The month in news
Overall, the news over the last month has had what is becoming a depressingly familiar ring to it. Latest job figures from the US show that 524,000 jobs were lost in the month of December alone – taking the number of layoffs since the recession officially began in December 2007 to 3.6 million – while in the UK, the national news has been dominated by continued job losses as unemployment rises above two million and a number of well-known high street names go out of business. Stationery suppliers will have been directly affected by Woolworths and Zavvi (formerly Virgin Megastores) both going into administration and there is continued speculation that Borders, owners of the Paperchase chain, may be unable to avoid a similar fate.
More than 1,000 employees at ACCO in the US began the New Year with a week-long furlough and we’ve also seen jobs cuts announced recently at MWV, Lexmark, Dell, Logitech, among others.
But growth can be achieved – BuyOnlineNow in the US and the UK’s WG Office Supplies are just two resellers to prove that, even in a downturn, businesses can thrive if they adopt a positive and forward-thinking approach.
Let’s hope we have more positive news in next month’s OPI!
News Editor, OPI
Steelcase prepares for the worst
Steelcase CFO Dave Sylvester says that he is expecting a "significant reduction in industry demand for the next several quarters".
His prediction came as the company released its third quarter results, narrowly staying in the black with a profit of $0.4 million compared to $31.3 million a year ago.
Total sales fell from $885.9 million to $811.3 million, with North American sales dropping by 11.4 percent while international sales edged up by 2.3 percent to $236 million despite an $18 million negative impact due to currency translation.
Looking forward, Steelcase expects to slip into the red in the fourth quarter as sales are set to fall by up to 22 percent compared to the previous fourth quarter.
The company recently announced a further set of cost-cutting measures in addition to previously announced staff reductions and site closures in March.
CEO Jim Hackett has revealed on a webcast that the company had been awarded a US Department of Defence contract that could be worth up to $113 million over five years.
Steelcase looks well placed to ride out the current economic crisis given its relatively low level of debt, strong cash position and $200 million on an untapped credit line.
Rebates cap 2008 success for TriMega
US dealer group TriMega says that it capped off a strong 2008 by exceeding its rebates target for the year. The group has just delivered third quarter rebate cheques totalling $5.1 million, bringing the total of quarterly rebates paid in 2008 to a record $34.6 million, 19 percent up on 2007’s total and $2 million ahead of its initial target of $32 million.
"The exceptional results that TriMega was able to record in 2008 are a direct reflection of the tenacity, resiliency and entrepreneurial spirit of our independent dealer members," said President Charlie Cleary.
"Despite the economic challenges, many of our dealers had a very solid year as a result of aggressively capturing market share."
Other highlights for TriMega in 2008 included increasing direct purchases by 5.5 percent to over $403 million, adding 40 new members and growing purchases in the group’s TriSupply private label programme with United Stationers and SP Richards by 49 percent.
Systemcare buoyant after 2008 results
Private label manufacturer of cleaning and hygiene products Systemcare says it ended 2008 on a positive note.
The Birmingham-based company says that it achieved its annual budget, including its target for the fourth quarter. "Our major global own label clients have all achieved growth," said Marketing Director Doug Skeggs. "We have worked closely with them to get momentum of sales which has continued to year end and, although November was flat, December was much better than we had forecast."
Skeggs said that the company’s success was due to a combination of quality, price and service levels that exceeded expectations. "Growth is not achieved just by low pricing," he stated. "It’s a whole package aimed at growing our customers’ brands month in and month out."
Skeggs added that Systemcare was confident of its own new product development and actions to support its customer base to achieve further growth in 2009 despite the forecast of tough market conditions.
Referring to the company’s acquisition by US group ITW last year, Skeggs commented: "We and all of our customers have the comfort and reassurance of knowing that Systemcare has the resources of a major international company behind us – this benefits us all and gives us and our customers even more confidence in these uncertain times."
PaperPro "increasingly optimistic" in patent dispute
PaperPro CEO Todd Moses says that he is "increasingly optimistic" of a favourable ruling in his company’s patent dispute with Staples.
His comments come after a California federal judge issued a claim construction order, also known as a Markman ruling, which sets interpretations for the disputed patent claims.
Moses says that his legal representatives believe that PaperPro has a "more than likely chance" of winning summary judgement in at least one set of the claims – enough for PaperPro to win infringement in the lawsuit that it initiated in 2007.
"We have always believed that we have a strong case.This ruling is going to make their position very difficult to defend," said Moses. Should PaperPro be unsuccessful in obtaining summary judgement, then the case is likely to go to trial later this year. PaperPro is suing Staples for multiple counts of patent infringement, trademark infringement and unfair competition in the manufacturing and marketing of its One Touch staplers.
French subsidiary for HSM
Shredder manufacturer HSM has established a new subsidiary for the French market.
The new subsidiary was officially opened in the French city of Lyon on 1 January.
The move is the next step in HSM’s expansion plans for France where the company has already made significant investments and employs 17 people.
HSM says the establishment of a subsidiary will benefit customers by offering trained service personnel, fast and flexible reaction times and professional consulting. "We are happy that the start-up activities have been completed and HSM France can now start active market development," said Irene Dengler, HSM’s Managing Director Corporate Companies.
Another record year for e-Tailer
The online OP supplier BuyOnlineNow has reported its eighth consecutive year of record sales growth.
The company posted sales of $28.6 million in 2008, a 45 percent increase on its 2007 total.
"We experienced dramatic growth in a number of products categories, notably the janitorial and break room supplies categories which grew 263 percent and 189 percent respectively," said founder and CEO Bob Herman.
BuyOnlineNow is built on a strong customer service ethic and returning customers accounted for nearly 60 percent of sales.
December 2008 sales were up by almost 105 percent compared to the previous year, boosted by the BuyOnlineNow’s new free shipping programme in the US.
Herman Miller execs take pay cut
Top management and directors at office furniture manufacturer Herman Miller have agreed to take a cut in their salaries and bonuses this year as the company faces a slowdown in orders.
CEO Brian Walker will take a 10 percent pay cut, while members of the executive leadership team wxill see their base salaries reduced by 5 percent.
In addition, the value of bonus incentives given to the CEO and executive team has been halved. The board of directors have also agreed to a 10 percent reduction in their annual retainer.
Herman Miller recently announced that it was laying off 1,100 employees and Board Chairman Michael Volkema declared that it was very important that the leadership "personally share in the company’s cost reduction efforts".
The news comes as trade association BIFMA reported that furniture orders in the US dropped by 21 percent in November to $760 million.
MWV slashes jobs
Packaging and OP manufacturer MWV is to reduce its workforce by 10 percent.
MWV says that it will lay off around 2,000 of its global workforce of 20,000 by the end of the year, with approximately 800 of the job losses to be completed by the end of the first quarter.
The actions are part of a $125 million cost reduction plan that includes the closing or restructuring of up to 14 manufacturing locations, and are in addition to steps begun last year to pare costs. Overall, the company expects annual savings of up to $300 million to be made by mid-2010.
MWV laid off workers at its consumer and office products facility in Sidney, New York at the end of last year, and it is not yet clear if the latest plans mean further layoffs in its OP unit.
Dell jobs go in Ireland
Dell has announced that it is to lay off 1,900 workers in Ireland as part of its cost reduction programme. All of Dell’s production at its Limerick plant will be switched to its Polish facility and third-party manufacturers. The move is part of Dell’s $3 billion cost reduction programme. The company will maintain its EMEA ‘Command Centre’ in Limerick. employing around 1,000 staff.
GfK sees netbook opportunities
Market research group GfK says mini-laptops, or netbooks, continue to present an interesting opportunity in the UK mobile PC market.
According to its latest report, netbooks accounted for 11 percent of the total PCs sold within the retail channels in the UK and 13.5 percent of all mobile PCs sold.
However, due to their competitive pricing, netbooks only accounted for 6 percent of the PC market in value terms.
The average price of a netbook was around £205 ($300) during October, around half the price of a notebook (with an average price of £396), which is perhaps one of the success factors for the netbook.
GfK says that one of the reasons why netbook sales are increasing so dramatically is that the number of brands and models in the market is increasing rapidly every month.
For example, during May 2008, there were only five brands active in the UK netbook market with a total of 22 models, but by October 2008 this had increased to 16 brands and a total of 117 different models.
This influx in new models is causing some interesting movements in the sales across channels and the market-place for these products is certainly changing.
Around six months ago, the majority of these netbooks were sold in traditional computer shops and specialist stores.
However during the past six months, as the range of products on offer has dramatically increased, these products have been pushed into new sales channels.
Mergers and acquisitions
German OP supplier Herlitz has sold its shareholding in Czech manufacturer proOffice to Austria-based group Ring Holding.
Herlitz says the deal is part of its strategy to focus on its core branded business and to streamline its product assortment.
proOffice makes soft plastic products such as flat files and clear pockets and Herlitz says that it is pulling out of its private label business in these lines, though proOffice will still supply the German company for its branded assortment.
Herlitz will still offer other office product lines, in particular folders and cardboard products, in both its own brand and private label packaging.
Thomas Hübner, Board Member of Production and Logistics at Herlitz commented: "Herlitz has secured access to an efficient production partner and, at the same time, with Ring we have found a reliable buyer who is interested in the sustainable development of the site." Berlin, Germany
UK independent dealer Winstonmead has acquired the assets and goodwill of PDQ Direct. PDQ – which has been trading since 1969 – went into administration just before Christmas. At its peak in 2007 the Worthing-based dealer achieved sales of £6.5 million ($9.5 million), but had recently been hit by the economic slowdown in the UK, losing a number of key customers. Managing Director Ryan Flippance has joined Winstonmead as Regional General Manager and several other members of the PDQ team have also been taken on.
"We are extremely pleased that Ryan and his team have decided to join us," said Winstonmead’s Managing Director, Adrian Hensby.
"This strengthens our presence in the south, complementing our other businesses servicing the Home Counties and adding significant sales and logistical gains."
Hensby also said that the steps that PDQ has taken in becoming a carbon neutral company would be used as a template for speeding up Winstonmead’s own ‘Carbon Smart’ programme. Basildon, UK
MyOfficeProducts has become the second largest independent dealer in the US after acquiring Chicago-based Royal Office Products. MyOfficeProducts’ latest acquisition brings total annual sales to around $135 million and it enters 2009 with a sales presence that includes over 110 sales reps serving 44 markets across 16 states. Bob Rolfe, Chairman and CEO of MyOfficeProducts, announced the transaction at a company-wide meeting of Royal Office Products employees in Chicago.
Rolfe assured the Royal employees that because both companies operate on the same IT operating platform the integration should be relatively seamless for the Royal employees and their customers. Rolfe also assured Royal employees that they will be able continue to conduct business as usual.
Other than the eventual name change to MyOfficeProducts they should not notice any material changes to the way they serve their customers. Nashville (TN), USA