B2B Furniture Giant Adjusts to Slow-growth Economy
Dick Resch has built a titan in the contract-furniture business, but growth is problematic in directionless U.S. economy.
February 16 2014 by Dale Buss
Over a half-century, Dick Resch has built KI into one of the top players in the contract-furniture business with a bottom-up culture that includes employee ownership of the Green Bay, Wis.-based company.
Now, KI is about a $750-million enterprise that is a major presence in each of its important vertical markets: education, health care, government and corporations. It also enjoys vibrant export and manufacturing markets in Europe, Asia and Latin America.
And these days, that diversified customer base is what’s helping KI continue to grow despite a sluggish and undependable U.S. economy and disappointing performances by other economies around the globe.
Overall, this year “won’t be a growth year for our industry,” Resch told Chief Executive, with a trade association projecting 3-percent growth in 2014, while Resch sees a 5-percent increase for KI. “But there are some players looking to make big acquisitions as they seek more revenues.”
Hot spots and soft spots in KI’s business generally reflect what’s going on in each B2B sector. Thus, for example, the health-care market is flat as “a lot of our great clients hold tight wondering what is the next change” to Obamacare. “There are a lot of projects on the board but nobody wants to pull the pin right now. Maybe as we get past the mid-term elections we’ll have a clearer view.”
Meanwhile, federal-government demand has been cut in half because of the sequester and continuing budget uncertainties in Washington, D.C. State and local government customers were “very strong” as their finances recovered last year, Resch said, “and we see that trend continuing.”
On the corporate side, KI benefits from strong continuing demand from companies expanding in high-tech centers including Silicon Valley, Cambridge, New York and Chicago. And energy companies have become big buyers as the U.S. drilling boom and robust profitability finance headquarters overhauls.
In an era where potentially every business and government customer is looking for ways to make advancements in “sustainability” in its purchasing, Resch is excited by prospects for the industry’s first “carbon-negative chair.” It’s made with a thermoplastic in a patented manufacturing process which captures carbon that otherwise would be in the air and converts it into AirCarbon, instead of using oil. Partner Newlight Technologies, of Costa Mesa, Calif., developed AirCarbon, and KI is selling the chairs through its network of 250 salespeople.
“It’s the biggest new thing in our industry, and it’s exclusive to KI in our industry,” Resch enthused. “They’ve been working on it for 10 years, and we made an investment in it eight years ago. It’s the real deal.”
KI / CEO: Dick Resch
Size: Revenues of about $750 million a year; more than 2,000 employees.
Location: Green Bay, Wis.
Goal: KI emphasizes tailoring product and service solutions to the specific needs of each customer through its unique design and manufacturing philosophy.
Fact: Owned by its employees since 1991, KI was identified as one of the 100 largest employee-owned companies in America last year r last year by the National Center for Employee Ownership.
Unique: Resch and KI are big civic boosters, with the KI Convention Center in Green Bay among their favorite causes. They’re helping with a $23-million addition to the center that broke ground in December.