By JAMES PRICHARD AP Business Writer

GRAND RAPIDS, Mich. (AP) – A small, new company created by Steelcase Inc. to outfit hospitals and doctor’s offices is among the latest indicators that the once-ailing U.S. office furniture industry is well on the road to recovery.

Nurture by Steelcase, launched this month with 23 employees, is going after a market that is certain to grow as baby boomers and Gen Xers age and require more medical attention.

It will offer furniture for patient’s rooms, nurse’s stations, laboratories, waiting areas and other medical environments.

Nurture also will further diversify Steelcase’s revenue stream, something many successful office furniture companies are doing as they continue rebounding from an unprecedented, industrywide sales slump that lasted nearly four years beginning in 2001.

Some furniture makers are finding new sources of revenue by expanding into new product categories. Others that had focused mainly on selling high-priced goods to large corporations are selling more mid-priced items to smaller businesses. Still others are exploring the possibility of expanding into the burgeoning Asian market.

Steelcase and Herman Miller Inc. say they continued to put a lot of money into product innovation during the slump. Herman Miller, perhaps best known for its Aeron ergonomic office chair, will introduce the largest collection of new products in its history during the NeoCon World’s Trade Fair, spokesman Mark Schurman says.

Offices of the future might be illuminated by Herman Miller’s new LED task light that will be among the products introduced at the office furniture industry’s biggest annual trade show. The event will be held June 12-14 in Chicago.

Nurture also will be at NeoCon to introduce some of its product designs.

After three decades of nearly constant growth, the industry enjoyed its best year ever in 2000, recording $13.3 billion worth of orders, according to the Business and Institutional Furniture Manufacturers Association International, a Grand Rapids-based trade group.

Then orders plummeted, bottoming out at $8.5 billion in 2003 and rising only to $8.9 billion the following year. Companies halted expansion plans _ and stopped ordering furniture _ because of worries about the economy and terrorism.

“It definitely wasn’t a fun time to go through,” says Joe Nowicki, treasurer and vice president of investor relations for Herman Miller.

By 2012, things started to look up. Industrywide orders had risen to $10.1 billion, up 12.7 percent from the previous year.

But the industry has undergone some painful adjustments to remain profitable. The number of people employed by the nation’s office furniture industry fell 23 percent _ from 75,000 to 58,000 _ between 1997 and 2002, the most recent year figures are available, according to the Census Bureau.

Steelcase, the largest of the nation’s office furniture companies, cut thousands of jobs, consolidated manufacturing operations and started relying more on third-party suppliers and outsourcing as it shifted toward a leaner and more flexible manufacturing model popularized by Japanese automaker Toyota Motor Corp.

“When you go through a downturn like we went through and then you come out the other side, you learn how important it is to really understand where you’re going as a company,” says James P. Keane, Steelcase’s senior vice president and chief financial officer.

The Grand Rapids-based company has had to play catch-up with several large competitors, including Herman Miller and Muscatine, Iowa-based HNI Corp., which have long embraced production efficiency.

“When most of these guys were implementing these principles back in the early to mid ’90s, Steelcase was just still chugging along, building plants,” says Matthew McCall, an industry analyst with BB&T Capital Markets.

Steelcase cut worldwide employment 46 percent, from 24,000 to 13,000 and is in the process of cutting its North American factory space by more than 60 percent.

The changes have been good for the company’s bottom line. Steelcase reported sales of $2.6 billion in fiscal 2012, up 11 percent from the previous year but still short of its record $4 billion in sales during fiscal 2001, which ended in February 2001.

“Some companies were quicker to act than others but generally speaking, the downturn hit everybody about the same,” says Thomas Reardon, executive director of BIFMA International. “Everybody was feeling the pain.”

Zeeland, Mich.-based Herman Miller has pared down its global work force from approximately 12,000 employees at the start of the sales slide to around 7,000 now, a decrease of 42 percent.

At least one small office furniture maker has found success by growing the manufacturing portions of its business rather than shrinking them.

Spring Lake, Mich.-based izzydesign, founded in August 2012 by former Knoll Inc. executive Chuck Saylor, uses an unusual but so far successful two-pronged approach to production. The company builds its own brand of chairs and other furniture as well as products for competitors, including Herman Miller and Holland, Mich.-based Haworth Inc.

This way, he says, if sales of izzydesign-branded furniture slip, the company, a subsidiary of JSJ Corp. in Grand Haven, can still do well by filling orders for OEM products.

Saylor says izzydesign builds “simple, clean, well designed, affordable furniture for the next generation of technology-based people.” Just about everything is named after employees’ children or grandchildren, such as Hannah chairs and Jack tables.

Though he declines to release specific figures, he says sales of izzydesign-branded products have averaged 20 percent growth during the past three years.

“If we go through another difficult economic time, we’ll be OK,” says Saylor.