ESOPs on the Rise
Employee stock ownership plans, or ESOPs, are becoming increasingly popular among firms in the architecture, engineering, planning and environmental consulting industry. The percentage of ESOP firms participating in ZweigWhite's annual Valuation Survey of A/E/P and Environmental Consulting Firms has increased from 17 percent in 2002 to 22 percent in 2003 and 26 percent in 2004.
"ESOPs have been around for more than 30 years, but seem to be gaining in popularity in the industry in recent years. One reason may be the legislative changes effective in 1998, which made S-corporations eligible to sponsor ESOPs," says Ian Rusk, ASA, a principal who specializes in financial advisory consulting for ZweigWhite.
Another reason may be simple demographic forces. The A/E/P industry is a highly fragmented one, with tens of thousands of companies, many of them relatively small (under 100 employees) and still owned and operated by their founders. "With many of these first generation owners being of the baby-boom generation and nearing retirement, and given the tax efficiencies of ESOPs, it's not surprising to see more firms employing them as a tool to manage major stock redemptions," explains Rusk.
Rusk goes on to say, "The tax advantages of the ESOP include the ability of the company to deduct the principal portion of ESOP debt and redemption of shares through contributions to the ESOP plan. From the sellers' point of view, selling their shares to the ESOP may allow them to defer the capital gains tax on the sale under certain circumstances, although this deferment is not applicable for S-corporations."
ESOPs are not for everyone, however. Rusk cautions that factors such as firm size, cash flow, debt service capacity and corporate culture need to be carefully considered.
Healthy Planet Healthy Kids
Healthy Children Project, a project of the Learning Disabilities Association of America, has launched a Web site designed and developed to promote public awareness of the risks of environmental toxins. Visitors to the Web site will now have access to key information that can help them make better decisions about their personal health, as well as take action to encourage public officials to make good policy decisions.
The Healthy Children Project serves women of child-bearing age, their partners and families, their healthcare providers, and the agencies and institutions that support them. The project provides information about the environmental health impacts of untested chemicals found in food, water and the products we use every day. It is intended to bridge the gap between scientific research and the information that is relayed to the public regarding the impact of environmental factors on developing fetuses, newborns and young children.
Web site visitors can:
* learn more about toxic substances in the environment and how they might affect children's health;
* understand possible reasons why the incidence of learning disabilities, developmental handicaps and disease among children is on the rise;
* and find valuable resources that can aid in reaching out to others in an effort to make a difference.
For more information, visit www.healthychildrenproject.org.
Modern Designs, Traditional Materials
TMaterial ConneXion will show "Kenneth Cobonpue," an exhibition of innovative furniture blending modern design with traditional materials from the award-winning Filipino designer.
Following a family tradition, Kenneth Cobonpue studied design at the Pratt Institute in New York. He apprenticed in Europe with various furniture production and marketing firms before returning home to the Philippines to manage his family's furniture design and manufacturing business. His designs reflect this cross-cultural background, a mix of American, European and Asian influences. His work integrates locally-sourced natural fibers and hand-made production techniques with modernist forms, achieving the warmth of organic materials fused with an intriguing transparency of structure. Combining handiwork and craft with modern form, a single sofa may have 5,000 knots in a dexterous weave that hold the fibers in place over a bent steel frame.
The exhibition, scheduled to run from October 14 through November 15, 2004 at the Material ConneXion showroom in New York, NY, will include a selection of iconic pieces such as Yin & Yang, La Luna, Suzy Wong, Dimple, Pigalle and Croissant.
A New Definition of Interior Design
The Board of Directors of the National Council for Interior Design Qualification (NCIDQ) approved in July a new definition of interior design. The definition will assist U.S. jurisdictions and Canadian provinces in regulating the practice and protecting the health, life safety and welfare of the public, while simultaneously helping the public and allied design professionals more clearly understand today's interior design practice.
Because the practice of interior design has grown as technology and the environment have evolved, NCIDQ reports that a new definition was needed to better reflect the changes taking place in the profession. A task force of interior designers from the United States and Canada developed the new definition and presented it for review and comment by all NCIDQ member boards and members of the major interior design organizations and associations.
"As the practice of interior design becomes more complex, it's essential to have a common definition that the public, legislators and other design professionals can use when understanding what interior designers may do in the course of their practice," says Derrell Parker, NCIDQ president. "We will incorporate this language into our model legislative documents, and we encourage jurisdictions to review these documents to see how they align."
The new definition can be accessed on the NCIDQ Web site at www.ncidq.org.
Billings Increased Six Consecutive Months
The American Institute of Architects' (AIA) monthly Architectural Billings Index (ABI) released in June marked the sixth straight month that U.S. architecture firms reported increased billings. Nonresidential construction activity typically follows billings for
architectural services by six to eight months, indicating that nonresidential construction should increase substantially over the next several quarters after a sluggish first half of 2004. In addition to a continued increase in billings, architecture firms point to healthy times in the months ahead in their own business conditions based on a considerable increase in inquiries for new design work.
Highlights from the report include:
* Firms in all regions are reporting stronger business conditions. The largest gains in June came from firms in the Northeast, followed by firms in the South.
* The commercial and industrial construction sector looks to benefit the most from the impending upturn in nonresidential construction activity. Architecture firms that
specialize in this sector reported the strongest gains in inquiries for new work in June.
* Over three-quarters of billings at architecture firms are for design phase activities. Approximately 13 percent of billings are services performed after the design phase-
construction or post-construction services. The final 10 percent of billings are for services that don't directly result in construction activity-feasibility studies, consulting, building code analysis, expert testimony, etc.
"The construction industry, and all business sectors affected by it, should be encouraged by the billings that architecture firms have reported through the first half of 2004," said AIA chief economist Kermit Baker, Ph.D., Hon. AIA. "The only caveat is that improved
economic conditions have had an inflationary effect on the price of construction materials, which has already created problems for the construction industry."
The ABI is collected from the "Work-on-the-Boards" survey, which is produced by the AIA Economics & Market Research Group. The findings amount to a strong predictive economic indicator that can provide a six- to eight-month glimpse into the future of non-residential construction activity. The indexes contained in the report are derived from a monthly survey sent to a panel of AIA member-owned firms.
Increase Projected for U.S. Office Furniture Industry
BIFMA International, Grand Rapids, MI, updated in July its projections on the U.S. office furniture market. Currently, BIFMA reports, as market size decreases, competition for market share is increasing. Manufacturers face a buyer's market where price and service are major considerations for the customer. Therefore, cost containment and operating efficiencies become even more important factors in meeting increased price
competition if a manufacturer is to remain profitable.
In October 2003, the Global Insight industry forecast model was adjusted to focus on the value of the U.S. office furniture market, which is defined as consumption rather than the historical and traditional value of U.S. shipments, also referred to as production. This change is due to the increasing significance of trade and its impact on the domestic market.
|Current U.S. Office Furniture Market Forecast|
Better Hospitals Are Worth the Investment
Hospital CEOs who decide to invest more money to build better hospitals in the next few years will find these costs can be quickly repaid through operational savings and increased revenue. This is the strong position held by The Center for Health Design, a nonprofit research and advocacy organization, and the authors of the lead article in the Fall 2004 issue of Frontiers of Health Services Management.
Taking the position that "better buildings" are worth the investment, authors Leonard L. Berry, Russell C. Coile, D. Kirk Hamilton, Derek Parker, David D. O'Neill and Blair L. Sadler use evidence from The Center for Health Design's Pebble Project research to make the case that design and building costs can be quickly repaid through operational savings and increased revenue. They created a "Fable Hospital"—a composite of recently built or redesigned healthcare facilities that have implemented facets of evidence-based design in their facilities. Using this data, the authors calculate that an array of design innovations—oversized single patient rooms, variable acuity rooms, double-door bathroom access, decentralized nursing stations, additional hand-washing facilities, noise reduction measures, staff support facilities and more—added almost $12 million to the $240 million project.
However, their conservative estimate is that in the first year alone, savings and revenue gains in the new facility were nearly $11.5 million.
"The current healthcare building boom presents a rare opportunity to use the emerging science of evidence-based design to build better hospitals, " says Berry, the lead author of the article and a Distinguished Professor of Marketing at the Mays Business School at Texas A & M University. "Better buildings can not only improve patient care, staff loyalty, medical outcomes, institutional productivity and financial performance, but also decrease medical errors and waste."
To download a copy of the article, visit http://188.8.131.52/dev/tracking/click_track.php?676-2. In addition, a discussion of the "Better Buildings" concept is also included in a Webcast of a conference sponsored by The Center for Health Design and the Robert Wood Johnson Foundation. To view the Web cast, visit: http://184.108.40.206/ dev/tracking/click_track.php?656-2.
How Consumers Buy
A recent edition of the monthly newsletter Implications, published by the producers of InformeDesign® (www.informe design.umn.edu) delves into consumer shopping behaviors and how designers should consider these behaviors in the design of retail environments to maximize customer satisfaction and purchasing. Each issue of Implications explores one major subject in relation to design and human behavior to help designers take their work to the next level by infusing their designs with research-based knowledge.
Each issue of Implications is written by leading experts in the subject matter. This edition, authored by Seung-Eun Lee, Ph.D., assistant professor, and Kim K.P. Johnson, Ph.D., professor, both of the Department of Design, Housing and Apparel at the University
of Minnesota, provides recommendations for designers to consider in the design of
retail establishments, based on consumer shopping behaviors. The newsletter also provides reasons why designers should include retail merchandisers on their design teams and tips on how to work effectively with these professionals. In addition, the issue
contains lists of published books and the research summaries available on InformeDesign related to retail design.
An Olympian Carpet Feat
America's Olympians weren't standing on American soil when they won nine gymnastic medals at the 2004 Games in Athens, Greece, but they were standing on American carpet. Milliken Carpet made the 2,500 square yards of carpet in Galatsi Olympic Hall, in itself a tremendous feat, since it was designed, manufactured,
packaged and shipped to the time-strapped venue all within 10 days.
The blue and green design of the 65-foot carpet banners featured the Olympic rings and welcomed the games back to its birthplace with the message "Athens 2004—Welcome Home." Though Milliken had a contract with the Olympics months before the competition began, the design and color specifications did not arrive until 10 days before the carpet was due to be shipped. It was manufactured at Milliken Carpet's headquarters in LaGrange, GA, and expedited through customs to reach Galatsi Olympic Hall, where it was installed around the competition mats. All the floor areas in the arena that feature messages, logos and graphic designs were made by Milliken.