MADA/OFI Trends Survey: October Furniture Industry Index Is Still Strong
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 October 2015. This edition marks the 45th Edition, which was started during the summer of 2004.
The survey focuses upon ten key business activities, with respondents rating each area on a scale of TEN (the highest) to ONE (the lowest). The business activities are 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 October 2015 Overall Survey Index is (56.05) and compares to July (58.78), April (56.80), and January 2015 (57.26). The highest recorded Index was 59.72 in July 2005; the lowest was 41.45 in April 2009. The average overall index is 54.68.
“The industry continues to move on a very steady and improving trend line. This is good news. The Overall Index continues to remain well above “50” and is definitely above the 54.68 Survey average. We are confident that the industry is still on course to achieve it’s best year in more than a decade.” Mike Dunlap commented.
The October 2015 survey highlights are:
• Gross Shipments Index dropped back to 59.33 from 62.40 in July and 58.48 in April. It is significantly higher than the 45 Survey Average of 57.79. The Order Backlog Index also dropped to 57.00 compared to 62.50 in July and 55.45 in April, and is also well above than the 45 Survey Average of 56.83.
• The Employment Index of 55.33 compared to 55.42 In July, is well above the 45 Survey Average of 52.24. The Hours Worked Index rose to 58.82 compared to 55.42 in July and 53.03 in July is well above the 45 Survey Average of 55.31.
• The Capital Expenditures slipped to 55.17 compared to 58.00 in July but Tooling Expenditures rose to 58.52 compared to 58.40 in July. These compare to the 45 Survey Averages of 55.49 and 55.91.
• New Product Development dropped to 57.93, its lowest level since July 2009. This is a major surprise, given the current state of the industry. This compares with 68.80 in July and the 45 Survey Average of 63.57. We will closely watch this in the next survey.
• Raw Material Costs remain flat at 50.34 compared to 48.75 in July and remains well about the 45 Survey Average of 44.69. Employee Costs dipped to 44.00 compared to 47.92 in July. The 45 Survey Average is 46.68.
• The Personal Outlook Index is 64.67, down from our all-time high in July of 66.40. This compares to 64.85 in April to and is well above the 45 Survey averages of 57.83.
Dunlap further stated “The declines in Gross Sales and Order Backlog index values are not very significant. Both have been improving since the first half of 2013, but these minor decreases are not a concern. They are still indicative of a pattern of solid improvement. The shifts in Employment Levels and Hours Worked index values are indicative signs that hiring new employees is not keeping up with demand and is still being offset by overtime.
“The modest changes in Capital Expenditures and Tooling Expenditures are mixed when comparing them to their 45 survey averages, The New Product Development is alarming and we will monitor this closely during the next few weeks. Both manufacturers and suppliers continue to report similar experiences.
“The flat index in Raw Material Cost indicates that inflation is definitely in check, with the four quarter average at 49.8. The Employee Cost index values are not unusual. They rarely show much improvement and 44.0 is not surprising.”
He added, “I am delighted to see the continued strength of the index in Personal Outlook Index.”
The most frequently cited perceived threats to the industry’s success are healthcare costs, (import) transportation costs, and finding qualified labor and employees. Healthcare costs have always been high on the list, but the other two have replaced the costs of materials on the concerns list. Healthcare costs are the most commonly cited concern from respondents since this survey process was started in August 2004.
Dunlap again thanked the respondents with this comment. “Over 72% of the responses came 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 crucial to the performance and improvement to this unique survey.”
“Three out of ten Index values have improved and seven declined, which is a simple correction in the industry’s performance. Only Employee costs are below the ‘50’ level. We maintain the opinion that the industry will continue to accelerate during late 2015 and well into 2016.”
The October 2015 MADA / OFI Trends survey was sent to more than 850 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 January 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.
