the supply chain can work collaboratively to address those customers' requests."

However, while customers may be requesting formaldehyde-free products, it appears they are not always willing to pay a premium for the option. Dow BioProducts, manufacturer of Woodstalk, a formaldehyde-free panel made from wheat straw, will cease production by the year's end. According to a release issued by Dow Chemical Canada Inc., "The demand in the marketplace for a high-quality, low-VOC fiberboard product was not at a level high enough to generate the returns necessary to sustain the business."

Mark Schurman, director of External Communications for Herman Miller, said Woodstalk was an option on nearly all of Herman Miller's surfaces. "It's a shame, because we had tested a lot of different products in that category, and Dow's product was the first that met our very demanding criteria. The closing has really put us in a spot where we have to look at what is possible out there, and find another supplier or work with someone to get a different product."

NEW BIFMA STANDARD IN THE WORKS

The Business and Institutional Furniture Manufacturers Assn. is beginning work on a sustainable product standard using the open ANSI consensus process According to Tom Reardon BIFMA executive director, the scope of the standard will most likely include the following:

* Human and ecosystem health

* Renewable energy and energy efficiency

* Materials re-utilization

* Water management

* Social accountability

"Our objectives are to create a consensus-based and voluntary Sustainable Furniture Standard that: serves as a viable market-based alternative to emerging proprietary standards and protocols; provides a leadership standard in a comparative multi-tiered performance-based framework; is developed in a transparent process drawing from best practices in the evolving field of sustainability; and defines what sustainability means through criteria based on environmental, economic and social benefits," Reardon said

Value of the U.S. Office Furniture Market
(Millions of U.S. Dollars)

Year       Production       Change        Imports

2006 *      $10,650           6.6%           N/A
2005 #        9,995           11.8           N/A
2004          8,935            5.1        $2,022
2003          8,505           -4.3         1,870
2002          8,890          -19.0         1,777
2001         10,975          -17.4         1,806
2000         13,285            8.5         2,094
1999         12,240           -0.9         1,772
1998         12,350            7.8         1,532
1997         11,460           14.1         1,236
1996         10,040            6.4           968
1995          9,435            6.6           798
1994          8,850            8.5           677
1993          8,160            5.8           548
1992          7,710            6.7           440
1991          7,228           -8.1           394
1990          7,863                          446

Year        Exports       Consumption     Change

2006 *         N/A          $12,960         8.8%
2005 #         N/A           11,910         12.2
2004          $347           10,610          5.4
2003           307           10,068         -2.5
2002           338           10,328        -16.4
2001           430           12,351        -17.0
2000           496           14,883          9.5
1999           430           13,591          1.2
1998           454           13,428          9.6
1997           443           12,253         15.1
1996           360           10,648          7.7
1995           345            9,888          8.0
1994           375            9,152          9.7
1993           364            8,345          6.6
1992           324            7,826          6.7
1991           288            7,334         -9.1
1990           245            8,064

* Figures Forecast

# Figures Estimated

Note: Volume reflects the manufacturers' invoice value of new
office furniture. These figures do not include refurbished
(recycled) furniture (add an estimated 15%) or RTA office
furniture (add an estimated $800 million). Consumption is
defined as production plus imports, minus exports.

Source: The Business and Institutional Mmnufacturers Assn.
International