Office-Furniture Firm Keeps `Lean' -- Thomas Sehrer President Magna Design

Accomplishment: Surviving and thriving as a regional office-furniture manufacturer for 40 years.

Magna Design, of Lynnwood, sells office furniture in Washington, Oregon, Alaska, Hawaii, California, Texas, Arizona, Colorado, Utah and other scattered areas east of the Mississippi. The company will open a Canadian showroom in a month and has also sold its furniture in Japan. Magna specializes in moderately priced, high-quality laminate and wood office furniture, and specialized furnishings for library and institutional use.

The company was founded in 1953 as Great Western Manufacturing by J.W. Rankin. It was sold to Minneapolis-based Colwell Industries Inc., a publicly held company, in 1972. Thomas Sehrer bought Magna Design in 1983 in a leveraged buyout from Colwell. Sehrer, 53, worked for Colwell and suggested that the company sell Magna, which had been losing money for five years, to him.

Magna built education and library furnishings and other highly specialized furniture. When that business leveled off, the company moved into office furnishings and customized work. That market took off in the 1980s.

Industry growth was driven by the trend toward an open-plan office arrangement; the birth of the desktop computer, which required specialized equipment; and the growth of the white-collar work force, Sehrer says. Magna mostly rode high on the furniture industry's economic tidal wave of the 1980s.

By 1990, that wave had crested and began its downward crash. The entire furniture industry is now in a slump, which started in 1990 and may last through 1991. For the first quarter of 1991, orders declined 11 percent for the entire industry, Sehrer says.

Magna however, has bucked the trend because it already had faced the problem of falling sales in 1986 and 1987. "Our earlier troubles really worked for us. We've stayed in our market niche and are leaner internally," Sehrer says.

Since the 1990 industry downturn, Magna has been approached by both ailing companies seeking to be purchased by Magna and strong companies wanting to acquire it, Sehrer says.

Magna Design employs about 100 workers at its Lynnwood corporate offices and two other satellite locations, also in Lynnwood.

Quote: "Love it or sell it." Sehrer believes that owners should be hands-on managers. Sitting back and letting someone else run your company probably means you'll begin a decline, he says.

Secret: Sticking to a market niche. Magna's mission is to remain a regional company focused on providing high-quality, moderately priced office furnishings. The company briefly expanded to the East Coast region but realized that the move diluted the company's control and upped its expenses.

Setback: By 1985, after struggling for several years, Magna had posted a string of growth years and was on its way to becoming a $10 million to $12 million company.

"We thought we were out of the woods. The company was stable, and we just had to manage the growth," Sehrer says. But, in 1986, sales fell and kept falling in 1987, taking the company back to the $6 million range. The problem was a heavy customer concentration in Alaska, Texas and Colorado, where economies took a plunge.

To shore up the bottom line, Magna, among other things, cut overhead costs and concentrated on spreading its customer base. The changes worked. In 1990, despite an industry slump, the company posted its best year, with sales of $8 million.

Magna Design's setback in the mid-1980s turned into a benefit, Sehrer says. Adjusting to industry hard times has been easier for Magna, because the company already made its hard choices when the company experienced its individual crisis.

Advice: "Don't ever let up. If you think it's gotten easy, you've overlooked something."

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