This Week, Industry Snapshot Looks at
Office Furniture

Bush Industries Herman Miller, Inc. HON Industries, Inc. Knoll, Inc. O'Sullivan Industries Holdings WinsLoew Furniture, Inc. Subscribers Online Discuss Industry Snapshot

ALEXANDRIA, VA (September 19, 1997) -- The following is anabbreviated version of the Motley Fool's "Industry Snapshot," an educational subscription product available for delivery via e-mail or fax. We feel that it is the best tool available for learning how to invest in stocks.

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Every week we will offer up a taste of what is available to Industry Snapshot subscribers by providing a short summation of the industry and the companies that appear in the most curent issue.

This Week's Industry Snapshot

Like most everything else, the office furniture market can be divided in two major segments. For the purposes of our look into the mysterious and occult world of office furniture, we will focus on two main purveyors: the proverbial high- and low-ends. The high-end manufacturer of office furniture is a global giant looking to deliver modular designs to Fortune 1000 companies. These companies make office furniture of lasting quality for customers with facilities across the world, selling it directly or through specialized distributors willing to provide top-notch service. The low-end consists of ready-to-assemble furniture made out of particle and fibreboard that the customers put together themselves, maybe with some help from a friendly voice on the phone. Sure, it is a large gap, but hey -- whaddya expect when we can only cover six companies in an issue.

It's Not Office Furniture, It's Office Systems

The market for high-end office furniture has become more and more focused over the past few years, moving away from focusing on individual pieces and instead concentrating on the entire office system, including chairs, desks, modular walls, and other accoutrements. There are five major product categories in the office furniture market: office systems, seating, storage, desks, and tables. Overall, these products accounted for $9.7 billion in sales in the United States alone in fiscal 1996.

"Office systems" led these categories in revenue, accounting for 34.1% of sales. You know, office systems. Movable panels, work surfaces, electrical distribution, organizing tools, and freestanding components. These office systems are used to deploy flexible office environments in any size, where employees can mix and match components as they need them no matter how much floor space is available. The wave of restructurings and reorganizations that have blanketed the corporate landscape have led companies to use office furniture as a way to stimulate change. Heck of a lot cheaper than firing everyone, with severance pay the way it is and all.

With more than 400 players in the global office furniture arena, you may be surprised to learn that a handful of companies control the largest part of the market like prehistoric giants. Privately held Steelcase and publicly traded Herman Miller accounted for $4.4 billion of the market in 1996, with Steelcase playing the role of the Tyrannosaurus Rex with almost twice the sales of Triceratops Herman Miller. With Knoll Inc. clocking in at $651 million, it pretty much leaves most of the other players playing bit roles as small, fast-moving rodents sucking the life out of the dinosaur eggs left back at the nest.

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