Two Signs Growth Might Be Closer...

Thankfully the month of August 2009 is over. It will go down as one of the worst sales months in the history of my company. To say that it was "slow", harkens to the movie Apollo 13, when Tom Hank's character says "Houston, we have problem..." (a slight understatement). The best thing about a bad month is that it always ends, and a new month always begins.

With no where to go but up, I'm seeing small signs (both nationally and locally), that may indicate the worst is over.

Sign # 1: - Chicago Purchasing Manager's Index (which records regional manufacturing activity) surprised economists with a better than expected result for August of 50.0. (A result of 50.0 or greater is the threshold for indicated economic growth, below 50.0 indicates economic contraction. The result in July was 43.4).

Chart Courtesy of RTT News - Click Above For Source Article

When there seems to be no limit to how bad things can get, zero growth (or in this case no contraction) is growth.

Sign #2: - One of my clients who is dependent on venture funding for their planned expansion called with an immediate requirement for an East Coast office, and also released us to start planning for a local (year-end) requirement. This client had been "on-hold" for nearly 8 months awaiting funding, and it appears that this funding has now been secured.

Like the Purchasing Manager's Index, a single client finding funding doesn't make a trend, BUT - given that we have gone almost two full quarters with no good news, I'm taking these "blips" as a sign of things to come!

More Used Office Furniture - Now The State of California is a Competitor

As if there aren't enough competitors in the market place already, this week we got to compete against the Great California Garage Sale, as the state tries desperately to raise cash by selling off its surplus equipment (including hundreds of old file cabinets, desks, and chairs).

Surplus State of California File Cabinets For Sale

The State used every tool in their arsenal to move their product including Ebay, Craig's List and YouTube (click HERE to view the clip).

Differences from the 2001-2003 Recession

My Father always told me that business goes through cycles, and of course as usual, he was right. Having experienced the 2001-2003 "dot-bomb" implosion virtually at ground zero, I never thought we would go through anything like that again - but here we are.

I'm actually in Chicago participating in a contract furniture industry meeting, and unlike 2001-2003, where pockets of the country related to "tech" (Northern California, the North West, parts of Texas) were devastated, while the rest of the country was merely "nicked", it is crystal clear that ALL parts of the country have been devastated this time around.

To a person, my colleagues from across the country have told virtually the same story - a healthy (in some cases strong) 2008, followed by a deathly quiet 1st and 2nd quarter of 2009, with complete uncertainty headed into the 3rd and 4th quarter of 2009.

The theme coming out of these meetings - "don't stick your head in the sand", things may not deteriorate much further, BUT - the current operating conditions may last for a long time, so adjust accordingly to survive and thrive.

Manufacturing Jobs Returning Stateside?

Great article in this week's Business Week that outlines NCR Corporation's (they make ATMs) plans to bring manufacturing of these complex machines back to the United States. Hopefully a sign of more to come in the future! Click HERE for a link to the article.

Ergonomics of Office Seating

Of all the products and services we offer, providing the proper chair is probably the most important in terms of worker comfort. With that in mind, we are providing a basic primer on seating ergonomics, specifically a visual terms sheet for the functions of a chair.

This information is provided by Office Master. To view Office Master's Ergonomics University, you can click (HERE):

Graphics Courtesy of Office Master: Source Document Click (HERE)

How Much of the $700 Billion Bailout Made Its Way to the Bay Area?

Interested to know where the initial $700 Billion in bailout funds went? The New York Times has a great list that shows to date what went where - and who has paid their funds back.

Source Document: New York Times - Click above for Source Link

In summary, $549.4 Billion has been issued, $150.6 Billion is still uncommitted, and $70.1 Billion has been returned.

Bringing this down to a local level - a total of $25.731 Billion has been issued to Bay Area banks (all money is currently outstanding, none has been paid back). A list of the specific Bay Area banks is below:

• California Bank of Commerce (Lafayette) - $4Million


• Peninsula Bank Holding (Palo Alto) - $6Million


• FNB Bancorp South (San Francisco) - $12Million


• United American Bank (San Mateo) - $9Million


• Westamerica Bancorporation (San Rafael) - $84Million


• First ULB (Oakland) - $4.9Million


• Community Bank of the Bay (Oakland) - $2Million


• Pacific Coast Bankers' Bancshares (San Francisco) - $12Million


• UCBH Holdings (San Francisco) - $299 Million


• Wells Fargo (San Francisco) - $25 BILLION


• Bridge Capital Holdings (San Jose) $24 Million


• Heritage Commerce (San Jose) $40 Million


• SVB Financial Group (Santa Clara) $235 Million

Fed Chairman Makes Friday a Happy Day!

Never one to end the week on a down note, we are happy to present some POSITIVE pieces of information regarding the national economy and the local economy.

National Front: In a speech to the Federal Reserve Bank of Kansas City's Annual Economic Symposium, Ben Bernanke, Chairman of the Federal Reserve, said

"After contracting sharply over the past year, economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good".

The Fed Chairman's statement and outlook come on the same day that the National Board of Realtors released its survey of existing home sales, showing a fourth consecutive month of growth, and the first increase in year-over-year existing home sales since 2005. (To read a complete article on this subject in the New York Times click HERE).

Local Front: Home sales information from the Bay Area mirrors the national trend, with the Bay Area showing a 20.4% increase in the number of sales between June of 2008 and June of 2009:

Click above for Source Document: MDA DataQuick Information Systems, www.DQNews.com

This confirms a conversation I had just this morning with a leading East Bay residential realtor, who told me she has "been busy all summer". She went onto say that loans are "flowing back into the market for solid credit buyers" (20% down payment, verifiable income).

At Least Some Companies Are Growing!

Fortune Magazine has published it's 100 Fastest Growing Companies 2009 list, and California is home to 15% of the winners.

Courtesy of Fortune.com - Click Above for Source Document

Specifically the San Francisco Bay Area has 8 winners in our midst, with Sigma Designs of Milpitas ranking #2. (Click Here to see the California winners).

Furniture Manufacturer Haworth to Close Canadian Factory

According to published reports this week, contract furniture manufacturer Haworth, is closing its movable wall and wood furniture plant in Calgary Canada. Haworth acquired the plant, which manufactures Haworth's Smed brand of demountable walls product, less than 10 years ago when it purchased Smed from founder Mogens Smed. Haworth plans to consolidate the operations into their existing factories in West Michigan.

Smed Demountable Wall Product

As reported by Rob Kirkbride in this week's edition of The Monday Morning Quarterback, there is no love lost between Mogens Smed and Haworth. Smed opened DIRTT (Do it Right This Time), a direct competitor in the demountable wall market to Haworth, the day after his non-compete agreement with Haworth expired.

Smed commented to Kirkbride about the factory closing, "You know my opinion about big companies and I'm not just talking about Haworth here. Big companies don't care about people".

Haworth's response (through its CEO Franco Bianchi) also via Kirkbride, "He runs his business in the way that he thinks is right and we do the same...What I know is that we...are going to be around for many times going forward. I'm not sure if he can say the same thing".

Can't we all just get along...

National Commercial Real Estate Brokerage With East Bay Roots Faces NYSE Delisting

In yet another sign of the current challenging economic environment, Commercial Real Estate brokerage Grubb & Ellis Co. is facing delisting by the NYSE. Grubb & Ellis Co. has deep East Bay roots, but is now based out of Southern California.

Oakland City Center - Legacy of Grubb & Ellis Co-Founder Hal Ellis Jr.

Grubb & Ellis merged with NNN Realty Advisors in December of 2007, and at that time had a reported market capitalization of $725 Million. The reason for the most recent delisting notice is that Grubb's market cap has dropped below $50 Million for 30 consecutive days. This notice follows a similar notice issued in February of 2009, for non-compliance of the NYSE's requirement of a minimum closing price of $1.00 per share (over 30 days). Grubb's share price as of this morning was .62 cents.

The company has until January 23, 2010 to bring their share price into compliance. It should be noted that the company has stated it "intends to cure the deficiencies and to return to compliance with the NYSE continued listing requirements", and that it's its business operations, SEC reporting requirements and credit agreements are unaffected by the notification.

The Golden State Is Showing Some Tarnish

Congratulations are in order for the great state of California. In a recent CNBC.com survey ranking "Amercia's Top States For Business", California did not come in dead-last (that honor was reserved for one of our North Western neighbors). No, California came in 32nd - almost catching Arkansas (#31), and just staying ahead of Pennsylvania (#33).

The survey ranked each state based on a number of categories ranging from Cost of Doing Business (California ranked #49) to Access to Capital (California ranked #1).

Some more interesting information regarding our great state:

• California's projected Budget Gap ($53.7 Billion) is far and away the largest in the nation


• Our unemployment rate (11.6%) is the 5th highest in the nation


• The $11 Billion of Federal Stimulus funds that have been paid out to California is the most paid out to any state (in fact the next closest state is New York, with just over $5 Billion)
  

Bragging rights for the best state for business goes to Virgina, and the worst state for business in the nation... Alaska.

Basic Workstation Ergonomics

Workstation ergonomics (whether you work at a desk, a cube, or other) is critical to establishing and maintaining a healthy and productive work place. Below is a basic primer on office ergonomics, (thank you to Office Master, one of the leading producers of Ergonomic Office Seating for providing the graphics and information).

1. Monitor Height - Place top edge of screen at eye level. - This can be achieved using an adjustable monitor arm, or monitor stand.

2. Wrist Postures - Keep wrists flat with little or no bending. This can be achieved using an adjustable keyboard platform.

3. Mouse Placement -Place at same level of keyboard and as close to sides as possible. See #2 above - a proper keyboard platform will have a "mousing area".

4. Thigh Position - Keep thighs parallel to floor. An well designed ergonomic office chair will have a "seat slider", which allows the depth of the seat to be independently adjusted (to accommodate for shorter or taller users).

5. Document Holder - Place document at same level as monitor. Avoids neck strain - a document or "paper-holder" can integrate into the monitor stand in #1 above, or can be a separate piece of equipment.

6. Feet Position - Place feet flat on floor or footboard. This one gets tricky, because if shorter users adjust the height of their chair lower, it can throw off monitor height and keyboard position. A "foot-rest" can be used to achieve this position.

7. Monitor Distance - Keep at proper distance for screen size. Back to the adjustable monitor arm (which is one of my favorite pieces of technology in my office!).

Office Master provides more ergonomic information at their on-line Ergonomic University.

The End of Irrational Exuberence in Commercial Real Estate

A couple of weeks ago the East Bay was jolted awake with the news that Emeryville's Watergate Towers office complex was one of several marquee San Francisco Bay Area properties going into default. Now comes news from Southern California that Maguire Properties is going to stop making payments on more than $1 Billion in loans on seven buildings in Orange County.

As evidenced by the chart below, we should prepare for a continued downpour of defaults and forced sales.

(Click above for a link to the source document)

While all of this sounds horrible - look through the scary headlines and realize that these events are evidence of an irrational market slowly and painfully moving back towards rationality. In other words, these events are a GOOD sign of a functioning market.

It is now clear that commercial real estate purchased between 2005 and 2008 was wildly overpriced. Almost anyone who bought during this time, is now faced with plummeting valuations with no floor in sight. By refusing to extend loans on properties that are underwater, and by dealing with the consequences, the lenders are forcing rationality back into the marketplace.

Forcing these overvalued properties into foreclosure, and back onto the market where they can be sold at the current (albeit much lower but more realistic) market rate, is a huge step towards climbing out of this hole.

Q2 Update for San Francisco's East Bay Area Economy...

The East Bay Economic Development Alliance has released its June 2009 figures (latest figures) and the immediate picture is not pretty, but that does not tell the entire story.

Unemployment Rates Through June 2009 (click above for source information)

Included in this months report, is a detailed and incisive commentary on the East Bay Recession Dynamics written by Jerry Nickelsburg, Senior Economist from the UCLA Anderson School of Management.

In summary Mr. Nickelsburg states, "the East Bay economy remains in recession and there are more job losses on the horizon. But there is light at the end of the tunnel...for the balance of the year the East Bay economy ought to be characterized by an end to the recession, the beginning of a new expansion period..." While this is great news for the near future, those of working in the present still have to figure out how to pay the bills in a challenging time (see below).

Case in point - getting to the basics of my industry (commercial interiors): The value of commercial permits issued in the East Bay fell -48% when compared to the previous two year period. Take solace in the fact (I guess) that San Francisco commercial permits fell -70.6% for the same time comparison.

Value of Commercial Building Permits (click above for source information)

In summary we all need to "keep holding our breath" for a bit longer, but it appears that a 2nd half 2009 recovery maybe imminent.

Waiting On The East Bay Stimulus Funding To Flow...

Listening to the news or reading the papers, one would think that most of the Stimulus funds have been spent. In fact, look a little closer and it appears the spending hasn't really yet begun (at least in the East Bay).

click above for a link to the source information

Looking at the East Bay Congressional districts a total of $46,519,252 in Stimulus Contracts has been awarded (which sounds great), but it breaks down as follows:

• District 7 Congressman George Miller: $809,208 in a single contract to a consulting firm working with the Forest Service


• District 9 Congress woman Barbara Lee: $44,811,00 in a single contract to Lawrence Berkeley National Labs


• District 10 Congress woman Ellen Tauscher: $0,00


• District 11 Congressman Jerry McNerny:$899,044 in a single contract to a produce company for "fruits and vegetables"

Looking for the good news... this means that the bulk of the Stimulus money still hasn't been disbursed. I have never been a believer in "trickle-down" economics, but being that our industry tends to be at the "bottom" of the food-chain, I guess now is as good a time to start believing as any!

Turn Down that Ipod - Where Did My Walls Go???

As we begin to argue about whether the "worst is over", and whether the "greenshoots are taking hold", one of the greatest impacts of the recent financial meltdown may not be evident for another 3 or 4 years - I'm talking about the delayed retirement of workers 55 and over, and the downstream impact that this will have on the work place.

A number of recent articles have pointed out that retirement is being delayed, primarily because of the "perfect storm" of housing and stock market devastation, which has collectively wiped out a large part of the nation's retirement funds.

This means that the Baby Boomer generation which was getting ready to depart the workplace maybe sticking around for a while. This brings up a lot of "interesting" challenges for those of us planning offices -- specifically the challenge of creating a space that speaks to the Boomers, as well as to Generations X, Y, and (hold your breathe) Generation Z.

Each generation has different expectations on how their work areas should be designed, I found a great article that speaks specifically to this challenge, "Managing Multiple Generations in the Workplace" and I also found some great resources on the Business Week.com site: "Generational Tensions At Work".

Finally Some Good News!!!

Ok, not much about furniture today, but lets get some good news regarding the economy!

Job loss Rate

I know this graph doesn't look good - but the yellow bar shows LESS job loss, which translates into positive momentum for the economy (Click HERE for the New York Times article).

In the same vein, a survey by Price Waterhouse Coopers shows that manufacturers are feeling LESS pessimistic about the overall economy (click HERE to read the survey findings).

Couple that with the positive market reactions to the jobless rate news, and it appears we have some good news going into the 2nd half of 2009. (thats my story and I'm sticking with it today).

No Stimulus for Local Battery Makers

$2 Billion in Stimulus grants were given out this week to companies developing "new battery technology" for electric cars, but virtually none of those dollars are heading towards the Bay Area.

Out of the entire $2 Billion in grants, a grand total of $500,000 was awarded to a Bay Area organization (City College of San Francisco). The vast majority of the funds are heading towards companies in the Midwest, which is a little hard to swallow when you think about the number of local companies focusing on this type of technology. Click (HERE) for a list of grant recipients.

The SF Business Times had a great article on the Bay Area "hub" of companies focusing on "new" battery technology (click HERE to view the original article). I'm looking for any "green-shoots" to get our local economy hiring again...

Accoustics and Workstation Panel Heights

The recent trend in "sustainable" office design has brought workstation panel heights lower. Over the past two years we have seen panel heights reduce from a past standard of 69" tall to the current standard of 56" tall (or lower). The reason for the lowering of panel heights is two fold: 1) a move toward more "teaming" in the workplace versus "solo" working, 2) a drive towards utilizing more "natural light" throughout the office space.

One concern with lowered panel heights is increased noise and the potential for employee distractability. While panel height and panel material is a definite aid towards sound absorption, we have anecdotally found that a lowered panel height may contribute to a quieter office environment. Although counter intuitive, we have seen that because employees are much more aware that their conversations can be easily overheard, they tend to speak more quietly. Contrast this with a high panel office environment, where the "perceived" privacy is greater, and the volume of conversation is louder (this is non-scientific based on our experience).

A quick and easy "layman's" tool for measuring the difference that panel height makes in overall sound absorption can be found (HERE) - Note it may ask for an email address, but it is a simple tool to operate.

Allsteel Honored with 2009 Green Good Design Award

Consistent with our strong beliefs about supporting sustainability, both Sam Clar and CSG are proud to be partnered with Allsteel, a 2009 recipient of the Green Good Design Award from the European Center for Architecture Art Design and Urban Studies and the Chicago Anthenaeum.

Allsteel's Corporate H.Q. in Muscatine Iowa

Winning under the Corporations category, Allsteel was recognized for their corporate commitment to sustainability, and for implementing sustainable work processes into their everyday manufacturing.

To learn more about Allsteel's sustainability practices, visit their Sustainability website at All Together Now, or email me at: john@samclar.com.

New Task Lighting Options from Allsteel

One of the areas that has become increasingly important from both a LEED perspective, and an employee "comfort" perspective, is work area lighting.

Thankfully the old days of having to settle for the standard overhead "florescent" lights are just about gone. Today we have a lot of different options to choose from when looking for task specific lighting.

Allsteel is in the process of introducing Reed, their newest undershelf and freestanding task light:



Reed is available in two standard lengths (18"W & 36"W), offers 50,000 hours of usable life, and can attach either magnetically or with a screw mounting option. Reed contains no mercury, and is made with 100% recyclable materials.

Task lighting factors into LEED projects by contribututing to IEQ (Indoor Environmental Quality) Credit 6.1 Controlability of Systems, Lighting.

For more information on Reed, Allsteel, or to learn how lighting can contribute to improving the environment of your next office, contact your Sam Clar or CSG Account Executive, or email me at: john@samclar.com.