Herman Miller, Inc. Business Information, Profile, and History

Company Perspectives

Our founder, D. J. De Pree, committed Herman Miller to "modern" furniture in 1936 partly because he saw a moral dimension to Gilbert Rohde's clean designs, honest materials, and lack of ornamentation. In 1984, a major impetus behind Bill Stumpf and Don Chadwick's Equa chair was a desire to give a reasonably priced, comfortable, good-looking chair to everybody in offices--not just the higher-ups. These are but two examples of some of the best work done at Herman Miller. Our people and the designers we work with are concerned with larger issues of humanity and equality and bettering the world we work in. What arrives on the truck is furniture. What went into the truck was an amalgam of what we believe in: innovation, design, operational excellence, smart application of technology, and social responsibility.

History of Herman Miller, Inc.

Herman Miller, Inc. is one of the leading manufacturers of office furniture and furniture systems, second only to Steelcase, Inc. in sales. Ranked since 1986 among the top 20 in Fortune magazine's annual list of the 500 most admired companies, Herman Miller is esteemed as an innovator in furniture design, as well as for its unique commitment to employee relations and the environment. The company maintains operations in more than 40 countries, with about 18 percent of net sales coming from outside the United States.

Early History

Herman Miller was founded by D. J. De Pree, who bought the Michigan Star Furniture Company in 1923 with his father-in-law, Herman Miller, and a small group of local businessmen. The company originated in 1905 as Star Furniture Company before adding Michigan to its name four years later. It was located in Zeeland, a town in western Michigan near the city of Grand Rapids. Settled primarily by Dutch immigrants, many of whom handed down a legacy of skill in crafting fine furniture, Grand Rapids and its surrounding areas had by 1900 become a hub for American furniture production. Nevertheless, the industry suffered from a lack of innovations, and despite the abilities of its employees, Michigan Star Furniture Company, like most furniture companies in the area, had developed as a manufacturer of high-end traditional style home furnishings, which were modifications of European designs. De Pree had joined the company in 1909 as a general office boy and worked his way up to become president in 1919.

De Pree renamed the company Herman Miller Furniture Company, after his father-in-law, a major shareholder well known in the community, and set about trying to turn the struggling company around. However, both profits and employee morale during this time were low, and this trend continued through the Great Depression. In 1931 Herman Miller was primarily producing traditional furniture for the home, such as bedroom suites, which it marketed to such retailers as Sears, Roebuck and Co. De Pree's company was near bankruptcy.

That year De Pree was approached by the industrial designer Gilbert Rohde, who reportedly entered the Herman Miller showroom unannounced with a plan for a new look in furniture design. De Pree listened to Rohde's ideas and, attracted to the designer's straightforward approach, employed Rohde to design a new line of furniture for Herman Miller.

Rohde speculated that the decreasing size of modern homes would inspire a demand for a smaller, simpler, and lighter furniture style that De Pree referred to as "more honest" than that of traditional pieces. Rohde's first designs, completed in 1933, were exhibited at the Chicago World's Fair, where they met with approval from retail buyers and enthusiasm from the general public. In less than five years, most furniture makers had adopted more functional styles similar to those of Rohde.

During this time De Pree, a profoundly religious man, had begun to regard furniture design as a moral issue, and he admired the simplicity, high quality, and utilitarianism of the modern designs. This sense of moral responsibility also pervaded De Pree's management style. In an often-repeated anecdote regarding the origins of the company's commitment to its employees, De Pree visited the home of a millwright who had died on the job at Herman Miller in 1927. At the request of the widow, De Pree remained to hear some poetry that she read aloud. Profoundly moved by the poems, he inquired as to the author's identity and was told that the millwright had written them. De Pree became intrigued by the question of whether he had employed a millwright who happened to write poetry, or a poet who worked as a millwright, and after that he sought to realize and encourage the hidden strengths and talents of all of his employees.

Debut of Office Furniture in the 1940s

After Rohde's first efforts for Herman Miller met with success, he turned his attention to designing office furniture. Seeking to design an office more functional than decorative, he produced several different desktops, pedestals, and drawers, all of which could be interchanged to form a desk that would suit the user's individual needs. The Executive Office Group, the designs for which Rohde completed in 1939, was introduced in 1942. It included a creative L-shaped desk. Rohde also produced a design for a sectional sofa, manufactured by Herman Miller, that would exert a substantial influence on sofa designs in the years to come. With the revolutionary product line, Herman Miller's sales continued to climb and the company experienced considerable growth in the 1940s.

Rohde died in 1944, and one year later George Nelson, a young architect and the editor of the periodical Architectural Forum, was contracted as design director. By this time the company had abandoned all of its traditional furniture lines in order to focus solely on the contemporary. Nelson produced several creative and profitable office furniture designs as well as the classic Storagewall shelving and storage system, the "slat bench," the "pretzel armchair," and other residential pieces while also helping the company develop graphic design and advertising departments. Among his most important accomplishments at Herman Miller, however, was bringing the company together with such important design artists as Isamu Noguchi, Alexander Girard, and Charles and Ray Eames, which broadened the company's reputation for quality and innovation.

Charles Eames is widely regarded as a genius in contemporary furniture design. Working in collaboration with his wife, Ray, Eames experimented with new materials, such as molded plywood, fiberglass, aluminum, and wire, producing several distinctive pieces, primarily chairs, for Herman Miller. In 1946 he produced an influential design for a molded plywood side chair, and in 1956 he produced perhaps his most famous piece, known as the 670 swivel lounge chair. Consisting of a molded plywood back shell and seat shell with rosewood veneer padded with down, covered in leather, and supported by a five-prong stand, the 670 chair is known for its support and comfort as well as its light weight and casual form. The chair, one of Herman Miller's most successful products, was widely copied by other furniture companies.

By 1950 Herman Miller's sales had increased to $1.7 million. That year the company initiated the Scanlon management plan. Named after its inventor, a lecturer at the Massachusetts Institute of Technology, the plan was based on the idea that employees could serve as a valuable source of ideas for operations and cost effectiveness and should therefore be called on to participate in management decisions. The plan called for team organization and provided employees with various incentives, including financial rewards for productivity gains. Revolutionary at the time, the plan proved successful for Herman Miller and has since been adopted by several other major companies.

Debut of Action Office System in the 1960s

In 1960 the company was incorporated as Herman Miller, Inc. Two years later, D. J. De Pree's son Hugh took over operations, and Herman Miller began changing the configuration of the American office floorplan. The Action Office System, introduced in 1964, included freestanding desks, files, and other pieces that could be configured a variety of ways to form work arenas, specific to individual work needs. Then in 1968 Action Office products replaced the traditional construct of individual offices or large rooms with partitions and panels supporting desk components that could be easily moved or added on to, allowing for efficient use of floor space. The concept was created by a newly formed research team, headquartered in Ann Arbor, Michigan, and headed by inventor and sculptor Robert Propst. The team spent four years researching the needs of office workers, finding that the open plan system broke up the monotony of previous plans and provided an illusion of privacy for each employee while also allowing proximity for easy communication with coworkers. Furthermore, the Herman Miller Action Office system had the advantage of being cheaper to manufacture than the heavy wood furniture previously favored. It was the first open plan panel system in the world and subsequently fostered a multibillion-dollar industry.

Herman Miller became a public corporation in 1970, and its stock rose steadily. In 1976 the company made a hit with its Ergon chair, designed by Bill Stumpf and based on the science of ergonomics, in which the worker's physical relationship to his or her environment and duties is given special consideration. The chair, featuring a five-pronged aluminum pedestal on casters and comfortably padded with an adjustable back support and seat, became widely used in American offices.

Although sales of the Action Office components continued to increase during this time, research during the 1970s indicated some drawbacks to the product. Some customers complained that the cubicles lacked privacy while simultaneously engendering a feeling of isolation among employees, who could hear but not see one another. In 1975 Herman Miller contracted Stumpf and designer Don Chadwick to come up with a solution. Chadwick and Stumpf worked for nearly three years on the project, traveling to Europe to study contemporary office buildings in an effort to capture a more humane spirit in their new office designs. In December 1978 they presented their design, entitled Buroplan, to Herman Miller. However, the plan's combination of futuristic windows, archways, balustrades, and windows with traditional freestanding desks was considered too eclectic, and the company rejected it, subsequently offering the two a chance to design a new office chair that was based on the design elements of the project.

Because of special challenges in finding the right materials, the chair took Chadwick and Stumpf five years to design, but the result met with enormous approval. Manufactured in 1984, the Equa chair was designed to provide "seating equity," or equal comfort for both the employee who spends a long period of time in the chair and the employee who sits only between frequent periods of motion. Offering support and comfort, without complicated mechanical adjustment knobs and levers, the Equa chair was offered in two models, a standard model selling for $320 and a high-backed, leather model that retailed for $1,100. Time magazine later named the Equa chair one of three best products of the decade. The following year elements of Chadwick and Stumpf's Buroplan resurfaced in Ethospace interiors, an alternative to the Action Office system designed by Stumpf and Jack Kelley, which offered the worker a greater sense of control and more natural light.

Company sales saw unprecedented growth during the 1970s and early 1980s, increasing from $49 million in 1975 to $492 million in 1985. During this time Hugh De Pree stepped down and was replaced by his brother Max. Max De Pree developed a plan in which employees were allowed to become shareholders in the company, a practice that contributed to the company's inclusion in 1984 in The 100 Best Companies to Work for in America, by Robert Levering and Milton Moskowitz. Earnings and stock prices fell late in 1985, however, and industry analysts speculated that the decline in orders from the computer and electronics industries and the large number of companies copying and marketing Herman Miller designs were to blame. Some maintained that Herman Miller had focused too long on improving its internal operations and had ignored the increase in competition. Others, including Herman Miller representatives, attributed the decline in earnings to the disappointing sales of the Ethospace system. Nevertheless, the company surprised investors, overcoming the slump by implementing an aggressive program to sway large corporate customers away from their competitors. They reported sales of $714 million in 1988, up 20 percent from the previous year.

The following year Max De Pree published a book on the Herman Miller management style, titled Leadership Is an Art. Writing that "everyone has the right and duty to influence decision-making and to understand the results," De Pree emphasized the need to treat all employees as important contributors. He also stressed that in order to promote competence in a staff, a leader needs to form a "covenant" with the employees, attending carefully to their need for "spirit, excellence, beauty, and joy." Finally, De Pree maintained, the signs of a failing company included a "dark tension" among employees, an increase in the distribution of memos and manuals, and a lack of interest in company anecdotes and extracurricular functions. De Pree's book was well received, providing managers in other companies with insights into Herman Miller's success.

Ups and Downs in the 1990s

By 1990 Herman Miller's sales had reached $865 million, and the company began to expand its scope, acquiring other companies as subsidiaries and addressing new issues in the industry. The preceding year Meridian, Inc., a manufacturer of metal file cabinets, storage cases, and desks, was acquired. Other acquisitions included Miltech and Integrated Metal Technology, which fabricated sheet metal parts. Milcare, spun off from Herman Miller in 1985, sought to fill the needs of the healthcare profession, adapting the Action Office equipment for use in nursing stations, medical libraries, and hospital rooms. Also during this time Herman Miller sought to become a leader in conservation. Extensive recycling programs were implemented and the use of endangered tropical hardwoods, including the rosewood in the Eames 670 swivel lounge, was discontinued in favor of walnut, cherry, and other more plentiful hardwoods. The company won several awards for its efforts to protect the natural environment.

In March 1992 Richard H. Ruch retired from his position as Herman Miller CEO, having served in that position since 1987 and having been the first person outside the De Pree family to hold that title. Brought onboard as the company's fifth president and CEO was J. Kermit Campbell, who became the first outsider to be named to either post. Campbell was a 32-year veteran of Dow Corning, most recently serving as group vice-president and president of the U.S. area. He joined Herman Miller at an inauspicious time as the recession of the early 1990s hit the commercial real estate market particularly hard, dampening demand for office furniture. For the fiscal year ending in May 1992 Herman Miller posted its first loss in 22 years as Campbell immediately moved to restructure operations, including closing an assembly plant in California and dropping a low-volume product line. Charges of $48.7 million led to a net loss of $14.1 million, and the company also saw its sales decline from $878.7 million to $804.6 million.

Campbell continued to restructure over the next couple of years, discontinuing additional unprofitable product lines, pushing products to market faster, seeking to make the manufacturing process less costly, and shutting down some showrooms. By fiscal 1994 Herman Miller was able to report an 11.4 percent jump in net sales, to a record $953.2 million, and net income of $40.4 million, the company's best showing in four years. On the product front, Herman Miller introduced the Aeron chair in 1994, a multi-task chair ergonomically designed with a mechanism that, during inclination, transfers the weight of the user from rear to back. The Aeron won immediate accolades, including being added to the 20th Century Design Collection of New York's Museum of Modern Art. The chair was later given a furniture "Design of the Decade" award by Business Week magazine and the Industrial Designers Society of America. Herman Miller also reentered the residential furniture market in 1994 by launching Herman Miller for the Home, a collection comprised of both new designs and reintroduced "classic" home furnishings from the 1940s, 1950s, and 1960s. In addition, the company acquired Geneal GmbH, a German maker of office furniture.

While the company's sales were on the rise, expenses were rising as fast if not faster, leading to the need for further cost-cutting. Late in 1994 Herman Miller announced that it intended to close plants in Fort Worth, Texas, and Dayton, New Jersey. Then in the early months of the next year about 200 white-collar workers were cut from the workforce through either layoffs or early retirement. In May, Campbell added the chairmanship to his duties, succeeding the retiring Max De Pree. Just two months later, however, the board forced Campbell out, apparently displeased with the pace of cost-cutting. Ruch, who had remained on the board as vice-chairman, assumed the chairmanship, while Michael A. Volkema was named CEO. Then 39 years of age, Volkema had served as president and chief operating officer since May, having joined Herman Miller in 1990 through the acquisition of Meridian. Volkema had made a strong impression through his leadership at Meridian, which was growing at a compound annual rate of more than 20 percent, and where he had instituted a number of successful efficiency initiatives.

Volkema took charge just after the conclusion of 1995, when Herman Miller saw its sales surpass $1 billion for the first time but recorded only $4.3 million in profits. While focusing on containing expenses, the new leader also gave the green light to a new office furniture division called SQA, which in 1996 began selling lines not as expensive as Herman Miller's typical premium furniture--SQA standing for simple, quick, affordable. In early 1996 the company settled a four-year-old patent infringement suit that had been brought by competitor Haworth, Inc. Haworth had claimed that Herman Miller had copied its designs for prewired panel systems allowing office workers to plug into outlets built right into their cubicle walls. While not admitting any wrongdoing, Herman Miller agreed to pay Haworth $44 million.

A turnaround was evident in the results for 1996 as Herman Miller posted net income of $45.9 million on record sales of $1.28 billion. The company in fact rode the strong economy of the late 1990s to ever greater heights, culminating in 1999's $141.8 million in profits on revenues of $1.77 billion. Results overseas were not as strong, leading the company to divest its German manufacturing operations in 1997. The following year Herman Miller began selling its home furnishings over the Internet. In 1999 the company made its first major acquisition in nearly a decade, purchasing Geiger Group Inc., parent of furniture maker Geiger Brickel. Based in Atlanta, Geiger Brickel produced high-quality wood office furniture, including chairs and desks. It operated four manufacturing plants, three in Atlanta and one in Lake Mills, Wisconsin.

Early 2000s: Surviving a Severe Industry Downturn

In late 2000 Herman Miller went down market again by launching a lower-priced office line dubbed RED that was aimed at small businesses in general but particularly at Internet-based ventures. The line was sold exclusively over the Internet and via a single retail outlet in New York City. While early sales were encouraging, the faltering economy pushed the office furniture industry into one of its deepest downturns in decades, rendering the RED launch ill-timed. Both it and the SQA division were phased out in 2002. Meanwhile, the downturn wreaked havoc at the entire company. After reaching a record $2.24 billion in 2001, sales plunged to just $1.47 billion the following year. In 2001 and first few months of 2002, Herman Miller slashed its workforce by nearly 4,000, a cut of 37 percent, and closed several plants. Pretax restructuring charges of $81.6 million sent Herman Miller into the red for 2002, a net loss totaling $56 million.

While attempting to better position itself for an industry recovery, Herman Miller maintained its level of spending on research and development. One outcome was the introduction in 2003 of the Mirra chair, touted by the company as cheaper, more environmentally friendly, and more comfortable than the Aeron. Of the chair's weight, 42 percent came from recycled content, while 96 percent of the chair's content was recyclable. According to the company, the Mirra, recipient of several awards, was "the first piece of office furniture to be developed from its inception according to cradle-to-cradle principles."

Herman Miller recovered slowly along with the rest of the office furniture industry. By 2005 the company was able to report net earnings of $68 million on revenues of $1.52 billion, its best showing since 2001. During this period, the company leadership was altered. In March 2003 Brian Walker, who had helped shepherd Herman Miller through the downturn as head of the firm's North America operations, was named president and chief operating officer. He had joined Herman Miller in 1989 having previously worked for the accounting firm of Arthur Andersen. Walker was then named the seventh Herman Miller CEO in July 2004, succeeding Volkema, who remained chairman of the board and was also given leadership of a new creative office charged with creating innovations and inventions in furniture products designed for both in the office and outside the workplace.

In 2005 this creative office launched its first new product, Babble, which was codeveloped with a California firm called Applied Minds Inc. Babble was a desktop device designed for open office systems that made telephone conversations unintelligible to those outside the workspace. Babble was the first offering of Herman Miller's new line of sound management products, Sonare Technologies. Moving into new markets such as this one was deemed essential if Herman Miller was to reach a goal that Walker set in 2005: to challenge for the industry's top position by 2010--a daunting undertaking requiring five years of double-digit annual growth. On more familiar new product ground, the company also introduced a new office chair in 2005. Cella was positioned as the firm's low-priced seating entry, retailing for between $450 and $650, depending on the accessories. This compared with the $740 list price for the Mirra, the company's mid-priced market chair. Along with the high-end Aeron, Herman Miller now had "high-performance" chairs at every price point. Its reputation for innovation, quality, and integrity intact, Herman Miller was indeed well positioned to challenge Steelcase for the top position in office furniture.

Principal Subsidiaries

Geiger International, Inc.; Herman Miller (Australia) Pty., Ltd.; Herman Miller B.V. (Netherlands); Herman Miller Canada; Herman Miller Global Customer Solutions, Inc.; Herman Miller Italia S.p.A. (Italy); Herman Miller Japan, Ltd.; Herman Miller, Ltd. (U.K.); Herman Miller Mexico S.A. de C.V.; Integrated Metal Technologies, Inc.; Meridian, Inc.; Milsure Insurance, Ltd. (Barbados); W.B. Wood N.Y., Inc.; Office Pavilion South Florida, Inc.; OP Corporate Furnishings, Inc.; OP Spectrum LLP (90%); OP Ventures, Inc.; OP Ventures of Texas, Inc.; Workstyles, Inc.

Principal Competitors

Steelcase, Inc.; Haworth, Inc.; HNI Corporation.

Chronology

• Key Dates
• 1905 Star Furniture Company is founded in Zeeland, Michigan.
• 1909 Company changes its name to Michigan Star Furniture Company.
• 1923 D. J. De Pree and his father-in-law, Herman Miller, lead a buyout of Michigan Star Furniture, which is renamed Herman Miller Furniture Company.
• 1933 Company debuts a new furniture line designed by Gilbert Rohde.
• 1942 Herman Miller enters the office furniture sector through the Rohde-designed Executive Office Group.
• 1946 Designer Charles Eames's collaboration with Herman Miller begins.
• 1950 Company adopts the Scanlon participative management plan.
• 1960 Company incorporates as Herman Miller, Inc.
• 1964 The Action Office System is introduced.
• 1970 Herman Miller goes public.
• 1976 Company introduces its Ergon chair.
• 1984 The Equa chair debuts.
• 1994 Herman Miller introduces the Aeron chair and reenters the residential furniture market.
• 1999 Geiger Brickel, maker of wood office furniture, is acquired.
• 2002 Company workforce reductions reach nearly 4,000 in midst of deep industry recession.
• 2003 Company introduces its Mirra chair.