The Norwegian furniture industry, long overshadowed by oil, seafood and shipping, is said to have a bright future but the picture varies greatly. While furniture maker Ekornes is doing better than ever, its neighbour Hjellegjerde is in trouble and needs more money to keep going.
Hjellegjerde’s stock has fallen from an initial NOK 37 (USD 6) when the firm went public in 1997 to NOK 0.40 at the end of trading Wednesday. Hjellegjerde needs NOK 40-50 million quickly. If the directors are not able to find the money, this may herald the end for the furniture manufacturer, writes newspaper Aftenposten.
“We are in a vacuum and rumours are plentiful,” union representative Trine Garshol told Aftenposten. “Yet we hope for a good outcome.”
Hjellegjerde and Ekornes are both located in the same region on Norway’s northwest coast about halfway between Bergen and Trondheim. However their business philosophies are very different. Whereas Ekornes has focused on promoting its recliner chair called “Stressless” with four production facilities in Norway, Hjellegjerde has marketed a broad selection of furniture with 70 employees in Norway and another 300 at factories in Lithuania and Thailand.
According to Aftenposten, Hjellegjerde CEO Olav Inge Røyset admits that the company met falling demand with higher prices and failed to cut costs fast enough. From 2004 to 2009, revenues fell by 40 per cent.
Since announcing that it needed money in June, the company has been offered NOK 20 million for 91.2 per cent of their stock by Interstil, a chain of furniture retailers. The offer was turned down and Hjellegjerde sought other solutions. Sunday is the deadline by which the company must repay a NOK 20 million loan from Norway’s biggest bank, DnB NOR, which they are unable to do so far.
A general improvement in world markets may save companies like Hjellegjerde. Statistics Norway (state statistics bureau SSB) reports that Norwegian industry is expecting growth in production in the third quarter. Rising orders suggest that the economic crisis is over. The furniture industry is among the sectors reporting increased production and greater international demand.