At present we are all basking in the glow of bright economic times, with no appreciable change in sight. As I listened to Alan Greenspan, in his most recent address to Congress in early June, he was communicating with more encouraging words than I'd ever heard him use before. He described an economy that is experiencing considerable growth without any substantial inflation, and he seemed genuinely amazed that his report was as positive as it was. All this upbeat economic news was mirrored with a reported 15 percent increase in shipments of residential furniture for the first quarter of 1998 as compared with first quarter numbers from 1997, an increase of almost a billion dollars. New orders were up 17 percent in 1998 (over 1997) as well. (Stats from Furniture Insights, May 1998, © 1998 BDO Seidman, LLC) The furniture business is back on track, but is it back to "business as usual"?
Last year, in our segment's little world, we saw the closure of two of the largest and best known marketers in the futon furniture industry. Each had its own set of problems and reasons for falling off the edge of the futon furniture world. I won't speculate on the whys or the politics involved but I will say this: I don't think anyone outside the futon nucleus really noticed. Okay, I heard a few complaints about "crummy tactics," and "what about those warranties?" But as soon as the blip had passed and everyone jumped back on the now faster moving train, nothing had really changed. Stronger companies had simply picked up where our fallen comrades had left off, consolidating the business within a smaller number of players, and off they went-"business as usual".

Consolidation: The Business Buzzword For The New Millennium.

Consolidation can happen by accident or by design. From several conversations I've had and some serious reading of the financial and business press, I've concluded that consolidation by design will probably help define the landscape of survivors in almost every market. In the May 1998 issue of Furniture Insights, editor Ivan Saul Cutler says, "The same economic forces advancing efficiency and market strength driving the consolidation of Chrysler Corporation and Daimler-Benz into a vehicular manufacturing-marketing juggernaut also are at work in the furniture industry."
Cutler goes on to explain the concept in greater detail. "Primarily, larger, better managed and financed manufacturing and retailing groups will continue to grow, seeking greater influence, presence and positioning. A likely outcome may be fewer, larger producers and retailers," he writes. Bottom line: Cutler is saying that a substantial distillation will take place. The new paradigm will see consolidation take place for different reasons and in different ways, but the end result will be fewer manufacturers "aligned with a smaller constellation of stronger retailers," said Cutler.
In a scenario that hits very close to home, the Futon Association International and the Specialty Sleep Association are going through a consolidation of sorts. This effort, which presently focuses on the annual trade show, will continue to play out during this year as the two groups work together for the first time on a co-location theme at the Futon Expo which takes place next March in Las Vegas. The stated purpose of this consolidation is to produce a futon and specialty sleep products show that will allow a larger number of retailers to see a broader scope of new products under the umbrella of "an alternative" to the more traditional themes one would find at the High Point market. In theory the show should be a huge success. But should the consolidation go beyond the trade show? I've heard opinions on both sides of the discussion concerning a possible consolidation of the two associations into one, single group. The "yes we should" side says a single group will allow for a more powerful lobbying force, and will afford members a more cost effective way to get the benefits they join associations for in the first place. The "no we should not" side says the agendas and hot issues of each respective group are too specialized and do not correlate well enough for a consolidation beyond the obvious benefits of the already agreed upon or future trade show deals.
Framing the opposing views is easy. Solving the complex financial and political issues of a true consolidation of the two groups may take longer, if that path prevails. But an even more fundamental question may also be asked at this point. If this consolidation is a good idea, may it not also be a good idea for an even broader based consolidation of trade associations in the entire home furnishings industry? People who look at the big picture have always said that our competitors for consumers' dollars are the auto and computer/home electronics industries, not the furniture store down the street.
In tomorrow's global economy where survival will depend on being a larger link in a shorter chain, bigger is better.

Two Other Notes Of Interest

The Letter

We recently received a letter to the editor signed by three prominent importers. It follows here.

RE: It Takes all Kinds-A Reality Check

We are three wholesalers of long standing in the industry, and each of us manufactures in Indonesia. In May, after the Indonesian protests became a fixture on the evening news, we began to hear from customers, concerned about our ability to get product from our suppliers. Such concern might have been considered merely prudent, except that some of it was prompted not by media reports of demonstrations but rather by phone calls to the retailers.
In each case the retailer was given the same message in the same language: he should be careful about buying from At Home or Harlee or Bedroom Distributors (whichever of us was his supplier), because "their Indonesian factory has burned down", as if each were dependent on one manufacturer. In fact, each of us buys from multiple sources.
To set the record straight, each of us experienced between five and ten days of delay due to strikes and plant closings during the period of disruption. No factory was destroyed, and all are currently producing every day.
We cannot speak for the rumor mill, but we three expect to supply our customers adequately over the next few months. Our warehouses are stocked, factories are operating, containers are arriving each week, and we look forward to filling your increasing need for our furniture.

Sig Gordon, At Home Furnishings
Don Bumgardener, Bedroom Distributors
Steve Leichter, Harlee International

After hearing many rumors about the situation in Indonesia we received this letter to the Editor. Other importing companies may be in the same boat and may want to add their names to this list. To the best of our knowledge product from Indonesia is still moving into the US market.-Editor

The Report

For years we have all heard about the fire safety benefits of the boric acid powder used in the cotton batting most futon mattresses are made of. It works. When applied properly, boric treated cotton (with 10 to 14 percent boric acid by weight) passes FR 1647, the Federal Flammability Standard also called the cigarette smolder test. But until recently there has been no definitive study or testing designed to discover whether or not boric acid was toxic to humans.
During the first day of this year's Futon Expo I was handed a copy of a study, commissioned by Incide Technologies Inc., of Phoenix, AZ by Greg Windsperger of Airtex. The study, done by Intertox, Inc. of Seattle, WA, presents conclusive proof that boric acid, under the specific trade name Boron#10^TM, which is sodium polyborate, is not toxic.
The report states, "Four of the six studies reviewed indicate no observed adverse health effects from exposure of the test animals to the Boron#10^TM added to cotton batting." Richard Pleus, the author of the report also stated that in an oral toxicity study a benchmark toxicity measure, LD50, for the product Boron#10^TM was successfully established. The LD50, defined as the dose of a compound that would be lethal for 50% of a group of test animals, was extrapolated to be 3,339 mg/kg, a number similar to the toxicity of table salt.

This report, A Review of General Acute Toxicity Studies of Boron#10^TM in Cotton-Based Batting Product, is available by sending a letter of request and a 9" x 12" SASE to:
Mr. Jim Blasius, Incide Technologies, Inc.,
50 N 41st Avenue, Phoenix, AZ 85009.-Editor