Furnishings firms shift sales focus

Large-scale pullbacks over the past year by mortgage, real estate, construction and other related companies sent ripples through Reno-area office furniture companies.

Dan Kahl of Kahl Commercial Interiors, founded in Reno in 2001, says he's seen a big decrease in new office setups about 75 percent for companies that are leasing 5,000 to 10,000 square foot of space.

But public works projects and state contracts have balanced business for Kahl Commercial Interiors. Without large accounts such as furnishing the University of Nevada Reno's Knowledge Center, expansion of the Desert Research Institute and the new down-town Fire Station No. 1 to carry the day, Kahl estimates his sales would be down roughly 50 percent.

Gary Machabee, owner of Machabee Office Environments, founded in 1940, says the venerable company is, "keeping our heads above water and moving forward but it hasn't been positive. It's a tightening of business opportunities, but the net of it is that the sky has not fallen."

Established contracts are carrying Machabee Office Environments, but the economic downturn has forced Machabee and other companies to focus on improving internal efficiencies.

"Business is always a process of adaptation," Machabee says. "We have adapted and streamlined our business and are dealing with it the best we can. Sometimes a company like ours gets thrown in the bag of an

Office Depot or a Staples, but our business depends on customers that have long-term visions of what they are going to be."

Adds Kahl: "We actually like the challenge, because it helps us

re-examine our processes so when the economy starts to heat up again, we will just be much better off. We are constantly looking at our processes, our software and our Web site."

Tom Hegge, vice president of Office Pavilion, says business with real estate, mortgage and banking companies is off compared to last year, but certain large contracts, such as furniture for the new Scheels stores at Legends at Sparks Marina, as well as commercial and government contracts, have boosted business.

"We just finished the best year we've had in a number of years, but that is because we don't have a lot of depth of customers in the mortgage, appraisal or residential real estate markets," Hegge says.

"There still are businesses moving to northern Nevada, and downsizing also provides business for us. We have to tear down, move and consolidate facilities."

The bulk of Office Pavilion's work comes from the private sector either local firms or northern Nevada outposts of national companies.

Hegge says government entities may have less money, but its projects are longer term and current contracts typically were planned and funded several years ago.

Kahl Commercial Interiors also sees a great deal of work through longstanding contracts with the state of Nevada.

"Although they have budget issues, they still need functional workspaces," Kahl says. "The population is still here. Their budget may be off because of tax revenues, but the population they serve is increasing, and some departments need people."

Kahl notes that the Truckee and South Lake Tahoe areas still remain active for furnishing smaller office spaces to 5,000 square feet.

Hegge foresees plenty of activity through the rest of 2008. The question mark is for 2009 how will reduced tax revenues for state and local entities impact their building and purchasing?

"People are downsizing, but they still have to replace certain things," he says. "Health and ergonomics are still an issue, and quality seating is still an issue. Those things continue to move us forward."

Machabee expects political entities and their associated subdivisions to continue with careful spending plans throughout the year.

"For the short-term I think we have got some headwinds to deal with," he says, "but I think the state of Nevada will come back over time."