Reprographics 101

Commercial Construction Outlook: Weak

By: Dirk van Dijk, CFA (Analyst at Zacks.com)

August 17, 2011

Today the American Institute of Architects (AIA) released its Architecture Billings Index (ABI) for July. It is a “Magic 50 index” sort of like the ISM, where any reading over 50 means that billings for architectural services are increasing, and below 50 indicates a contraction. The ABI fell to 45.1 down from 46.3 in June, its fifth decline in a row. It is now at its lowest level since February 2010.


Why should we care about the ABI?

Because it is the best leading indicator out there for construction spending outside of residential investment in single-family homes.

Construction of office buildings, hotels, shopping centers, hospitals, schools and apartment buildings almost always requires the services of an architect, even for stores that appear to be cookie-cutter copies of other stores in a chain.



If work slows down for architects, then nine to twelve months later so will construction work on those sorts of big projects.

The index fell dramatically in early 2008 — after the recession officially started, but long before it was widely acknowledged to be underway. It stayed deeply in negative territory until late in 2010, but has again been on a steep declining trend since the start of this year.

Given the lag between when the architects draw up the plans and when the actual construction happens, that means we might get a little bit of help in GDP growth from non-residential construction in the third and fourth quarters of this year, but it is not going to last. It will once again be a drag on GDP growth by first quarter of 2012.


While so far the index is still well above the lows it was during the darkest days of the recession in late 2008 and early 2009, the trend is not good, and we sure don’t need any more drags on economic growth.

In the second quarter of this year, investment in non-residential structures added 0.20 points of the 1.30% growth. In the first quarter it subtracted 0.40 points from growth. In other words, if non-residential construction has simply stayed unchanged from the fourth quarter, then growth in the first quarter would have been 0.8% not 0.4%.

Breakdown by Region and Sector



The weakness was widespread, both geographically and by type of work. Regionally, the South was the strongest, with a reading of 46.9, followed by the West at 46.6. The Northeast had an index of 46.4 and the Midwest was the worst at 44.9. 



The AIA tracks activity by the predominate type of practice in architects offices. The commercial/industrial sector had a reading of 47.9. That covers the construction of things like office buildings, hotels and shopping centers. The reading for Institutional activity, the building of things like schools and hospitals, was 47.2.

Institutional activity is largely driven by public spending, and with the money from the ARRA gone, that activity is drying up. Mixed practice was at 47.1 and multi-family residential was at 44.7. It is surprising that the multi-family residential was the weakest of the four areas, since apartment vacancy rates have been falling, and rents are starting to rise.

The multi-family sector has been the one relatively strong area of residential investment of late. In July, housing starts for buildings with five or more units were up 66.7% over July of 2010, while single-family starts were down 0.9% year over year.

The renewed weakness in the ABI is bad news for firms that rely on non-residential construction. Some examples of firms that would be hurt by further weakness in the commercial construction sector of the economy are Watsco (WSO – Analyst Report), AAON Inc (AAON – Analyst Report), Lennox International (LII – Snapshot Report), Martin Marietta Materials (MLM – Snapshot Report) and Texas Industries (TXI – Snapshot Report).

All this, not to mention the long-suffering construction industry, which has been responsible for 30% of all jobs lost since the start of the Great Recession.

Thursday, August 18, 2011

Press release from the issuing company

ROCHESTER, N.Y. – Xerox Corporation will manage global print operations across more than 460 Cisco offices, making printing services easily accessible to employees working from different locations, using a variety of desktop and mobile devices.

As part of a new managed print services (MPS) strategy, Xerox will provide the Cisco workforce with more cost-effective ways to produce and manage documents, improving the efficiency of the print environment by 20 percent. Using the Xerox Enterprise Print Services (EPS) platform to support a new cloud-based mobile print solution, Cisco will allow employees to securely print from any device, anytime, anywhere without downloading software, mapping to a printer or booting up their laptops.

“Xerox is helping evolve our print services to work the way our employees do. They don’t sit at the same desk each day, using the same printer, but we need to make printing as simple as if they did,” said Sheila Jordan, vice president, Communication and Collaboration, IT, Cisco. “The new print environment will help employees make cost effective and environmentally sensitive printing decisions on a daily basis, and give them access to printed documents when they travel to another office, or even to a hotel.”

To meet corporate objectives for efficiency and cost control, Cisco will also use Xerox’s print governance tools – automated “pop-up” guidelines on the computer screen to direct users to the best printing option based on price, energy efficiency and ink consumption.

Security is also a top priority for Cisco’s MPS strategy, since many documents often involve sensitive financial or business information. To keep confidential documents secure, employees will swipe their badge to pick up print projects.

“This solution represents the future of MPS – combining managed print and cloud ITO services to work within a company’s existing infrastructure, and support multiple locations and mobile technologies,” said Stephen Cronin, president, Global Document Outsourcing, Xerox. “The Cisco workforce stays focused on business priorities because we’re making sure they spend less time on print-related tasks in the office, and we’re removing the barriers to printing while they are on the road.”

Xerox was positioned by Gartner, Inc., in the Leaders Quadrant in the 2010 Magic Quadrant for Managed Print Services Worldwide[1], and was recognized as a leader in IDC’s Worldwide and U.S. Outsourced Print and Document Services Forecast and Analysis2 and in IDC’s 2010 MPS MarketScape report3. Xerox was also named a managed print services market leader in Quocirca’s European Vendor “MPS Comes of Age” report 2010.

REMINDER …..

Eastern Regional Reprographics Association (ERA)

Annual Convention

November 3-5, 2011

Where: Hilton Head Island, South Carolina

There will be a vendor trade show at this convention!

For more information, go to http://www.eastrepro.com

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Western Regional Reprographics Association (WRA)

Annual Convention (61st Annual Convention!)

October 19 – 21, 2011

Where: New Orleans, LA

WRA will be holding its Annual Convention in conjunction with the 2011 Specialty Printing & Imaging Technology SGIA EXPO in New Orleans.

For more information, go to http://www.westernreprographics.org

One of my frequent blog-visitors brought this company – Mosaic – to my attention, yesterday, and, after reading up on what this company is doing, I thought I’d take a few minutes to write about it.

“Mosaic” aims to overhaul construction document handling”, is the title of an article that appeared in the Silicon Valley – San Jose Business Journal, back on April 1, 2011. The SV-SJ Business Journal have been running a series of articles, back around that time, profiling start up technology ventures, ventures looking for funding. In the article about Mosaic, it says, “money being sought: $750,000.” Uh huh.

The co-founder and CEO of the company, Anthony Jones, has an extensive background in A/E/C project document management; former positions held include stints with some “big names”, The Army Corps of Engineers, Turner Construction, Hensel-Phelps Construction, Gilbane Building USA, and Skanska Building USA.

Looks like one of Mosaic’s first customers was Whiting-Turner (Whiting-Turner is a very large General Construction / Construction Management firm, based in the Baltimore, MD area.) (Hmmm, I’m, at this very moment, recollecting that W-T is an ARC “premier account.”)

In the article, it states this, “Mosaic also believes that it (it’s technology and services) will impact the reprographics business, saying that it has already seen decreases of up to 50% in the number of drawings printed.”

Okay, that’s enough for now; I’ve placed the article in my Google Docs library, and you can access the article at this link:

http://tinyurl.com/3n7w5f8

Also, if you want to explore Mosaic’s web-site, here’s their web-site address:

http://www.mosaicds.com/

One of my frequent-blog-visitors suggested that this would be an article of interest to reprographers….

Three Technologies Where Construction CIOs Need Strategies

08/12/2011

Isaac Sacolick is the VP, Technology and CIO of McGraw-Hill Construction

Is it too early to start thinking about the 2012 IT Budget? The summer months are a good time to update the three- or five-year IT strategy. For many businesses and CIOs, the “quieter” summer months are the best and often the only chance to schedule longer-term planning and thinking.

We’ve seen some major shifts in technologies over the last few years. Some of these are general technology trends like cloud computing, which has driven down the time and cost of implementing new infrastructure and has given new options for scaling infrastructure “on demand.” There’s the emergence of lower cost tablet computing, which creates new options for equipping a more mobile work force. And then there’s Building Information Modeling technology, which has many potential uses as its adoption and maturity increase in our organizations and those of our partners. So with these and other macro trends, here are three areas where construction CIOs should consider developing a formal viewpoint with both short- and long-term strategies.

• Data and Content Storage — When I talk to CIOs about storage, they are quick to respond with the size of their Storage Area Networks (SANs), growth rates and how they are leveraging both Network Attached Storage (NAS) and SAN strategically. The shift from paper to digital plans, the growing use of BIM file formats and the legal requirements on document archiving are all driving up storage capacity needs. But storage is not just about disk space. CIOs need to build redundancy and disaster recovery into their document storage plans because a lack of access to documents halts productivity. Many CIOs are now working with global, distributed work forces and have increasing needs to share documents with partners. Strategies should take these trends into account and include technologies such as data replication, document management and enterprise search. Also, since both the hardware and software technologies in this space are still maturing, CIOs need both short- and longer-term strategies for handling the increases in document storage and access.

• Collaboration — This leads to the next area, which is the need for better collaboration inside the organization and with partners. CIOs are often the first to see the effects of organizational silos, which lead to wasted effort, diminished quality and lost opportunities. In the construction space, BIM and design-build projects require tighter collaboration between contractor, designer and owner. There are knowledge-sharing needs between members of a project and opportunities to leverage information from project to project. Over the last few years, there has been an explosion of tools to help project team members and enterprises capture and share knowledge, including enterprise 2.0 platforms, document collaboration systems and social CRM. But CIOs need to be responsible for more than just tool selection; they need to take an active role in establishing a culture of collaboration and sharing. As part of a CIO’s strategy, one should consider the need for developing talent, responsibilities and processes that help mature a more collaborative organization.

• Business Intelligence — Business intelligence is not about selecting a BI platform—that’s a means to an end. BI is really about better decision-making and leveraging analytics, governance and talent to make faster, smarter decisions deeper into the organization. A BI strategy should start with a quick question like, “What area in the organization will benefit from better transparency and process in their decision-making?” Starting with that question, a CIO needs a team and an approach to help address the early tactical needs, then look to broaden the scope to other areas of the organization. BI maturity benefits greatly from this kind of agile project management and by looking for quick wins to build up demand and influence broader changes.

Want to look at more? Consider construction site tablets, scaling BIM platforms and CRM integrations as other possible areas.

Two days ago, I introduced my blog-visitors to the blog (actually, it’s a web-site) called “Extranet Evolution.” The author (of the articles on that web-site) has a background in construction, project document management, and I.T. related to collaboration software and SaaS. Here’s another article I found that I think will be of interest to reprographers:

Will BIM kill the document controller?

Posted on 13 July 2011 by Paul Wilkinson

Here are the first two paragraphs in this article:

I watched and listened to a Building Design webinar today on building information modelling (BIM). Hosted by Robert Klaschka of Studio Klaschka Architects (he and I shared a platform at a London Constructing Excellence event in May), it included a question and answer session with UK government chief construction advisor Paul Morrell, and short presentations from various BIM practitioners, including an architect, a software vendor and a contractor. Some viewers of the webinar were also interacting via Twitter (hashtag #BDbim), and someone asked: “Is BIM going to make the information manager/document controller’s role obsolete?”

I tweeted back that, under BIM, we will still need people to manage contract processes, correspondence, etc, but there would gradually be fewer drawings to control. I then added that we may also see the emergence of a BIM or Model Manager role, a more expert professional role combining design expertise with skills in team coordination (though this role is still in its infancy).

And, here are a couple of sentences from two additional paragraphs, just to highlight certain comments the author made:

Of course, this gradual erosion of the drawing management aspect of the document controller’s role will take some years, but it will continue a process that started over a decade ago when electronic document collaboration platforms first began to be used on construction projects.

The production of drawings is not going to suddenly disappear due to the advent of BIM.

Here’s the Internet address for the complete article (it is worthwhile reading this author’s comments and opinions. And, I would encourage you to visit this author’s web-site on a routine basis.

http://www.extranetevolution.com/2011/07/will-bim-kill-the-document-controller/

I’d like to thank Vern Kellie, of Imaging and Printing Corp, Chicago, for sending bringing this article to my attention.

First-half downtown condo sales fall even further

By: Alby Gallun August 16, 2011

(Crain’s) — The fifth year of the great downtown condo bust is starting to look a lot like the second, third and fourth.

Downtown developers are on pace to sell fewer than 600 condominiums for the fourth straight year as the slump drags on and downtown denizens flock to apartments instead.

They sold just 261 condos and townhomes in the first six months of 2011, down from 406 a year earlier, according to a report by Appraisal Research Counselors, a Chicago-based consulting firm. It was the poorest first-half showing for downtown developers at least since the market peak in 2005.

Many developers have slashed prices to spur sales, but the shaky economy, worries that condo values have further to fall and a tight lending climate continue to work against them.

“This is probably the new norm,” says Appraisal Research Vice-President Gail Lissner.

The firm’s numbers reflect sales contracts, not closed sales. Appraisal Research also tracks closings, which totaled just 385 units in the first half of 2011, down from 1,116 a year earlier.

There is one bright spot in an otherwise gloomy market: Developers continue to convert condo buildings into apartments amid booming rental demand, reducing the once-large supply of unsold condos.

Since 2008, eight downtown projects that were built as condos have gone rental. Developers are now sitting on just 1,911 unsold units, down from 7,689 in second-quarter 2007, according to Appraisal Research. It is the lowest supply since 1997, when the firm began tracking unsold condo inventories.

Sales have reduced the supply as well, though a big share of them are coming from developers that have slashed prices. Projects like 757 Orleans and Silver Tower in River North and 200 N. Dearborn in the Loop were among the top sellers in the second quarter, thanks to aggressive discounting.

Many buyers expect a deal whether developers are advertising them or not. Magellan Development Group, the developer of the Aqua tower near Millennium Park, gets about four or five offers a week, one or two that are “pretty credible,” the rest from “bottom feeders,” says David Carlins, president of the Chicago-based firm.

“We still have got a whole lot of people who are looking for an unbelievable bargain, and it’s out there, but it’s just not us,” he says.

Prices at Aqua, an 82-story tower at 225 N. Columbus Drive, range from $306,000 for a studio up to almost $2 million for a penthouse, according to Appraisal Research.

Buyers have closed on 158, or 60%, or the 262 condos in the tower, which also includes apartments and a hotel. Magellan isn’t feeling any pressure yet to cut prices; the project’s construction loan doesn’t mature until the end of 2013, Mr. Carlin says.

Yet considering how hard it is for buyers to obtain financing, Magellan has set up loan programs with two lenders, MetLife Bank and Alliant Credit Union, to finance purchases in the building. Mr. Carlins is also optimistic that sales will pick up when a nearby grocery store and restaurants, along with a new Radisson Blu hotel in the tower, open this fall.

Longer term, he believes rising apartment rents will draw more buyers into the market as they compare the cost of renting vs. owning. But before that happens, the lending market has to open up, and buyers have to be confident that condo prices won’t fall further, he says.

“The condos in my mind are around the corner,” he says. “It’s just a long corner.”

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If you go to this Internet address, you’ll find a shocker of a bar chart that – at a glance – shows how incredibly deep the recession – in condo sales in downtown Chicago – has gotten.

http://www.chicagorealestatedaily.com/article/20110816/CRED0701/110819907/first-half-downtown-condo-sales-fall-even-further