Operation Oslo: 9to5 Seating Joins Norway’s Flokk

Few words in the business lexicon have more meanings than “acquisition.” Perhaps that’s because reporting about acquisitions seldom gets beyond the rote legalisms. Rarely are the leaders or their personalities revealed, and how they guided their businesses into these historic unions.

There’s always an exception, and the union of 9to5 Seating with Norway-based Flokk in November 2019 is precisely that. On Wednesday of the short work week preceding the four-day Thanksgiving holiday, two CEOs finalized an agreement to unite a family-owned seating maker in Hawthorne, CA, with Europe’s largest office and task chair manufacturer.

Lars Røiri, CEO, Flokk. Image: Flokk

Flokk, known as Scandinavian Business Seating until three years ago, has had Lars Røiri as CEO since 2007. The result of a progression of strategic actions in pursuit of his vision for unifying Europe’s fragmented workplace furniture industry into an international “house of brands.”

9to5 Seating represented an ideal opportunity for Flokk. “I was impressed by their advanced manufacturing capabilities and their very dedicated, professional management team,” said Mr. Røiri, speaking of the American firm.

A bonus for Flokk was getting a CEO at 9to5 Seating who was also an e-commerce pioneer.

“I started a website called OfficeSeating4U.com and another one called Furniture Genius,” said Dara Mir, then an undergraduate member of the University of Southern California’s Class of 2002. “I bought chairs from several office furniture manufacturers and drop-shipped them to my customers.”

Dara Mir, CEO, 9to5 Seating. Image: 9to5 Seating.

He learned the major players, their product lines and how consumer trends shaped the marketplace at that time. Within months of his USC graduation, Mr. Mir would draw upon his market and consumer knowledge in launching a new business with his parents.

Around the same time, in-depth knowledge of consumer marketing and product management backstopped Mr. Røiri’s rise to CEO of HÅG. By 2002, he was roughly 24 months into his workplace industry tenure following 12 years of stepping his way up the management ranks, first in industrial products, then consumer medical devices and dental supplies.

A 1987 graduate of the Norwegian Business School in International Management and a Master of General Business, Mr. Røiri, through his scholarly work paired with his consumer product experience, was about to set HÅG on a brave new course. “We industrialized and professionalized HÅG, and changed the management team,” said Mr. Røiri.

Between 2005 and 2007, HÅG was purchased off of the Oslo stock exchange by a group Mr. Røiri led, was enlarged into a more substantial business, and ultimately sold to a private equity firm, Sweden’s Ratos.

Says Flokk CEO Lars Røiri, “We are by far the most efficient seating manufacturer in Europe.” Image: Flokk

“These actions supported our strategy to consolidate a fragmented furniture industry in the Scandinavian countries,” said Mr. Røiri. “In 2007, together with Ratos, we acquired the Swedish firm RH and the Danish firm RBM that, along with HÅG, formed Scandinavian Business Seating.”

As this newly created troika contemplated how to deal itself into the European furniture scene, the Mir family in Los Angeles considered how to make the best hand from the cards they held.

Flokk developed core competencies to support its far-flung businesses, including efficient manufacturing/product assembly, procurement/supplier development, and product portfolio development. Image: Flokk

Dara Mir’s parents, Darius and Susan Mir, had known furniture industry success – first, in 1983 with a distribution warehouse in downtown L.A., followed in 1985 by importing and distributing Italian-made ergonomic seating. From 1986 until the early months of the new millennium, the Mirs grew a business centered around making office chairs for wholesale markets.

These were their first tastes of free enterprise in the U.S. after emigrating here from Iran in 1982.

A potent threat to their livelihood, built around their wholesaler clientele, surfaced as Dara Mir graduated from USC. He was intent on joining the family business despite the competitive storms it was weathering. Those rough conditions hailed from China.

“Our wholesale customers started sourcing from China directly,” said Mr. Mir of the new reality they faced. “The perception at that time was the most inexpensive products in the world were coming out of China.”

The Long Beach factory, opened in 1995, where he had grown up sweeping floors and doing what needed doing became, in 2002, a place Dara Mir helped his parents shutter.

“At that time, we had 20 years of industry know-how and manufacturing experience,” said Mr. Mir. “After I graduated, we brainstormed how to create a business model with diversity, one not focused on five or six major customers.”

As China’s growing powerhouse needled U.S.-based manufacturers, another powerhouse was energizing in the Scandinavian countries.

Flokk’s house of brands results from a progression of strategic actions for unifying Europe’s fragmented workplace furniture industry. Image: Flokk

“We created a very strong position in the Nordic region,” said Lars Røiri. “We then established strong positions in the U.K., France, the Netherlands, and Germany with our subsidiaries.” These were opportunities where the Scandinavian style of management influenced acquisitions and business development.

“Scandinavian management involves high levels of delegation and trust, with a leadership culture based on openness and transparency,” said Mr. Røiri. “We try to have the fewest management layers as possible in the organization, making managers responsible and accountable.”

9to5 Seating’s Hawthorne, CA, manufacturing facility incorporates rooftop solar panels and received certification as a LEED Gold Manufacturing facility. Image: 9to5 Seating

For example, Flokk’s press releases often carry the CEO’s contact information. Rarely, if ever, does that happen in the U.S. Asked how many contacts he receives, Mr. Røiri said, “Quite a few. I hear from newspapers, industry publications and some of our larger dealers.”

Does it help him with a first-hand understanding of Flokk’s customers, what’s influencing their markets and the cultures present there?

“My background in marketing and sales makes knowing what’s happening in the markets very important,” Mr. Røiri said. “The most important people we have are the ones who know the local markets best, such as the sales representatives for 9to5 Seating. It is most important for me, as CEO, to spend time on our international plans and the growth and development of our markets.”

As with Poland’s Profim, 9to5 Seating will continue as a standalone business. “The intention is for us to grow Flokk’s North American business,” said Dara Mir. Image: 9to5 Seating

He has that latitude as a result of Flokk’s structure emphasizing three functional groups.

“We have developed strong functions we call our core competencies,” said Mr. Røiri. “First, efficient manufacturing and assembly of products; second, procurement and supplier development; and, third, product portfolio development.”

Flokk has substantial investments in this approach. Its product portfolio unit numbers 50 members. Its procurement team is Europe’s strongest. And, Mr. Røiri adds, “We are by far the most efficient seating manufacturer in Europe – you can see that from our profit statements.”

Building on gains from Scandinavian Business Seating’s formation in 2007, the next boost came in 2014 when Triton, an international private equity firm, became the owner. With Triton’s backing, the acquisitions came fast: Netherlands-based BMA Ergonomics in 2015; Sweden’s Malmstolen in 2016; Offecct of Sweden and Swiss-based Giroflex both in 2017; and Poland’s largest seating manufacturer, Profim, in 2018.

In 9to5 Seating, the Mir family continued the vertically integrated structure of their prior businesses, adding parts factories in China and Tennessee. Image: 9to5 Seating

The name change in 2017 to Flokk captured the ‘house of brands’ concept. In a similar effort at capturing a theme, the Mirs seized upon a Grammy-winning song from 1980 about the working world.

“I remembered the Dolly Parton song “9 to 5” from the movie and thought ‘9to5 Seating’ would be unique and memorable,” said Dara Mir, of naming the new venture. He saw another benefit in the name: 9to5 Seating would always list at the top of any directory.

Soon the Mirs cracked the code. What contract dealers needed were products to differentiate their dealerships and wow their A&D clients. With that and a national network of sales representatives, orders streamed in following 9to5 Seating’s 2004 launch.

“To us, value for our customers means delivering quality, service, price and design,” said Mr. Mir.

Having carried forward the vertically integrated structure of their prior businesses, Darius Mir established two wholly owned parts factories, one in China in 2003, and another in Union City, Tenn., ten years later, which the Mir family still owns. That 9to5 Seating had a China facility caught the eye of Lars Røiri.

“We are building a position in Asia,” said Mr. Røiri. “We’re in Shanghai, Singapore and Japan, plus Australia.” 9to5 Seating’s factory in China “completes the picture” he said.

What becomes of that picture in the future, now that 9to5 Seating has joined Flokk’s international house of brands?

Some have asked about how 9to5 Seating and HÅG will operate under the same owner in the U.S. market. It’s a non-issue to both CEOs – the reasons why stem from Flokk’s European experience.

“We have operated in Europe for years with brands in different market positions,” said Mr. Røiri. His is not a cookie-cutter application of strategic thinking.

“We have had a well-known niche position in the U.S. with HÅG as a high-end brand for years, including a factory in Greensboro, North Carolina, until the year 2000,” said Lars Røiri. Once a subsequent distribution relationship with Izzy+ ended when Izzy closed in April 2018, HÅG established a distribution operation based on shipping products from Europe.

As with Poland’s Profim, 9to5 Seating will continue as a standalone business. “The intention is for us to grow Flokk’s North American business,” said Dara Mir. “They pride themselves on supporting companies in their house of brands, keeping their unique brand voices and not diluting them away.”

“We will not change the products of 9to5 Seating to Scandinavian products, but instead, we’ll strengthen the brand,” said Lars Røiri. A uniquely Norwegian approach, one that stands in contrast to the U.S. style of tinkering from the start with acquired businesses. Perhaps it is a reflection of coming from smaller countries.

“We have developed ways of relating with the larger countries surrounding us and their markets,” said Mr. Røiri. The combined population of Norway, Denmark and Sweden is about 21 million, bettering the L.A. metro area’s estimated population by just three million.

“The Scandinavian culture has historically featured strong relations with different cultures and markets,” said Mr. Røiri. “It’s in the DNA of our countries.”

Maybe that DNA also inspires products that are not merely ergonomic but healthy for workplace users. Mr. Røiri emphasizes “providing products that contribute to our health and encourage more movement” along with a functional, appealing design. He terms this an international mega-trend, with sustainable products forming another mega-trend.

“Scandinavian firms like HÅG have been in the sustainability forefront for years,” he said. “We were the first Northern European company to hire an environmental manager in 1981 or 1982, which was very early.”

When 9to5 Seating’s new factory in Hawthorne, Calif., was taking shape in Dara Mir’s mind, it was a company decision to maximize the facility’s energy efficiency and sustainability. What resulted is a building with rooftop solar panels generating some of the building’s electricity, the first LEED Gold Manufacturing facility in the South Bay market of Los Angeles, and other steps in reducing the firm’s carbon footprint. “Nowadays, it’s widespread, but it wasn’t in 2009,” said Mr. Mir.

With similar entrepreneurial outlooks and customer-centric philosophies, one might ask about the benefits deriving from this union. That is, aside from giving Darius and Susan Mir, with 40 years in the furniture industry, a retirement opportunity with the chance for more time with their grandchildren.

With the addition of 9to5 Seating, Flokk has roughly 2,600 employees with an approximate revenue of $410 million U.S. An operation on that scale brings much to the table.

Says Lars Røiri, “By leveraging Flokk’s expertise in manufacturing, logistics and go-to-market know-how, we can help 9to5 Seating further expand and realize significant growth in the U.S. market.”

Speaking for 9to5 Seating, Dara Mir said, “Flokk has refined their processes over decades, becoming manufacturing experts with extensive logistical know-how, with our goal being how to maximize the knowledgeable team and wealth of resources they have to offer.”

Dara Mir shared an observation from a sales representative who said to him, “Maybe you haven’t taken the time to see all that you’ve accomplished – it’s rare to do what 9to5 Seating has done. You guys are one of the industry’s best-kept secrets.”

Well, that secret is safe no longer.

As researcher, writer and commentator, Stephen Witte reports and advises on trends shaping the future for the A&D community, manufacturers and distribution channels. His background includes corporate roles in product management, product development and public relations. Contact him at stephenmwitte@gmail.com.