Better Business, Greener Projects
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State of the Industry Archives.

August 2005

Better Business, Greener Projects

Architectural woodworkers look to turn profits while also tackling more green building projects.

By Jo-Ann Kaiser
Public buildings continue to be a strong growth area for architectural woodworkers.
Business is not going gangbusters like the cabinet industry is witnessing, yet architectural woodworkers, for the most part, are seeing a steady improvement in sales compared to a couple of years ago.

So say a handful of architectural woodworkers located in various parts of the country, who Wood & Wood Products interviewed about business trends. In addition to asking them to help measure the pulse of business, W&WP delved into the impact the green building movement is having on their operations.

Bruce Cody, president of Architectural Wood, Roanoke, VA, and a past president of the Architectural Woodwork Institute, says he thinks business, on balance, is pretty strong. "You have some pockets and regions that are extremely strong and some smaller areas not doing so well," he says. "I read articles about the state of the economy and you get mixed signals about the retail level. It's not an area I deal with much, but I hear woodwork for educational institutions is strong.

"In the Washington, DC, market, the government is spending a lot on infrastructure and security-related things. Hotel and tourist building is pretty strong. In the manufacturing sector, they say that $1 spent equates to $7 in the economy. I have a feeling that a lot of money is going into building," Cody adds.

AWI President Talks Shop

Upward business trends for members of the Architectural Woodwork Institute give rise for "cautious optimism."

Kirsten Ingham, president of Pearson Millwork Inc. of Arlington, WA, has the distinction of being the first woman ever elected to serve as president of the Architectural Woodwork Institute.

The AWI, based in Reston, VA, has 1,000 manufacturing members. Wood & Wood Products contacted Ingham to discuss the state of the association, including key issues facing architectural woodworkers.

Wood & Wood Products: How would you describe the overall health of the architectural woodwork industry?

Kirsten Ingham: This past spring, most AWI manufacturing members I spoke with reported healthy backlogs of contracted work, better profit margins than the past three years and an improving business environment in the commercial construction sectors.

Each year, AWI measures our specific industry's performance with the AWI Cost of Doing Business Survey. Our independent study collects and reports AWI manufacturing member performance measures, plus wage and compensation information that results in an industry operational report card.

AWI's 2005 CODBS results show gross profit margins up by 1.4 percent with net profits up 1.1 percent, indicating an upward trend compared to the results of the 2004 and 2003 CODBS. In addition to the improvement in margins, CEOs in the survey reported a targeted revenue growth rate of 15 percent above the prior year's 13 percent.

We are encouraged by the verbal and statistical feedback we are receiving from our members across the country. In general, the overall feeling is that the business is much improved and the majority of our members express cautious optimism for the future.

W&WP: What are the key issues that AWI is monitoring?

Ingham: For the past five years, AWI has been a contributing partner with the American Forest and Paper Assn. supporting the industry-wide Wood Dust Study conducted at Tulane University, completed in 2004. The study's findings will be presented to the Occupational Safety and Health Administration and other related government agencies to aid in establishing wood dust threshold value limits. OSHA considers TVLs as tolerable, but not "safe" levels of exposure. The TVLs are used by OSHA to develop permissable exposure levels; PELs have the force of law and are enforced by OSHA with fines. The outcome of this important study and OSHA's acceptance of solid scientific findings will impact every processor of forest products operating in the United States.

In addition, for the past several years, AWI has been monitoring the U.S. Green Building Council and its LEED program requirements for "green construction." Most recently, AWI has placed METAFORE's green forest products resource web link on our Web site -www.awinet.org - to allow visitors access to this powerful Web-based certified forest products database.

Over the years, AWI has maintained and reported to its members about the American Subcontractors Assn.'s fabulous governmental and legislative work on state and federal levels. Areas of interest to AWI members, and for that matter, most small business subcontractors, include contractual insurance requirements, contract retainage of subcontract progress payments, unfair bid practices and reverse auction market bidding, to name a few. Currently, AWI volunteers are building an education seminar program based on fair contracts issues. This will be offered as the first of many presentations at the upcoming AWI Annual Meeting and Convention in San Diego, Oct. 27-29.

The key critical issue for our association and its members continues to be the "lack of a skilled workforce" to ensure efficient and effective delivery of architectural woodwork to our customers.

W&WP: What is AWI doing to address the woodworker skills shortage?

Ingham: AWI is aggressively working to address our industry specific needs via a three-level approach by offering comprehensive education programs through AWI's newest initiative, the Architectural Woodwork Institute of Lifelong Learning (AWILL).

At the shop trades level, while there are a few pockets of good training available in the United States for architectural cabinetmaking and millwork, the USA should be embarrassed at the dismal state of trade education in general, and fine woodworking education in particular. If we can marshal the resources over the next several years, AWI has a few good champions of our craft who will spearhead a movement to raise the perception of our trade as a career, while developing a structured, effective program of training and credentialing for woodwork professionals.

At the middle management industry level, AWI continues to lead the industry in the presentation of lifelong learning programs for line managers. For more than 20 years, the AWI Estimating Seminars and the AWI Project Management Seminars have trained efficient, productive operational managers. These foundation programs, taught by experienced AWI members, are to be supplemented by new programs introduced over the next two years. AWILL implemented its first introductory course in Project Management, which debuted on July 9 in Nashville, TN.

Additionally, the AWI Estimating Introductory Course is in development. Both of these new introductory programs will serve as prerequisites to the advanced AWI Project Management and Estimating seminars.

In the arena of upper management, AWI is launching an executive level program this year where the exchange of real-life situations and experiences come together. Groups of eight to 10 non-competing AWI manufacturing members will counsel each other to acquire better leadership skills and apply tested business practices at round table groups. This is the essence and value of our newest offering, the AWI Best Practices Group.

Networking and education are two primary value propositions for membership organizations. Building on that premise, our newest program leverages the collective knowledge and experience of business owners in a deeper and ongoing format through structured peer group networking sessions.

W&WP: What impact has the green movement had on AWI members?

Ingham: The green movement has presented both new marketplace opportunities and challenges, not only for our members who manufacture custom architectural woodwork, but also the entire supply chain of AWI Supplier Members and other vendors who provide veneers, lumber, panel products, wood finishes and consulting services.

One of the initial challenges to meet our customers's LEED requirements was in locating and incorporating certified and approved materials like lumber, veneers and panel products. Over the past several years, the marketplace has evolved to become more customer friendly, and we now see a wider selection of certified wood products, high qualities of materials plus a whole new available supply of agri-fiber hybrids to meet the LEED requirements.

W&WP: Have AWI members been affected by foreign competition?

Ingham: It appears that many AWI supplier member companies have embraced long- term strategic plans designed to leverage offshore competitors and partners to better compete in the North American marketplace. This alignment of and for commodity product lines is an essential part of business survival in today's global market. In contrast, 70 percent of AWI Manufacturing members produce annual revenues of $2 million or less, many of which operate solely in local and regional market areas. Given the nature and complexity of custom architectural woodwork manufacturing, the majority of our manufacturing members have not been adversely impacted by offshore competition, especially the manufacturers who compete for the larger commercial projects in the United States.

W&WP: How has the industry changed in the last five years?

Ingham: The custom architectural woodwork and most construction-related industries have experienced slow economic periods. However, this seems to be improving and trending to the positive side as of 2004 and 2005, according to our latest data and consensus reporting.

For several years, as the construction industry slowed down, bidding for less and less available projects intensified, margins evaporated and competition grew fierce. And what about quality? Some might feel that in times of competitive pricing, low margins, and survival, quality might be compromised.

The competitive market may be part of the reason that AWI's Quality Certification Program has grown in recognition and use over the past three years. Architects, contractors, and owners are demanding quality custom-manufactured products and are using AWI QCP as a means to ensure quality-compliant woodwork, especially in the competitive bid market.

With that said, the increasing demand for certification at the customer level has resulted in the growth of the QCP Manufacturing Participants, project inspections, QCP certification labels and QCP certificates.

I would also note that certification and accreditation programs are increasing in demand in most construction-related trades and professional positions. As new generations move into our industry, the older experienced personnel are no longer an available expertise resource. Education, training and ongoing verifiable levels of competency are the future strategy of business.

Steve Taylor, director of architectural services for the Woodwork Institute, says he also sees a lot of money being spent on woodwork for school projects. "In California, the public works market is strong and schools and hospitals are strong growth areas, too. In California, hospital work seems to be driven in part by seismic issues, and that could account for school building and rebuilding as well" to bring the buildings up to code, Taylor says.

Rick Kogler, operations manager for Architectural Wood Products Inc. in Baton Rouge, LA, says the industry overall appears to be doing very well. "In conversations with other architectural woodworkers, the feedback is that business is up except for a few pockets of the country, and is very high for commercial and residential work. Some companies are reporting backlogs of work for six months or longer. The positive news is quite a change from a year ago." Kogler adds that he sees an upturn in healthcare and governmental work.

Bruce King, president of Bruce King Fine Woodwork in Denver, CO, says business for his company has been very solid. "Colorado has historically been a boom or bust state. It was a mining place, and that was notoriously boom or bust, but it has been the same for energy and even tourism. Skiers flock here when we have snow, but stay away when we don't. The state has done a lot to stabilize tourism by doing things like manufacturing snow. Right now, we are in a boom because of the demand for gas. This area has a lot of oil and gas resources."

As far as architectural woodworking and construction projects go, King says the late 1990s represented a tremendous period of growth due to Internet start-up companies. "There was a boom in office structures, but when the dotcom companies went bust, Colorado was left with an oversupply of office space that affected the construction industry. It wasn't a complete halt, because of medical and institutional work continuing steadily. While there is growth here, some companies were impacted and went out of business. The economy is steadily improving and some companies are quite busy, but some have space in their schedule."

King has been in the woodworking industry in various capacities for 25 years. "For much of my career I worked for other companies, working in a shop, in the field, then doing estimating, project management and business development. I realized I had reached a point where the only way to advance was to work for myself."

King also does consulting work in leadership and management. "Woodworking companies are often started by people coming out of the trades - people with strong engineering minds. With success, the role the owner or top manager performs begins to change. It's very different managing 100 people rather than 20. Administrative skills become more critical to maintain a healthy business culture," he says.

King says he believes woodworking businesses that attract good employees will also attract good customers. "The state of the economy affects our business, but it's also important to create a culture that makes us successful so that even in tough times, companies can succeed."

It's Not Easy Being Green

W&WP asked architectural woodworkers how the green building movement, including wood certification and the Leadership in Energy and Environmental Design (LEED) program, developed by the U.S. Green Building Council, has impacted the way they do business. All of those interviewed reported that the increasing emphasis on environmental consciousness is a very positive, welcome development, but some argue there are problems with compliance, from supply availability to material costs, along with disagreements over the criteria for certification and LEED system points.

"I think the green movement is a very healthy concept," says King. "It is embraced, at least in principle, by most people in our industry. However, it is also very misunderstood."

King says that wood, by definition, is a renewable resource. "What is not green about wood? I have a huge fascination about wood and have been using reclaimed wood in many projects from buildings that have been dismantled. Some of the material comes from structures erected 100 years or more ago, made from old stands of timber. Old timbers have a lot of interest, with nail holes, knots, checking and rust. The wood usually has a tight grain and is weathered, which gives it a deeper color. For one project I was renovating, the client wanted exposed brick and exposed timbers. The original material was pretty beat up, so we covered the existing timber with Douglas fir and hemlock."

Taylor, of the Woodwork Institute, says he thinks the LEED system standards for wood - that give points to FSC-certified woods only - are problematic.

"I say this as a lifelong Sierra Club member and someone very sympathetic to the idea of green forest management," Taylor states. "[The USGBC] has set the bar so high that it is very difficult to get quality products that meet its standard, particularly in terms of lumber and veneers. The problem regarding core products like particleboard and MDF, etc., is not nearly as difficult because there is strawboard and other agricultural types of panel products, which are green and fill that criteria. There's a certain amount of recycled product out there, but as far as actual lumber and veneer from real wood, there's a problem.

"I have had inquiries from shops and architects about availability of those types of products for different projects," Taylor continues. "When I get on the Internet or start calling suppliers on the phone, I find it is very difficult to get green veneers, for example, in any kind of quantity and of reasonable quality. It seems likewise difficult to get environmentally acceptable lumber. This certainly won't cripple the LEED program because there are so many parts to the program that people can choose to get high ratings from other designations and let the category of green wood products go by the wayside."

Taylor and others stress that the concept of using green materials is very attractive. "But as far as it affects our industry, it seems problematic. I think the people who certify these products need to figure out a way to get some certified product out in the marketplace; or else that aspect of the LEED program is in danger. I want to emphasize that there is nothing in the Woodwork Institute program or manual of millwork that conflicts in any way with the LEED program. We are not opposed to the program or the idea of environmentally sound wood products. I am just commenting on the situation as I see the availability of product that meets the standards they have set," Taylor says.

Several people lament that Lyptus, a hybrid hardwood developed by Weyerhaeuser, does not meet LEED requirements because it is a cultivated product, rather than one that grows wild in the forest. "If you used the same standard for what we eat, we wouldn't be able to eat bread because it isn't grown on a prairie," Taylor says.

Certification Rules Too Strict

Hardened environmentalists argue that some of the commercially harvested lumber in the United States is not certified because it is essentially from a monoculture instead of from a diverse natural forest. Like Lyptus, woods like Douglas fir might not qualify under this criteria, when the lumber otherwise fits the bill for a green product.

Cody says he has seen the impact of green building in his area. "William McDonough of Charlottesville, VA, has been a real mover in the green and energy-efficient design area. He's a real guru in this area. One of his former students, now working in Roanoke, came up with an idea for a competition for designing green buildings, primarily residential, using many of the principles in McDonough's book, "Cradle to Cradle" [written with Michael Braungart]. We were expecting some local interest, but people heard about it on the Internet and all of a sudden, little old Roanoke has become a major center for green building," Cody says. "There was a major exhibition of the designs and submissions came from all over the world. A few experimental houses will be built, which will be sold at some time to the public."

Cody says he sees a lot of interest among his clients about using green, certified wood products; but when it comes time to do the actual project, the green products do not always make the cut. "There's a lot of interest in using green products, there's a lot of discussion, and there's a lot of hype, but I'm not seeing it in the practical world. There are a lot of costs associated with doing a LEED project. People don't want to admit that, but there it is. When it comes down to dollars and cents, clients occasionally value out some of the green productst. We support the idea [of green building]. We are trying to stay up front and get as much information as we can and disseminate it to clients. Others may be farther along with clients in use of green building products, but my experience is that the intent and interest may be there, but the execution isn't always there."

None of those interviewed disagree with the concept of building with green materials. All champion the idea. "The intent of the green movement is very good," Kogler says, echoing the sentiments of many in architectural woodworking.

Taylor says he wishes the Forest Stewardship Council and others involved in certifying wood products would be a little less extreme. "I am very in favor of environmental interest groups and the work they do, but it doesn't do any good to get a set of standards that people can't meet in the real world."

                                                                                                                                                                                           

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