Magna Design Furniture Positioning For Future -- Company Acquired Smaller Store To Gain Entry To Higher-End Market

LYNNWOOD

The office-furniture industry is still flat, but Magna Design in Lynnwood is positioning for the future.

The company acquired Woodinville-based Westop Inc. late last year and is in the process of upgrading the 24,000-square-foot facility and plugging Westop's products into the Magna Design mix, says Tom Sehrer, Magna Design owner.

The acquisition broadens Magna Design's offerings by adding a line of higher-priced furniture.

Magna Design specializes in moderately priced, high-quality laminate-and-wood office furniture, and specialized furnishings for library and institutional use.

Westop makes higher-priced, veneer-style office furnishings and specialty furniture for the hospitality industry. Sehrer bought Westop for its line of office furniture, but the company will stay in the hospitality business, he says. Magna Design doesn't, however,

plan to aggressively expand the hospitality business.

Sehrer will be aggressive on the office-furniture side of the business. The acquisition, for an undisclosed price, allows Magna immediate access to that higher-end market and the ability to take advantage of Westop's respected name, Sehrer says.

Combining Magna and Westop - now called Westop, a division of Magna Design - allows the company to capture more of the boardroom and executive-suites market, Sehrer says. Magna Design's lower- priced offerings could not penetrate that high-end market.

Westop has sales of about $1 million a year, and Magna is about an $8 million company, Sehrer says. The combined companies have about 100 workers. Magna Design plans to increase Westop's sales volume by at least 50 percent, Sehrer says. The increase will come from sales of the Westop product line to Magna Design's existing customers. Also, the company will expand its base by offering the higher-end product to a broader market.

The strategy already has worked. Sehrer says Magna Design has captured some new business. Sehrer would not reveal specifics.

Despite Sehrer's projections for sales growth, Magna Design is in an industry that has faced prolonged lackluster conditions.

With the growth of the computer industry and the white-collar work force, the furniture business boomed during the 1980s. In the 1990s, the industry's fortunes turned abruptly, as corporations downsized.

The slump, which began in 1990, has been unshakeable. But Sehrer says he is cautiously optimistic about 1992. "We are seeing more activity than we did last fall," he says.

Magna Design has faced tough conditions before.

The company was founded by J.W. Rankin in 1953 as Great Western Manufacturing. It was sold to Minneapolis-based Colwell Industries Inc., a publicly held company, in 1972. Sehrer bought Magna Design in 1983 in a leveraged buyout from Colwell.

By 1985, after struggling for several years, Magna had a string of growth years and was on its way to becoming a $10 million to $12 million company, according to Sehrer. But, in 1986, sales fell and kept falling in 1987, taking the company back to the $6 million level. The problem was a heavy customer concentration in Alaska, Texas and Colorado, where economies took a plunge.

To shore up the bottom line, Magna Design, among other things, cut overhead costs and concentrated on spreading its customer base.

The changes worked. By 1990, the company had pushed its sales back to $8 million where they remained last year.