Formway heads to US

By Selwyn Parker

In the early 80s Rick Wells was trying to figure out how to sell furniture in the Wellington area out of a newly acquired factory.

"We didn't see much further than Petone, to be honest," recalls the chief executive of Formway.

At the time, privately owned Formway basically manufactured seats, albeit with a useful product in the form of a piston-driven chair developed by the factory's former owner, a gifted English engineer named James Adcock.

Now the company has a slightly larger vision, and it's called America. Having just won a couple of gold medals at the United States' biggest furniture trade fair, Formway is in the process of tying up deals that will put it into the world's richest market for office furniture.

Right now the no-nonsense Wells, one of seven shareholders, thinks Formway will sign up a strategic American partner because it's not practical to try to go it alone in the States, given its size, complexity and consequent cost.

"It's a mammoth market," Wells explains. "It's not practical to export large quantities from New Zealand. We expect to sign the deal by January."

Decisions, decisions. However, it must be nice for a little New Zealand manufacturer to be cultivated by some of the biggest names in the US industry who want to handle its innovative open-plan, "systems furniture."

Since those anxious early days, Wells has learned a lot about exporting his firm's product.

Formway cut its exporting teeth in Australia, where it established a modest assembly plant with a handful of people in the wild west of Sydney, Marrickville, in 1990.

At first, Formway Australia sold its product through a network of agents, though without much success. Now it relies mainly on office professionals - designers, architects and other specialists - and sells out of first-floor showrooms where appointments are essential.

Its first breakthrough came in late 1990 in the form of a federal Government order to be sole supplier for what the trade calls "management seating" for offices throughout Australia. That contract put the Petone company on the furniture landscape across the Tasman.

It proved a tough market. In office furniture, as in most other products, the Australian market is more sophisticated than New Zealand's.

"There's a greater array of choice, with more international products. Australians can afford to be more discerning."

Meantime, he noticed that most of Formway's Australian sales came out of Sydney where it had signed an exclusive deal with a particularly astute retailer.

So Wells bought the retailer.

Little by little, Australian sales grew and Formway had to move to ever-larger factories. In July, Formway's Australian subsidiary made its fourth move in less than 10 years, this time to new premises that doubled its capacity.

Formway is now in profit in Australia after suffering years of modest losses. Today some 45 per cent of the firm's sales come out of this buoyant economy. He predicts that within 18 months Australian sales will be over 50 per cent.

Formway gradually developed enough confidence in its product and exporting expertise to dream of conquering other countries. So, with some trepidation, Wells booked a stand at the NeoCon commercial furniture exposition in Chicago in June 1999.

Buried among 460 other exhibitors spread over an area roughly five times the size of Eden Park, Formway's systems furniture could hardly have been the centre of attention. But it is aimed squarely at a fast-moving commercial environment where tomorrow's needs are different from today's, requiring more or fewer personnel, reconfigured offices, team-based cultures, whatever you want.

It's called "free system" furniture that, with a minimum of fuss, can be readily adapted to the latest exigencies in work stations. The average Formway office could probably be completely reorganised in a quarter of an hour.

You couldn't say free-system furniture has a lot of personality but it's nothing if not ergonomic and adaptable. "We're designing for a world market," says Wells.

And the world noticed, or at least those at NeoCon did. Formway picked up two gold medals - the maximum allowable - in the categories of "alternative furniture" (in the sense that it can be alternated) and in "computer support furniture."

Formway now faces the challenge of perhaps massive overnight growth if North American sales meet expectations.

In theory, turnover could double or triple its present $25 million. Staff numbers will certainly grow to more than today's 150. There will probably be financing, logistical, legal, manufacturing and all sorts of new problems.

Still, they're problems many exporters would want.