Industry headwinds such as steel and aluminum tariffs and new disruptors are forcing many West Michigan office furniture makers to deal with new challenges.
While the Trump administration instituted the tariffs in a bid to support American jobs, office furniture executives say they’re left to deal with the consequences of rising costs, which ultimately will get passed along to their customers.
On top of new competition from coworking spaces and e-commerce retailers shifting consumer expectations in the buying process, executives say the added tariffs create more uncertainty at a time when the industry has been “three years away from a recession for about 10 years,” according to Steelcase Inc. President Jim Keane.
“We have to be very aware of what’s happening economically. We have tariffs to deal with, we have a whole series of different things that are changing all the time,” Keane told MiBiz. “You can no longer just develop (and) create a business that’s immune from all of that. You have to recognize that change will constantly be coming, constantly adapting.
“Whether it’s an economic cycle or it’s new tax policies or it’s tariffs, or whatever it is — be highly adaptive.”
Manufacturers already are feeling a direct impact from various headwinds related to the tariffs.
As MiBiz previously reported, Steelcase applied for a tariff waiver in March for a specialized porcelain-enameled steel the company sources from Japan for use in whiteboards made by its Georgia-based PolyVision division. At the time of the report, the U.S. Bureau of Industry and Security had already received 10,444 steel and 1,624 aluminum waiver applications.
Last week in announcing first quarter financial results, Steelcase CFO Dave Sylvester cited rising steel costs as driving a new round of price adjustments, the company’s second in four months.
“We expect commodity cost increases to continue pressuring our gross margin for another quarter or two while these price adjustments take fuller effect,” Sylvester said in a statement.
Another executive dealing with the tariffs is Herman Miller Inc. President and CEO Brian Walker.
“To be frank, it makes it harder to solve customer problems as economically as (manufacturers) would like,” Walker told MiBiz in Chicago at the NeoCon trade show earlier this month.
As Walker sees it, the tariffs force office furniture manufacturers to decide between filing for federal exemptions or instituting price increases, which ultimately affect consumers.
“You’d have to ask yourself: How do you cover (the increasing costs for metals)? You have to do it through price increases,” Walker said. “We’re nervous about it from what it does to the economy. We’re not really nervous about what it does for (the company) in the long run. We’ll adapt. We always have.”