Steelcase Buys and Mogens isn't DIRTT

The Random Musings of the World's Most Knowledgable Contract Furnishings Expert (or so I think).

Grab your wallets - it's go time. In case you haven't noticed, the real, actual, honest-to-god, for real, industry consolidation has begun! After years (nee decades) of fits and starts, folks I'm here to tell you "we're in it and there will be no stopping it."

Oh sure, you probably figured Haworth had already bought up every European contract maker (maybe nearly every Italian maker anyway), but you'd be wrong. Stuck into every nook and cranny - or hamlet over there, if you will, are dozens of makers of contract furnishings - all waiting to be acquired (i.e. for sale). Some of these companies are pretty cool, but many of the best have already been acquired, and the few remaining will be going very fast. That will leave a pile of also-rans that frankly nobody should buy, but some will get sold anyway.

I know what you're thinking - "what about Mogens?" Well, Mogens, at least for the moment, doesn't figure into the industry consolidation scheme. And if you're wondering if DIRTT will survive without its former chief (feel free to attach any title you'd like to his name), my guess, and probably Dick Haworth's guess, is NO! For those of you too young or too old to remember, Dick bought SMED (as in Mogens Smed) a while back and it pretty much went to dirt (or DIRTT) within a few years (i.e. after the non-compete date passed). But, this column isn't about Mogens, but quite possibly the next one will be.

Meanwhile, back in fantasy land, oops I mean M&A land, Steelcase has picked up for cheap a pretty innovative company in Orangebox. Their stuff is cool, on point, and well designed. Of course the risk here is that Steelcase dealers can only absorb so much. Think Herman Miller's purchase of CBS. With a handful of recent partnerships and acquisitions, I'm not sure even I can keep them all straight. The fact is, dealers, have only so much space in their heads to store all the product information that they need. Will Orangebox product occupy some space to the detriment of Coalesse? Turnstone? Probably.

Of course just throwing another brand into the showroom isn't a long-term marketing strategy. And Steelcase desperately needs a marketing strategy even more than it needed Orangebox. When you compare financials across the big 5, Steelcase constantly underperforms given the amount of R&D they do. Steelcase lags in getting the message out and the buyers in line. Obviously that is the subject of its own column, but suffice it to say, buying Orangebox doesn't really solve that basic problem. In fact, it might make it worse.

All of this acquisition activity is being driven by cheap capital. There is literally tons of money available for acquisitions and who knows how long that will last. Buy now, pay later. Buying up companies with cheap capital didn't start with the contract industry, but it's firmly onboard now. They be WOKE.