Furniture Firm Shifts Focus in Slow Economy By CARLOS MARTINEZ Staff Reporter When the tech downturn started battering local tech companies, Pacific Office Interiors got battered right along with them. The office furniture company that had targeted tech firms primarily in the Conejo Valley saw its numbers drop and needed to do something to bolster its sales. “So we started talking to firms that dealt in defense,” said David Walk, the company’s vice president. “It was our luck that the defense industry was picking up.” During the summer, defense firms like Raytheon Corp., which operates a facility in Santa Barbara, and Northrop Grumman Corp., which operates a facility in Chatsworth, were preparing to ramp up their purchases of office furniture. Both companies confirmed the purchases, but would not comment further. Pacific’s troubles were not unique as the office furniture industry throughout the United States suffered. Michigan-based Steelcase Inc., the world’s top office furniture maker and seller, saw its revenue drop by more than 20 percent last year as orders plummeted. Last month, Herman Miller Inc., the country’s third largest office furniture maker, announced drastic cutbacks, laying off 600 workers in the face of a 30-percent drop in sales from last year. Herman Miller had already closed one manufacturing plant and consolidated several of its brands and operations. But by January, Pacific’s fortunes had turned as Raytheon and Northrop Grumman suddenly were responsible for 35 percent of the company’s sales, and helped make up for some of the business it lost due to the tech downturn. “We used to have a lot of business from defense firms, but all that went away in the early ’90s,” said Free Taylor, company principal. The return of defense work was still not enough to overcome a drop in business from the previous year, due to the tech industry’s downturn. Overall revenue dropped from $16 million in 2000 to about $13 million in 2001, Taylor said. The company does not reveal net income figures. But while tech companies either reduced or canceled their orders, defense firms slowly began to order more furniture and more installation work. “These were companies that we hadn’t heard from in years, so we were somewhat surprised,” Taylor said. But perhaps not surprised enough to be satisfied. Although more orders are coming in from Northrop Grumman and others, Taylor said the company expects only a slight revenue increase, to about $14.5 million this year. Barry Coyle, a Ventura-based office furniture industry consultant, said furniture companies like Pacific will continue to see rough times through the end of this year. “You’re not seeing a lot of movement overall since furniture is a capital item,” Coyle said. “What you’re going to see are corporations readying for expenditures next year. “But the defense market is different and a lot of them are doing business now.” Overall, furniture orders figure to increase, beginning in spring 2003, Coyle predicted. “The economy started recuperating a few months ago and the typical rule of thumb is that the furniture industry lags behind by 18 to 23 months, so that’s in line with that,” he said. Pacific Office Interiors, in anticipation of a return to prosperity in its old stomping grounds, is moving its operations from Oxnard to Westlake Village in June. The company will move from its existing 15,000-square-foot building to 17,000 square foot closer to its clients. “We found that it’s a lot more difficult to get people to come out to Oxnard to look at furniture,” Walk said. The new facility will give potential clients a chance to see more displays and a larger showroom, Walk said. Companies generally spend between $3,000 and $4,000 per workstation, making such purchases a major investment, Taylor said.
