MADA / OFI Trends Survey: January Furniture Industry Index Remains Strong

February 9th, 2016 / Holland, MI

Three Index Values Reach Record Highs

Michael A. Dunlap & Associates, LLC unveils the results of its 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 January 2016 and marks the 46th 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 January 2016 Overall Survey Index is (57.25) exceeding October 2015’s (56.05). The 46 Survey average for the overall index is 54.74. 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 improve and grow on a very steady and increasing trend line. This is good news! The Overall Index is strong and is definitely above the 54.74 Survey average.

“2015 was the best year we’ve seen in well over a decade and we are confident that 2016 will be even better!” Mike Dunlap commented.

The January 2016 survey highlights are:

-Gross Shipments Index shot upwards to an all-time record of 64.33 after a drop to 59.33 in October 2015. The 46 Survey Average is 57.93. The Order Backlog Index also rose to 59.00 compared to 57.00 in October. The 46 Survey Average is 56.87.

-The Employment Index of 57.00 is another all-time record after 55.33 in October and the 46 Survey Average of 52.34. The Hours Worked Index declined slightly to 57.50 compared to 58.52 in October. The 46 Survey Average is 55.55.

-The Capital Expenditures rose slightly to 55.33 from 55.17 in October. Tooling Expenditures slipped to 57.93 from October’s 58.52. These compare to the 46 Survey Averages of 55.48 and 55.95.

-New Product Development rebounded to 61.33 compared to 57.93 in October; the lowest level since July 2009. This is puzzling, given the current state of the industry. The 46 Survey Average of 63.52. We will continue to monitor this in the next survey.

-Raw Material Costs improved again mark the third all-time best of this survey. The index of 52.33 effectively notes material cost deflation. Three of the past four quarters are all above 50.00 and the 46 Survey Average is 44.86. Employee Costs also improved to 46.55 from October’s 44.00. The 46 Survey Average is 46.68.

-The Personal Outlook Index is 61.03 down slightly from October’s 64.67, The all-time high was 66.40 in July 2016. The 46 Survey average is 57.90.

Dunlap further stated “The fact that we have three all-time high index values in the January 2016 survey is very exciting! The high Gross Sales, Employment, and Material Costs are strong indicators of the current firmness of the industry.

The shifts in Employment Levels and Hours Worked index values are indicative signs that hiring new employees might be keeping up with demand and is still being offset by less overtime.

“The modest changes in Capital Expenditures and Tooling Expenditures are mixed when comparing them to their 45 survey averages, The New Product Development index is still alarming and we will monitor this closely during the next few weeks. Both manufacturers and suppliers continue to report similar experiences.

“The Raw Material Cost Index is extraordinary, but it certainly reflects the decline in commodities like fuel, steel, copper, and plastics. It’s actually a “deflation” scenario that is good only for a short period. Yes, it beats index values in the upper 30’s and lower 40’s. With the four quarter average at 50.36 and 46 average of 46.88, conditions are out of balance.

The Employee Cost index value is not unusual and is nearly equal to the 46 survey average

He added, “I am delighted to see the continued strength of the index in Personal Outlook Index.” It’s a purely emotional question and we put a lot of value on this content.

The most frequently cited perceived threats to the industry’s success are healthcare costs and exchange rates. 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 63% of the responses come from 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 are extremely helpful to the performance and content of this unique survey.”

“Five out of ten Index values have improved and five have declined, but these are simple corrections in the industry’s performance. Only Employee costs are below the ‘50’ level. We maintain the opinion that the industry will continue to grow steadily during early 2016 and perhaps into 2017.”The January 2016 MADA / OFI Trends survey was sent to more than 700 individuals involved with office furniture 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 $10 Million in sales. The survey repeats in April 2016.

For further information, please contact:

Mike Dunlap at

Phone: 616-786-3524

Mobile: 616-990-8725

e-mail: mike@mdunlap-associates.com

www.mdunlap-associates.com

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 strategic business and market planning, furniture industry trends, Market Entry, Global Partnerships, & Collaboration, Author, Presenter, & Speaker, Mergers, Acquisitions, & License Agreements, Expert Witness Services in Products Liability, and Independent Rep Sales Team Development.

 

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