July MADA / OFI Trends Survey: Furniture Industry Index Is Up Again
Michael A. Dunlap & Associates, LLC unveils the results of its July 2017 Quarterly MADA / OFI Trends Survey, a unique tool that measures the current business activity of the commercial furniture industry and its suppliers. This survey was completed during the month of July 2017 and marks the 51st Edition. The Survey was started during the summer of 2004.
The survey focuses on ten key business activities and respondents rate each area on a scale of TEN (the highest) to ONE (the lowest). These include Gross Shipments, Order Backlog / Incoming Orders, Employment Levels, Manufacturing Hours (Overtime vs. Reduced Hours), Capital Investment, Tooling Expenditures, New Product Development Activity, Raw Material Costs, Employee Costs, and the respondents’ Personal Outlook on the industry.
The unique element of this survey is the establishment of an Industry Index Number to quantify where the industry is currently performing. For example, an index of 100 means that things “couldn’t be better”, an index of ONE is “absolutely the worst” it can be, and an index of 50 means it is neutral; no change “up” or “down”.
The July 2017 Survey Overall Index is (57.49) compared to an almost identical January 2017 Overall Index of (57.87). The 51 Survey Average Overall Index is 54.93. The highest recorded Index was 59.72 in July 2005 and the lowest was 41.45 in April 2009 during the bottom of the recession.
“The industry continues to grow but at a nice, steady pace.The Overall Index is strong and remains above the 54.93 Survey average. We remain confident that 2017 will exceed 2016,” Dunlap commented. “I feel good about where the industry is going.”
The July 2017 survey highlights are:
Gross Sales is 60.29, up from 50.13 in April, with an average of 57.93 and Median of 59.76. This clearly shows the pent up demand from previous quarters.
Order Backlog is 64.12, up from 61.00 in April, with an average of 57.36 and Median of 59.06. This is very good news for the 3rd and 4th quarters.
Employment Levels is 54.29, up from 53.04 in April, with an average of 52.49 and Median of 53.30. Hiring is strong!
Hours Worked is 58.33, up from 51.82 in April, with an average of 55.70 and Median of 55.75. Lots of overtime!
Capital Expenditures is 62.06, down from 64.50 in April, with an average of 56.00 and Median of 56.48. This is still very strong!
Tooling Expenditures is 60.31, down from 66.00 in April, with an average of 56.29 and Median of 56.83. This is a normal pattern. 1st quarter tooling expenditures are usually strong.
Product Development Activity is 63.64, down very slightly from 63.91 in April, with an average of 63.46 and Median of 63.12. Still very strong and in line with the average and median.
Raw Materials Costs is 45.67, up from 43.48 in April, with an average of 45.02 and Median of 45.11. This is normal.
Employee Costs is 47.65, improved from 43.33 in April, with an average of 46.60 and Median of 46.51. This is also normal.
Personal Outlook is 64.29, up from 63.91 in April, with an average of 58.46 and Median of 61.09. Very strong!
Dunlap stated, “Although some think the slowdown with the large public companies indicates a general decline in the industry performance, at MADA, we disagree, We are surveying many more than five or six companies. The growth is coming from the smaller under $50.0 Million sales and fewer than 500 employees. I am still pleased to see the strength of the Personal Outlook Index. It’s a purely emotional question but we put a lot of value on this content.”
The most frequently cited perceived threats to the industry’s success are material costs and healthcare costs Healthcare costs are the most commonly cited concern from respondents since this survey process was started in August 2004.
As always, Dunlap thanked the respondents with this comment. “Almost 60% of the responses come from “C” level executives who are the Chairman, CEO, COO or President of their organizations. I am always extremely grateful for their participation and support. Their suggestions and recommendations continue to be helpful to the performance and content of this unique survey.”
“Eight out of ten Index values have improved and only two – Capital and Tooling Expenditures – have declined. Only Material costs and Employee costs are below the ‘50’ level. We maintain the opinion that the industry will continue to grow steadily during 3rd and 4th quarters of 2017 and probably into 2018.”
The July 2017 MADA / OFI Trends survey was sent to more than 450 individuals involved with the commercial furniture industry’s manufacturing and suppliers from Africa, Asia, Australia, Europe, North and South America and from companies ranging from more than $1 Billion in sales to less than $500,000 in sales. The survey repeats in October 2017.
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Michael A. Dunlap & Associates, LLC, is a consulting firm that focuses upon issues involving the working, learning, healing, and hospitality environments and furniture industries. These include Commercial Furniture Industry Trends, Strategic Business and Market Entry & Planning, Global Partnerships, & Collaboration, Mergers, Acquisitions, & License Agreements, Expert Witness Services in Products Liability, and Author, Presenter & Speaker.