Contract - Editorial: Keep the Faith

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Editorial: Keep the Faith

01 November, 2009

-By Jennifer Thiele Busch



As we rush headlong toward the holidays and a new year (whew!) it is probably safe to say that many of us have given up on 2009 and are looking forward to what 2010 will bring. The expectations are mixed. On the one hand, design firms continue to report more activity in terms of RFPs, an observation that is supported by the AIA's Architecture Billings Index (ABI). The monthly survey's new projects inquiry score was up for the second month in a row in October, though it was down slightly from its September high, at 58.5 for October versus 59.1 for September. (Any score over 50 indicates an increase in activity.) This apparent trend has not yet translated into actual work, but in October, the Architecture Billings Index also showed its most positive signs in more than a year that the rate of decline for demand in design services may be slowing. October's ABI rating for billings was 46.1, up significantly from 43.1 in September, and the highest level since August 2008.

These days any positive news is good news. The U.S. economy as a whole is showing early signs of recovery across multiple sectors (with the possible exception of retail), but is being outpaced by a global economy that is recovering more rapidly. For the most part, firms with international offices, or that do work internationally, have fared better during this recession, and that will continue to be the case. Geographic and industry sector diversification are more important than ever before. Real estate activity—which drives design activity—is still in decline, but at a slower pace. Real estate is always a lagging economic indicator, and design lags further behind that.

So even though he economic picture is brightening overall, 2010 will unfortunately be another tough year for the A&D community and its associated businesses. For manufacturers of commercial interiors products, 2009 is expected to end with year over year production down 30.2 percent and consumption down 29 percent according to BIFMA—statistics that are pretty much in line with what the general economy has been experiencing. BIFMA is also forecasting a 4.6 percent decline in production and a 1.9 percent decline in consumption in 2010 versus 2009—predictions that seem a bit optimistic given the anecdotal evidence that we are hearing from manufacturers.

When the best news in months is a slower rate of decline, rather than real growth, some companies will continue to reach for unrealistic financial goals regardless of the damage they have to do to get there. This kind of manufactured "growth" is not sustainable and will do more harm than good in the long run. Smart companies, however, know that they need to change their business strategy to embrace a more long-term view that focuses on maintaining visibility and growing market share, so they are well-positioned when the economy rebounds. In this industry, that translates into a continued commitment to good design.

In this issue of Contract you will find the results of our 2009 Brand Report, which asks a cross-section of our readership to name the top brands that come to mind in various product categories. This year, we also asked for the first time, "When thinking about brands that inspire you to create your best commercial design solutions, who are the top that come to mind? The top 10 were Knoll, Herman Miller, Steelcase, 3form, Haworth, Armstrong, InterfaceFLOR, Teknion, Bernhardt, and Maharam. It should come as no surprise that all of these companies have continued to innovate, develop well-designed products, and maintain a high profile even during these worst of times. An unwavering focus on good design is certainly not for the faint of heart. But for those who keep the faith, the payoff is in the reputation it earns.



Editorial: Keep the Faith

01 November, 2009


As we rush headlong toward the holidays and a new year (whew!) it is probably safe to say that many of us have given up on 2009 and are looking forward to what 2010 will bring. The expectations are mixed. On the one hand, design firms continue to report more activity in terms of RFPs, an observation that is supported by the AIA's Architecture Billings Index (ABI). The monthly survey's new projects inquiry score was up for the second month in a row in October, though it was down slightly from its September high, at 58.5 for October versus 59.1 for September. (Any score over 50 indicates an increase in activity.) This apparent trend has not yet translated into actual work, but in October, the Architecture Billings Index also showed its most positive signs in more than a year that the rate of decline for demand in design services may be slowing. October's ABI rating for billings was 46.1, up significantly from 43.1 in September, and the highest level since August 2008.

These days any positive news is good news. The U.S. economy as a whole is showing early signs of recovery across multiple sectors (with the possible exception of retail), but is being outpaced by a global economy that is recovering more rapidly. For the most part, firms with international offices, or that do work internationally, have fared better during this recession, and that will continue to be the case. Geographic and industry sector diversification are more important than ever before. Real estate activity—which drives design activity—is still in decline, but at a slower pace. Real estate is always a lagging economic indicator, and design lags further behind that.

So even though he economic picture is brightening overall, 2010 will unfortunately be another tough year for the A&D community and its associated businesses. For manufacturers of commercial interiors products, 2009 is expected to end with year over year production down 30.2 percent and consumption down 29 percent according to BIFMA—statistics that are pretty much in line with what the general economy has been experiencing. BIFMA is also forecasting a 4.6 percent decline in production and a 1.9 percent decline in consumption in 2010 versus 2009—predictions that seem a bit optimistic given the anecdotal evidence that we are hearing from manufacturers.

When the best news in months is a slower rate of decline, rather than real growth, some companies will continue to reach for unrealistic financial goals regardless of the damage they have to do to get there. This kind of manufactured "growth" is not sustainable and will do more harm than good in the long run. Smart companies, however, know that they need to change their business strategy to embrace a more long-term view that focuses on maintaining visibility and growing market share, so they are well-positioned when the economy rebounds. In this industry, that translates into a continued commitment to good design.

In this issue of Contract you will find the results of our 2009 Brand Report, which asks a cross-section of our readership to name the top brands that come to mind in various product categories. This year, we also asked for the first time, "When thinking about brands that inspire you to create your best commercial design solutions, who are the top that come to mind? The top 10 were Knoll, Herman Miller, Steelcase, 3form, Haworth, Armstrong, InterfaceFLOR, Teknion, Bernhardt, and Maharam. It should come as no surprise that all of these companies have continued to innovate, develop well-designed products, and maintain a high profile even during these worst of times. An unwavering focus on good design is certainly not for the faint of heart. But for those who keep the faith, the payoff is in the reputation it earns.
 


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