Wednesday, December 17, 2008

(Sad) Sign of the Times

Last year's acquisition of Hillier Architecture by RMJM was called a merger at the time. It was an acquisition as so many of these M&A deals are. If I've written it once, I've written it a bunch of times: There is very rarely such a thing as a merger. It's called a merger to make the acquired firm feel good, but it's an acquisition.

Want proof? Check out the press release issued earlier this week by RMJM Hillier that announced "the company will now operate under the name RMJM in North America. RMJM Hiller was formed in June 2007 following the merger of RMJM and Hillier Architecture (there's that bogus 'merger' term again). The RMJM Hillier name was used only in North America while the firm, headquartered in Edinburgh, Scotland, is still known as RMJM throughout the rest of the world. The new name also coincides with a global rebranding for RMJM including a new logo and website."

The sad part of the story for me is that the announcement means the firm will no longer carry the name of Hillier Architecture founder Bob Hillier. I met Bob a few years ago at an industry event and found him to be a knowledgeable, charming fellow. Although the press release quotes Sir Fraser Morrison, CEO, Americas with RMJM as saying, "Bob Hillier has been instrumental to the success of the merger. I want to thank him for his commitment and continued involvement in the firm," the name change is clearly a public distancing from Hillier.

It's all too common these days among A/E firms that acquire other firms to bring them under the corporate umbrella of the acquiring firm, but that doesn't mean it's a good idea.


ABI Keeps Falling: Posts All-Time Low For Second Straight Month

When we wrote last month that "while some quarters believe that President-Elect Barack Obama will push an agenda of addressing America's infrastructure," that does seem to be true.

However, as we also wrote, "Fact is, it will be two more months before he even takes office and perhaps much longer than that before bills are introduced into Congress, debated, signed into law, and then funding appropriated for them."

That was reflected in today's news that the AIA's Architecture Billings Index hit its all-time low for the second straight month, again posting its lowest level since the survey began in 1995.

And, as we said last month, because the index is a leading indicator of construction activity, the ABI shows an approximate 9- to 12-month lag time between architecture billing and construction spending. This means we shouldn't expect to see much construction activity for the bulk of 2009.

The November ABI rating was 34.7, down from the 36.2 mark in October, and the 41.4 mark in September that was a six-point drop from August. Any score above 50 indicates an increase in billings, but it's been a long time since that has happened. The inquiries for new projects score was 38.3, also a historic low point.

"With mounting job losses, declines in retail sales, and travel cutbacks, the need for new commercial facilities has dropped considerably recently," said AIA Chief Economist Kermit Baker. "What's just as troubling is that the institutional sector-- schools, hospitals, and public buildings-- is also beginning to react to tighter credit conditions and a weakening economy."

Regionally, the ABI breaks down as follows: Northeast (39.5, down from 44.3 in October), South (36.8, down from 40.0 in October), Midwest (31.4, down from 37.4 in October), and West (33.5, down from 34.9 in October). Sector by sector, the ABI breaks down thusly: mixed practice (44.5, down from 45.1), institutional (40.8, down from 42.1), commercial/industrial (26.7, down from 33.6), and multi-family residential (30.0, down from 34.2).

At this point, it's really anybody's guess as to when things will turn around.


Friday, December 12, 2008

ENR won't be buying Building Design + Construction after all

Turns out that McGraw-Hill, Engineering News-Record's parent company, will not be buying Reed Business Information, Building Design + Construction. Nor will anyone else after news came out this week that Reed Elsevier has dropped discussions with potential bidders for Reed Business Information, it's business-to-business publisher.

Reports earlier in the week had private equity group Bain Capital in the lead to acquire Reed Business Information after another private equity firm dropped out of the bidding. The bids had fallen from about $2 billion to about $1 billion.

Reed Elsevier says it will consider selling Reed Business Information at some point when market conditions improve. In the meantime, Reed Business Information will be managed as a separate division within Reed Elsevier.

Reed Elsevier had announced plans to divest Reed Business Information, which also publishes Variety and Publishers Weekly, among many other trade magazines, back in February, citing a desire to exit the print industry. But tightening global credit markets have hampered the auction and eventually led to its being put on hold for the time being.


Wednesday, December 3, 2008

The photo holiday card and you

Hope everyone had a great Thanksgiving. The Thanksgiving weekend usually brings with it the arrival of the first batch of holiday cards. And while most folks take the time to write out a heartfelt message, recent years have brought with them an increasing number of generic photo cards of the sender's family...with no personalized greeting whatsoever.

Those of you reading this might be wondering, "Why is he posting a blog item about photo holiday cards on a blog devoted to the AEC industry?" Well, if your firm is like the many firms out there that crank up the holiday card machine about this time each year, keep reading.

Do you (or your marketing department) send out holiday cards each year without any sort of personalized greeting to the recipient? (Judging from the avalanche of cards I get each year from many of you, I would answer this question "yes.")

Well, if the answer is yes, shame on you. Why would you treat the holiday card any differently than any other thank-you note or communication with your clients? Why half-ass this all-too-important marketing effort?

If your answer is, "We send out too many cards to personalize each one," then you are sending out too many cards. You don't need to send out one to every person in your database.

Trust me, if you aren't currently doing business with them and haven't spoken with them in several years, your clients will be more likely to wonder why you are sending something to them when you can't even pick up the phone to see how they are doing.

Point is, make the holiday card a truly effective marketing piece. Send out fewer, target them to specific clients, and personalize the heck out of them. Then, wait for the phone to will!


Monday, December 1, 2008

Lower gas prices mean lower mileage rates

For those of you enjoying lower gas prices when you go to the pump (and who isn't), your old friend, the Internal Revenue Service, wants to spoil your fun.

The IRS is lowering some of its automobile-mileage deduction rates for 2009 to coincide with falling gas prices. The 2009 rates are slightly lower than rates for the second half of 2008, which were raised in response to the spike in gas prices. The standard rate for business use beginning in January 2009 will be 55 cents a mile, down from 58.5 cents since July.

When the mid-year deduction rate took effect earlier this year, a gallon of gas cost an average of $4.05, up nearly $1 from the beginning of 2008. Prices in recent months have fallen, however, to a national average of $1.82 a gallon.

In the past few years, the mileage reimbursement rate had risen sharply from 40.5 cents in 2005, to 44.5 cents in 2006, to 48.5 cents in 2007, to 50.5 cents in the first half of 2008 before the hike to 58.5 cents in July 2008. Yet, the 55-cent deduction rate for average gas prices of $1.82 a gallon are still much better than the 40.5-cent rate in 2005, when the average gas price was $1.75 a gallon.

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