I visited the PEiR Group blog-site this morning. On April 28th, there was a post on that site that talked about a reprographer in Cincinnati who provided a digital camera system (service?) for a large construction project in that city. That post was interesting (at least it was to me!)
While doing some research, late one evening a couple of years ago (when I was still at NGI), I "discovered" a company that does that (active camera, accessible on-line, for construction project sites) for a living.
If you go to this web-address, you can see a real-live demonstration of how OX BLUE's system works.
http://clarkconstruction.oxblue.com/clarkhuntsmoot/
By the way, I find it amusing when people say that they or others "discovered" something. Take for example, when people say that Christopher Columbus discovered the Americas. There were already people living in the "new lands" that Chris "discovered" and, that being the case, he didn't really discover the Americas, did he? Perhaps all of the history books should be revised to say that Chris was the first European "visitor" to the Americas, rather than the "discoverer"?
Thursday, May 14, 2009
Sunday, May 10, 2009
Update on ARC stock
This is an update on previous posts about ARC's stock.
In one of my previous posts, I suggested that there are at least two ways to make money in the reprographics business: (1) earn money from owning a profitable reprographics company, (2) earn money by owning a piece of another reprographics company (if you buy low and sell for more than you paid for it, of course.) In another previous post, when ARC’s stock price was at $2.68 per share, I said “it does feel like ARC’s stock is definitely undervalued.”
For anyone who bought 20,000 shares of ARC stock (NYSE: ARP) when ARC fell to $2.54 per share, which happened several weeks ago, those 20,000 shares, at the price per-share ARC closed at ($8.15) on Friday May 8th, were worth $112,200 more. (Investment $50,800, Value $163,000, Increase in value $112,200.)
How much did your reprographics company earn you in the past two months? Would you have earned more than that had you bought ARC at $2.54 per share?
Never ceases to amaze me how the stock market works. ARC reported, on Thursday this past week, that its Sales were off around 25%, Q1 2008 vs. Q1 2009. And, in spite of that, ARC's stock price surged well ahead of where the stock has been trading this year. Does that mean that investors believe that the worst is over?
In one of my previous posts, I suggested that there are at least two ways to make money in the reprographics business: (1) earn money from owning a profitable reprographics company, (2) earn money by owning a piece of another reprographics company (if you buy low and sell for more than you paid for it, of course.) In another previous post, when ARC’s stock price was at $2.68 per share, I said “it does feel like ARC’s stock is definitely undervalued.”
For anyone who bought 20,000 shares of ARC stock (NYSE: ARP) when ARC fell to $2.54 per share, which happened several weeks ago, those 20,000 shares, at the price per-share ARC closed at ($8.15) on Friday May 8th, were worth $112,200 more. (Investment $50,800, Value $163,000, Increase in value $112,200.)
How much did your reprographics company earn you in the past two months? Would you have earned more than that had you bought ARC at $2.54 per share?
Never ceases to amaze me how the stock market works. ARC reported, on Thursday this past week, that its Sales were off around 25%, Q1 2008 vs. Q1 2009. And, in spite of that, ARC's stock price surged well ahead of where the stock has been trading this year. Does that mean that investors believe that the worst is over?
Saturday, May 9, 2009
Hmmm, could a flexible, electronic display screen someday replace a multi-page, bound set of A/E plans?
So, when will we see rolls of plan sets (i.e., sets of A/E drawings printed on paper) REPLACED by flexible, electronic display screens? R&D people have been working on this technology for many years. E-INK is the electronic ink technology behind this, and that's the same E-INK that powers Amazon's Kindle device.
Someday in the future (and who knows when that might be; probably be well after I'm gone from the scene)..... a GC Project Manager might go out into the field with one large, rolled-up sheet of thin plastic. When he gets to the job-site, he unrolls the sheet of thin plastic, uses a USB connection to connect the sheet to his laptop, goes on-line to the Internet, downloads a current set of A/E drawings for the project to his laptop, then begins to scroll through the pages in his "electronic set" of drawings (clicks to go from sheet to sheet in the set). Continuing on, walks the project with his superintendent and with trade subs, uses a stylus to write comments and to draw circles around problems he found with the drawings; hits his save button, then "sends" the full set of now-marked-up drawings to the Owner, his boss, and the entire A/E team. Perhaps we will see a gigantic 36" x 48" Amazon Kindle some day - but I kind of doubt it. Might be easier to produce a very thin plastic, electronic 36 x 48 sheet (a "flexible" display screen.)
Latest info I found on the Internet about developments going on with "flexible display screen" technology - - -
from photonics.com: 02/24/2009
http://www.photonics.com/Content/ReadArticle.aspx?ArticleID=36597
Bendable Display Screens
TEMPE, Ariz., Feb. 24, 2009 – Screens typically used on mobile phones, laptops and televisions have consistently become sharper and thinner and are changing the way we send and receive information. Now, a breakthrough in flexible display technology has demonstrated a screen that is as thin as a piece of paper and that can bend like one, too. By using flexible components, a team at Arizona State University’s Flexible Display Center (FDC) has announced the world’s first “touchscreen” active matrix display on a flexible, glass-free substrate.
Achieved through a collaborative effort between the center and its partners, E Ink Corp. and DuPont Teijin Films, it is the first demonstration of a flexible electronic display that enables real-time user input.
The breakthrough comes as a result of combining FDC’s low-temperature thin-film transistor technology, DuPont Teijin Films’ high-performance Teonex polyethylene naphthalate (PEN) films and E Ink’s Vizplex-ink laminate to form active matrix electrophoretic (electronic paper) displays. The touchscreen capability is enabled by integrating a low-power display controller that was developed by E Ink and Epson and demonstrated as part of E Ink’s developer’s kit.
The flexible touchscreen display supports real-time user input either by stylus pen or by touch, and it consumes power only when the electronic paper is activated. Once sketched on the display, information can be stored or sent wirelessly before erasing.
“Pen and touch input has become the preferred user interface in many portable electronic devices,” said Michael McCreary, vice president of research and advanced development at E Ink. “The ability to incorporate the flexible touch feature into the E Ink Vizplex display will enable a host of new applications that require shatterproof displays.”
“We believe successful deployment of flexible touchscreen technology can stimulate a number of applications that will allow Army soldiers, and ultimately other users, to input, store or transmit real-time data from remote locations using ultralow-power displays that are rugged, sunlight-readable, lightweight and thin,” said Nick Colaneri, director of the FDC. “This is an outstanding example of how the Flexible Display Center collaborates with our partners and other technology providers to create innovative solutions that address the rapidly growing market for flexible electronic displays.”
A video demonstrating the new touchscreen is available here.
For more information, visit: flexdisplay.asu.edu
Someday in the future (and who knows when that might be; probably be well after I'm gone from the scene)..... a GC Project Manager might go out into the field with one large, rolled-up sheet of thin plastic. When he gets to the job-site, he unrolls the sheet of thin plastic, uses a USB connection to connect the sheet to his laptop, goes on-line to the Internet, downloads a current set of A/E drawings for the project to his laptop, then begins to scroll through the pages in his "electronic set" of drawings (clicks to go from sheet to sheet in the set). Continuing on, walks the project with his superintendent and with trade subs, uses a stylus to write comments and to draw circles around problems he found with the drawings; hits his save button, then "sends" the full set of now-marked-up drawings to the Owner, his boss, and the entire A/E team. Perhaps we will see a gigantic 36" x 48" Amazon Kindle some day - but I kind of doubt it. Might be easier to produce a very thin plastic, electronic 36 x 48 sheet (a "flexible" display screen.)
Latest info I found on the Internet about developments going on with "flexible display screen" technology - - -
from photonics.com: 02/24/2009
http://www.photonics.com/Content/ReadArticle.aspx?ArticleID=36597
Bendable Display Screens
TEMPE, Ariz., Feb. 24, 2009 – Screens typically used on mobile phones, laptops and televisions have consistently become sharper and thinner and are changing the way we send and receive information. Now, a breakthrough in flexible display technology has demonstrated a screen that is as thin as a piece of paper and that can bend like one, too. By using flexible components, a team at Arizona State University’s Flexible Display Center (FDC) has announced the world’s first “touchscreen” active matrix display on a flexible, glass-free substrate.
Achieved through a collaborative effort between the center and its partners, E Ink Corp. and DuPont Teijin Films, it is the first demonstration of a flexible electronic display that enables real-time user input.
The breakthrough comes as a result of combining FDC’s low-temperature thin-film transistor technology, DuPont Teijin Films’ high-performance Teonex polyethylene naphthalate (PEN) films and E Ink’s Vizplex-ink laminate to form active matrix electrophoretic (electronic paper) displays. The touchscreen capability is enabled by integrating a low-power display controller that was developed by E Ink and Epson and demonstrated as part of E Ink’s developer’s kit.
The flexible touchscreen display supports real-time user input either by stylus pen or by touch, and it consumes power only when the electronic paper is activated. Once sketched on the display, information can be stored or sent wirelessly before erasing.
“Pen and touch input has become the preferred user interface in many portable electronic devices,” said Michael McCreary, vice president of research and advanced development at E Ink. “The ability to incorporate the flexible touch feature into the E Ink Vizplex display will enable a host of new applications that require shatterproof displays.”
“We believe successful deployment of flexible touchscreen technology can stimulate a number of applications that will allow Army soldiers, and ultimately other users, to input, store or transmit real-time data from remote locations using ultralow-power displays that are rugged, sunlight-readable, lightweight and thin,” said Nick Colaneri, director of the FDC. “This is an outstanding example of how the Flexible Display Center collaborates with our partners and other technology providers to create innovative solutions that address the rapidly growing market for flexible electronic displays.”
A video demonstrating the new touchscreen is available here.
For more information, visit: flexdisplay.asu.edu
Friday, May 8, 2009
What effect will BIM have on the Reprographics Industry? - This could very well prove to be a billion dollar question!
What effect will BIM have on the Reprographics Industry?
Many years ago, not long after I began my career in the reprographics business and industry, an “older” reprographer mentioned to me that, only a few years before, people in the micrographics industry had said that “microfilm” would replace blueprinting. That customers would take miniature pictures of their drawings and distribute the drawings on rolls of microfilm or on microfiche cards, instead of “printing” large-format drawings. (If you wanted to view the drawings in a larger format, you could “blow-back” the drawings using xerographic “blow-back” machines.) Well, of course, that turned out to be complete B.S. – microfilm never affected the volume of large-format printing work done by reprographers. I guess I should ask, “where, is microfilm today?”
And, years after that, when CAD systems first started appearing at A/E offices, some said that CAD would seriously erode large-format printing volume. Well, that did not happen. In fact, because CAD made it easier for A/E firms to provide even greater detail than was the case before CAD hit the scene, the number of drawings in a “typical” set of A/E drawings (for just about every type of project) EXPLODED. I can recall from the late 1970’s doing bid-set printing for an Architecture firm in Silver Spring, MD (Johannes & Murray; they specialized in K1-K12 schools), and most of their school projects contained about 70-80 drawings. In the decade we are now in, K1-K12 school projects sometimes have double that number of drawings. So, while CAD automated the design process, it certainly did not adversely affect the volume of large-format printing work done by reprographers. Gee, I think just the opposite was the case!
Before I get into the meat of this post, let me state a few FACTS. Some may differ with my opinion that these are FACTS. Take whatever position you want. But, remember, this is my blog.
FACT: Reprographers, here I’m speaking about the A/E/C reprographics business and industry, generate a very substantial portion of their revenues from producing “prints on paper” – large-format printing services - and, thusly, a substantial portion of their profits comes from large-format printing services.
FACT: Anything that threatens that volume – the volume of large-format “prints on paper” - has to be taken very seriously. I don’t care how you “slice it or dice it”, if the volume of “prints on paper”, for whatever reason or reasons, seriously declines over the next decade, then charging for digital services (e.g., file processing, file downloads, file conversion, planroom services, etc, etc) won’t make up for a serious decline in demand for large-format “prints on paper.” If the volume of large-format “prints on paper” declines – and some are predicting that will be the case - the reprographics industry will have less players in the future than it has today and some of the industry's surviving players may end up being smaller companies than they are today.
FACT: The reprographics industry has been experiencing a shift from “print, then distribute” to “distribute, then print”. This shift, driven by customer demand and enabled by the Internet and other technology, has reduced the volume of large-format prints on paper done at reprographer production centers (some call them stores). The reverse of that, reprographers who are active in promoting, selling and operating FM business segments and companies that sell/lease wide-format imaging equipment are benefiting from “distribute, then print”. Files downloaded at GC and sub-contractor offices can be printed on “local” plotters (and multifunction systems) placed at their offices by reprographers who offer FM services. As this trend continues, reprographers will be faced with downsizing their “production center” volume capabilities, because they may not need, in the future, all of the high-volume production capacity they now have. This shift will affect margins to some extent.
FACT: A material portion of the “total” - of “all” printing revenues derived from the typical non-residential construction project – comes at one point in the project life-cycle; that point being “bid-set” printing time. For real estate development projects that are “hard-bid”, reprographers are not only tasked with printing sets for the GC’s who are going to bid, but for the sub-contractors of each GC. For real estate development projects that aren’t hard-bid [i.e., where the GC is (or a few GC’s are) pre-selected by the Owner], bid-set printing still has to happen – the pre-selected GC needs (or plural, GC’s need) to get pricing from its (plural, their) subs. Pricing the cost of construction is a very critical part of the real estate development business. All GC’s take that part of their business very seriously. All GC’s are looking for ways to reduce the cost of estimating and for ways to improve the productivity and accuracy of their estimating processes.
FACT: As I said earlier, “anything” that threatens the volume of large-format prints-on-paper done by reprographers is a serious threat to the reprographics industry. About 5 years ago, I visited the offices of one of the largest GC’s in the U.S. and met with a young man (Doug) who was, at that time, second in command of that GC’s “Estimating / Pre-Construction” group. We asked him about his firm’s needs. We were there to develop a relationship with his firm. (We later implemented a staffed FM service for one of his firm’s regional offices.) While talking, he shared with us his opinions on, and views about, the “estimating process”, “now and future.” He said, “nowadays most of our estimating is still done by manual “take-off”; our estimators (he was speaking not just about his firm’s estimators but about his sub-contractors’ estimators as well) use scales and rulers and they measure and count based on information that’s shown in the plans (printed large-format drawings) and in the specifications. He went on to say that “that process is changing. We are already beginning to use computer estimating programs, programs that allow our estimators to do their take-off work “on screen” rather than from printed large-format drawings." (NOTE THAT ARC’S PLANWELL AND SUB-HUB SOFTWARE PROGRAMS BOTH HAVE SOME SORT OF ELECTRONIC ESTIMATING FUNCTION AND THAT REPROMAX’S DFS PLANROOM SOFTWARE CAN “PLUG-INTO” ON-CENTER SOFTWARE’S ON-SCREEN TAKE-0FF PROGRAM.) He (Doug) went on to say that, “a few years from now, when all of our older estimators are gone and have been replaced with younger, IT-computer-savvy guys, probably all of our estimating functions will be done directly from digital files – in other words, we think we will be printing substantially less (large-format prints on paper) in the future.” And, being the nice young man that he was, he said something along the lines of “I hope you didn’t mind me saying that.” Doug did say, however, that he expected this change to be generational (meaning evolutionary, i.e., over time) rather than “revolutionary" (overnight.) Okay, to conclude this “fact” paragraph, let me just say that the use of on-screen or on-line estimating software, software that permits take-offs to be done without having to do take-offs from large-format printed drawings, could, in itself, cause serious erosion in the volume of large-format printing work done by the reprographer community. However, before any reprographers begin obsessing about this (the affect of on-line or on-screen estimating software on the volume of large-format printing being done by our industry), let's go on to the next paragraph. For, to me, I think the next paragraph contains the BIG QUESTION.
QUESTION: If someone invented a technology process that would enable construction cost estimators to do extremely accurate “take-offs” without having to even look at large-format prints on paper and without even having to bother doing electronic take-off’s using on-screen or on-line software programs, what effect would that technology process have on the A/E/C reprographics business and industry? And, let me take this one step further. “What if” that same technology enabled the A/E, GC and Owner “team” to get “constructability” and “collision” information in addition to “estimated-project-cost” information?
Enter BIM.
The first time I looked into BIM (what it was, what it did, how it worked), I came away with the impression that reprographers might be able to make money by offering “3D Printing Services.” And, after speaking with reprographer friends over the past two years about BIM and 3D printing services, some reprographers do believe that BIM represents an opportunity to make money from providing 3D printing services. I’ve heard many reprographers say that BIM will create greater demand for large-format color printing services.
The foregoing paragraph goes to show you how narrow-thinking some people (i.e., I) can be - - - if they (i.e., me) don’t really know what a new technology represents and, failing that, don’t realize that there is a much bigger picture to be looked at.
As I said in the previous post, KP Reddy (of RCMS Group) gave a thoroughly thought provoking presentation about BIM at the IRgA Convention in Pittsburgh last week.
In the IRgA brochure that listed this year’s education breakout sessions, the title given to KP Reddy’s presentation was …. “Leverage Intelligent BIM to Stay Ahead of the Curve.”
I’m not going to go into detail about the RCMS Group, KP Reddy’s company, but, if you want more details about KP’s company, visit his web-site at www.rcmsgroup.com
After listening to KP’s presentation, I was provoked to do more research about BIM.
I still don’t know as much as I should about BIM, but I think I do know enough about BIM to say that BIM could have a serious adverse impact on reprographers, long term (3 to 5 or more years from now?) , but I don’t see much of an adverse impact in the short term. (1-3 years).
BIM came about, in part, because of the need for “interoperability” in the A/E/C (and Owner) community. Once most A/E firm team members are trained in how to use BIM (and that will likely take a while; that time frame stretched, somewhat, because of the recession) and the same applies to GC’s, fewer quantities of large-format prints on paper will be produced; simply because large quantities of prints on paper will be unnecessary. But, again, I don’t see that happening in the near term; this will be an evolutionary change, night an overnight one.
BIM is not just a 3D CAD program. BIM is a Building Industry Modeling Program. BIM programs (REVIT, Bentley BIM and ArchiCad and others) have extensive database capabilities. And, BIM programs offer several, very important, benefits to project participants:
• Draw all elements of the project, and not just in 2D but in 3D
• Enable the data-basing of all elements of the project
• Enable project-cost estimating using the database of elements and using standard costs for those elements, the latter imported into the database from sources such as R.S. Means
• Enable “constructability” reports
• Enable “collision” reports
• A/E teams will have better feedback (as to the reality of their designs), before construction begins
• GC’s can identify many of the potential problems before construction starts
• Owners will experience less surprises
I don't yet have a complete handle on all of the benefits BIM will offer to A/E/C project participants. I'm certainly no expert on this subject.
So, please now look back at the QUESTION I posed a few paragraphs earlier in this post, and then ask yourself this question: If BIM automates the estimating process to the extent that estimators will not need to do take-offs from prints on paper and will not need to do take-offs using on-line (or on-screen) take-off software and, instead, will be able to get project-cost-estimates directly from the database that’s within BIM (along with other very important by-product reports), then what, really, will the effect of BIM be on the A/E/C reprographics industry? If you are a reprographer, you should, by now, be able to guess what my answer to that question would be!
Okay, I’ve made the point I wanted to make. BIM could end up being a very negative thing for reprographers. (And, I don't just mean a big pain in the ass, I'm saying that from a financial perspective.) I hope that doesn’t end up being the case, but facing reality, it certainly could end up that way.
Now, I’m going to share with you some information I looked at on the web - information related to BIM and reprographics (or BIM and reprographers). Some of this information is from blogs, in other words, opinions from others.
First up, John Cronin, who is the President of PLP, a software vendor to firms in the reprographics industry and who is one of the brightest light bulbs in the pack, wrote a couple of “BIM-related” posts for his blog back in April 2006. His blog is called “The Blueprint” and his blog’s address is:
http://theblueprint.typepad.com/theblueprint/2006/04/index.html
On April 27, 2006, John wrote this post:
"BIM Will Create More Demand for "Content Brokers""....
"I had a meeting yesterday with two principals from Gensler. Gensler is a renowed architectural firm that has been voted Contract Magazine's Most Admired Firm by their peers for two consecutive years. The primary topic of the meeting was Building Information Modeling (BIM) and how it would affect the construction industry and specifically the AEC commercial reprographics industry. Gensler has adopted AutoDesk’s Revit application [interactive overview] and is using it more and more each day. I learned a lot about the use of BIM and how it will affect the industry. More to come in later posts...”
And, on April 28, 2006, John wrote this post:
"Years to Build – Lost in a Day"....
"As AEC commercial reprographics firms take on more responsibility for controlling project critical construction content, the perception of reprographers is improving. My cousin who worked for an engineering firm questioned why I would want to buy a company that sold to “blueprinters”. Three years later he commented “I get it now. We are turning over more and more responsibility to our blueprinter”. This was also confirmed in my meeting with Gensler. Stakeholders in the construction industry are feeling more and more comfortable with their reprographics firm being the custodian of their project critical content. But what happens when they can’t get to that content or it gets destroyed? A minor blip is manageable, but frequent minor blips or a serious data loss could lose that customer forever."
Okay, I mentioned these two posts from John’s blog for a couple of different reasons. (1) John's initial posts about BIM were nearly three years ago (April 2006). He had just met with two principals from Gensler’s Washington, DC area office. Gensler is one of the largest Architecture firms in the U.S., if not in the world. (2) In his second post, which was related to his first post, John basically gives an opinion – that opinion being that A/E firms are comfortable with reprographics firms being the “custodian of project critical content” and I guess you could go on to conclude (which is the point I think John wants to make) that A/E/C reprographers must recognize the importance of “document management” to their A/E/C customers and be fully prepared to provide document management (and distribution) services to their A/E/C customers.
Most reprographers, nowadays, offer document management services to the A/E/C (and Owner) community – PlanWell, ReproMax DFS, NextPlans, OCE PlanCenter, yada, yada, there are many others. E-plan-rooms give GC firms an easier way to keep all project documents organized and to make available to their sub-contractors the plans and specs subs will need to bid jobs. But, we also know more about BIM now than John knew about BIM back then.
And, knowing what we now know about BIM (or, I guess I should say, what I think I know about BIM)......... after BIM is fully rolled out, years from now, and people understand the real power of BIM, will there even be a need for “document management service providers?” [Reprographers provide DM services to keep digital files of drawings and specs totally organized and up-to-date and to ease the file distribution (or paper print distribution) process.] In the fully-deployed BIM world, where all information about the project is stored in databases and 3D computer-models – will not estimators be using these tools to estimate construction costs, and, if so, where will large-format paper prints fit in to that world?
Next up, I copied some information off of TPM’s web-site. (www.tpm.com) TPM, which used to stand for “The Print Machine” is one of the premier A/E/C reprographics companies in the Carolinas. (I believe TPM is still owned by Jerry Cooper, a long-time reprographics industry veteran who has a very solid reputation.) Below, in the information I copied from TPM’s web-site, “OnLine Planroom”, you’ll see a list of questions that respond to one very basic question - why would I want to use an OnLine Planroom?”
“Online Planroom
More than an ordinary planroom, this planroom allows you to download easily, view quickly, distribute globally, track efficiently and print anywhere.
* Click and print to one or multiple locations or your local HP printer
* Easily create professional invitation bid packages
* Save time and money on costly printing and shipping fees
* Do online take-offs with On Center software
* Safeguard your drawings and specifications
* No more long, painful downloads
* Track your project from start to finish
* Archive your entire project on CD-ROM”
Okay, TPM offers ReproMax’s DFS planroom software/services. You will notice in the writeup where TPM mentions that one can “do online take-offs with On Center software. (That’s an option (and it costs extra.) The question is not whether the bullet points on TPM’s “reasons-why-list” are valid today, for they are probably very valid today. The big question is, “will any of the bullet points on TMP’s reasons-why-list be valid when and after BIM is fully deployed?
Next up, you’ll see an article from the Daily Journal of Commerce, Portland, OR. This is a fairly recent article that talks about BIM. I’m pretty sure that Tyler Graf, author of this article, is not a reprographer. I thought Tyler’s article was very well done. Read my specific comments after the article concludes. Here's the complete text of Tyler's article:
“Builders say BIM can be competitive tool during recession".....
By Tyler Graf, Daily Journal of Commerce - Portland, OR ......
"Despite the tough economic times, many contractors and engineers are pushing three-dimensional modeling software as a way of maintaining a competitive edge. But with fewer construction projects available, and builders and designers generally reluctant to spend more money, will the use of software such as Building Information Modeling stagnate, or will it flourish?
Leonard Klein, an engineer at Glumac, said he hopes BIM’s progress doesn’t slow. The 3-D modeling software lets engineers, contractors and architects view all aspects of a building digitally while seeing how all the parts interact. It has helped Glumac on numerous projects, Klein said. “If used wisely, it could save you a lot of money,” he said. His company began using BIM a few years ago, and it continues to use it on most of its projects. Hoffman Construction also was among the first to start using BIM. The company believes the technology will give it an advantage over its competition during the recession.
“Whatever the tool is that can make a project faster, easier, more efficient in the long run – those are good investments,” said Bart Eberwein of Hoffman Construction. Not everyone agrees. There are some who have declined, for financial reasons, to join the BIM bandwagon. Architect Carol Mayer-Reed said spending money on new technology has not been on her mind. What is? “It’s called ‘getting work,’ ” she said. Mayer-Reed said she’s spending more time and energy on marketing efforts than in the past. The introduction of BIM also demands more downtime on the front end, said Ken Klein of BIM manufacturer IMAGINiT Technologies, due to the amount of extra training required. “That’s one of the reasons more people traditionally haven’t done it, in addition to the cost,” Klein said. He’s concerned that firms will choose not to adopt the use of BIM during the recession. That could hurt construction efficiency, he said. The reason, he said, is a lack of interoperability within the built-environment community: “You have all these people working together … but they’re all working on a linear path, so these folks don’t talk to each other or work on a common platform,” he explained."
"The National Institute of Standards and Technology estimates that the lack of interoperability costs the construction industry roughly $16 billion a year. And last month, McGraw Hill Construction released a report on the comparative advantages of BIM use. According to the report, in the coming year 62 percent of BIM users will use it on more than 30 percent of their projects. Nearly half of all current adopters will advance to become heavy BIM users, using it on at least 60 percent of projects. In 2008, contractors used BIM on about 35 percent of their projects, the report states. There’s still uncertainty. Financial plans can change quickly during a recession, contractors said. Eberwein, for one, said whether BIM is used during the recession will depend on the types of projects that contractors are building. High-tech manufacturing facilities and medical and pharmaceutical buildings tend to benefit most from new modeling software because those buildings are never quite finished, Eberwein said. Most hospitals that Hoffman works on are almost constantly under renovation, even when they are new, due to the medical field being a “dynamic” industry, he said. Klein said health care construction could help BIM progress during the recession, when hospital projects are expected to be available. But as the number of overall projects dwindles, Klein added, building professionals may start looking for any edge they can get – even if it costs more. “In some ways, the recession is pushing the progress,” he said.”
Okay, I think one can easily draw at least two conclusions from the above article: (1) BIM will evolve and, at some point, will be in wide-spread use throughout the A/E/C community. It will end up being the “preferred way” projects are conceived, created, designed, planned and estimated. (2) the current downtown in the A/E/C industry will temporarily delay the rollout and adoption of BIM technology.
Next up, I’m going to make mention of a couple of slides (within a multi-slide presentation) that were contained in a presentation given at the Eastern Regional Reprographics Association’s fall 2007 conference. [That presentation was prepared and given by Ken Sandlin, a very bright young man who is the CTO (I think that’s his title, but I’m not sure) of A&E – The Graphics Complex. At the time Ken prepared this presentation, A&E was an independent reprographer and a member of the ReproMax group. Later, A&E was acquired by Thomas Reprographics, the U.S. reprographics industry’s 2nd largest company. TR is a member of the ReproMax group.]
“B I M - What Does it Mean to the Reprographer?”
• Presenter: Ken Sandlin, AIA A&E - The Graphics Complex
(Note; The person who introduced Ken said this before Ken gave his slide-show presentation: "We all have heard the word BIM and most of us know it stands for Building Information Modeling. We will explore how this fits into a larger revolution that is currently underway in the AEC industry and talk about how this will change Reprography. Ken will offer his views on what the Reprographer can do to survive and flourish in this new world.")
From slide 29:
• The new paradigm will be as follows:
• The Design Team will include the Owner, Architect, Consultants, GC and Suppliers. All of them will be involved in the process from the start.
• How information is distributed and in what form will Change.
• Information will be shared via BIM
• Centralized Information Sources
• More Electronic Delivery
• More Demand for Color
• Projects will be priced sooner and more often
From slide 30:
• As this process takes hold, the function of the traditional reprographer may decline to the point where print services are marginalized.
• There will be a gradual, general decline in traditional printing.
• Huge bid events will no longer be necessary. Bid sets will be smaller, more targeted and more frequent. Many bid sets will be eliminated as contractors and subcontractors are able to retrieve construction process and specification data directly from the BIM model.
Well, there ya’ go. A very tech-savvy-guy (Ken Sandlin) who was with (and I think is still with) one of the leading reprographers in the U.S., said, nearly two years ago, that BIM will bring about a change that reprographers don’t want to see happen! – - Look at the sentence from slide #30 that says this: “Many bid sets will be eliminated as contractors and subcontractors are able to retrieve construction process and specification data directly from the BIM model.”
In spite of what Ken said nearly two years ago, most reprographers are ignoring what’s coming down the pike. In my opinion, THE MOST SIGNFICANT FACTOR AFFECTING THE LONG-TERM VIABILITY AND HEALTH OF THE A/E/C REPROGRAPHICS INDUSTRY IS BIM. Yet, only one educational breakout session at this year’s IRgA Convention addressed BIM head on, and, while it was good that we had that session on the agenda, that session was only attended by 20 to 25 people! Apparently, “BIM’ is a subject that reprographers don’t want a lot of discussion about …… because reprographers have not yet been able to determine how they can benefit from BIM (and, more importantly, if they can benefit from BIM or if BIM will negatively affect their businesses.)
Another bit of information to share with you: Here’s a link to the “BIM” committee formed by the Smart Buildings Alliance organization:
http://www.buildingsmartalliance.org/nbims/committee_members.php
National BIM Standard Project Committee Members
If you visit that the page at that web-address, you will see that (a) there are 412 members of the NBIMS Project Committee and that (b) the list of committee members (and their respective firm names) is a veritable “who’s-who” list of players in the A/E/C community, US-country-wide. BIM development and deployment is being taken very seriously by our customers.
Next up, here’s a link for the A/E/C CEO Roundtable conference that was held in Dallas, TX last fall (Sep 2008.)
http://www.cimastrategic.com/files/Sept08-Dallas-RoundtableSummary-eVersion.pdf
“IPD Through BIM: What's Working and What's Not?”
AEC CEO Roundtable Conference, Dallas, TX, Sep 2008
“We are 5-10 years away from full implementation of BIM
Note the above quote regarding how many years we’re away from full implementation of BIM. That comment was made at a conference that was held during the current A/E/C industry recession. The primary reason given for the 5-10 year timeframe mentioned - the recession itself. Back then and right now, firms in the A/E/C are primarily concerned about survival. Everything else takes a back seat, at least until conditions improve.
Next up, below you will see an excerpt from an article about (actually, it was a review of) “DProfiler” a BIM “macro” software product developed by Beck Technology Group. (I have not cut and pasted into my blog post the entire article that appeared on aecbyte’s site, so, if you want to read the entire article, go to the web-address that appears below.) Here’s what the author of that article said about DProfiler:
Beck Technology Group
Product: DProfiler
http://www.aecbytes.com/review/2008/DProfiler.html
“In my recent article on the AIA 2008 National Convention and Expo, I provided a brief overview of a relatively new application called DProfiler, which was being exhibited at the AIA show for the first time. DProfiler is being marketed by its developer, Beck Technology, as a “macro” BIM software intended for use at the planning and conceptual design phase to get an accurate cost estimate of a proposed design.”
After you read the full text of the author’s review of Beck’s Dprofiler software product, you will probably want to, and I urge you to, visit Beck Technology’s web-site. I did, and I found what they’ve developed to be quite fascinating, if not intriguing. For those of you who do not know Beck, The Beck Group (which, until a few years ago, was known as HCB Contractors) is one of the premier GC’s in the U.S. We did a LOT of business with Beck in Florida.
After you’ve read about DProfiler and after you’ve visited and read more about RCMS Group (KP Reddy’s company, which offers iBIM services), you should (presuming you managed to make it all the way through my blog post) have enough information TO PROMPT YOU TO BEGIN THINKING VERY HARD ABOUT THIS QUESTION – WHAT EFFECT WILL BIM HAVE ON MY REPROGRAPHICS BUSINESS – AND TO THINK EQUALLY HARD ABOUT WHAT YOUR STRATEGY SHOULD BE, NOW AND GOING FORWARD, TO DEAL WITH THE EFFECT THAT BIM WILL HAVE ON YOUR REPROGRAPHICS COMPANY.
One last note.... Two days after I posted the article that's the subject of this post (BIM and its affects on the A/E/C Reprographics Industry), I was visiting the web-site of Wide-Format Digital Imaging and saw this press release from back in 2008:
InfoTrends Releases New Wide Format LED Forecast
InfoTrends Press Release: Updated: July 8th, 2008
"The wide format LED market represents a massive portion of total wide format print volume. Market trends that InfoTrends has identified in the past, such as distribute and print, the influence of color, and the trend toward electronic document transfer, continue to have a considerable impact on the market."
"InfoTrends expects worldwide shipments of wide format LED hardware to grow from over 42,000 units in 2006 to almost 52,000 units in 2011, for a CAGR of 4.0%. While North America, Western Europe, and Japan represent the largest markets for wide format LED printer and copier hardware, InfoTrends believes that Eastern Europe, India, and China will receive more attention in the coming years as architectural and engineering projects are increasingly outsourced to less expensive design centers."
"Low-end units, which account for half of all unit shipments, are expected to drive overall market growth. Similar to the way that the office printing market has evolved, InfoTrends believes that end users are adopting more cost effective printing and information sharing processes, and this is dramatically impacting the wide format LED hardware and supplies markets."
"The continued move toward decentralized printing and the growing use of color, combined with the electronic information sharing and smaller size printing, are eroding demand for high-end systems and driving growth in low-end digital systems," commented Tim Greene, a Director at InfoTrends. As users adopt these new processes, it often reduces their need for professional wide format technical document production services."
"To sustain their growth, print-for-pay companies that have primarily served industries that use wide format technical documents are now offering document management services (including scanning and archiving) and/or wide format digital graphics production. Hardware manufacturers have enabled these changes by offering more reliable and productive wide format LED hardware. At the same time, vendors are using aggressive sales and marketing tactics to drive new unit shipments."
Okay, now for my comments about that press release. From a "reprographer's perspective", there is one important point InfoTrend's LED forecast touches on:
Demand for high-volume large-format printing orders (the type of work done at reprographer production centers) is expected to fall over the years to come. It will go up in the short term as the reprographics industry comes out of the recession it is now experiencing, but, later on, the volume of that type of work will fall.
Many years ago, not long after I began my career in the reprographics business and industry, an “older” reprographer mentioned to me that, only a few years before, people in the micrographics industry had said that “microfilm” would replace blueprinting. That customers would take miniature pictures of their drawings and distribute the drawings on rolls of microfilm or on microfiche cards, instead of “printing” large-format drawings. (If you wanted to view the drawings in a larger format, you could “blow-back” the drawings using xerographic “blow-back” machines.) Well, of course, that turned out to be complete B.S. – microfilm never affected the volume of large-format printing work done by reprographers. I guess I should ask, “where, is microfilm today?”
And, years after that, when CAD systems first started appearing at A/E offices, some said that CAD would seriously erode large-format printing volume. Well, that did not happen. In fact, because CAD made it easier for A/E firms to provide even greater detail than was the case before CAD hit the scene, the number of drawings in a “typical” set of A/E drawings (for just about every type of project) EXPLODED. I can recall from the late 1970’s doing bid-set printing for an Architecture firm in Silver Spring, MD (Johannes & Murray; they specialized in K1-K12 schools), and most of their school projects contained about 70-80 drawings. In the decade we are now in, K1-K12 school projects sometimes have double that number of drawings. So, while CAD automated the design process, it certainly did not adversely affect the volume of large-format printing work done by reprographers. Gee, I think just the opposite was the case!
Before I get into the meat of this post, let me state a few FACTS. Some may differ with my opinion that these are FACTS. Take whatever position you want. But, remember, this is my blog.
FACT: Reprographers, here I’m speaking about the A/E/C reprographics business and industry, generate a very substantial portion of their revenues from producing “prints on paper” – large-format printing services - and, thusly, a substantial portion of their profits comes from large-format printing services.
FACT: Anything that threatens that volume – the volume of large-format “prints on paper” - has to be taken very seriously. I don’t care how you “slice it or dice it”, if the volume of “prints on paper”, for whatever reason or reasons, seriously declines over the next decade, then charging for digital services (e.g., file processing, file downloads, file conversion, planroom services, etc, etc) won’t make up for a serious decline in demand for large-format “prints on paper.” If the volume of large-format “prints on paper” declines – and some are predicting that will be the case - the reprographics industry will have less players in the future than it has today and some of the industry's surviving players may end up being smaller companies than they are today.
FACT: The reprographics industry has been experiencing a shift from “print, then distribute” to “distribute, then print”. This shift, driven by customer demand and enabled by the Internet and other technology, has reduced the volume of large-format prints on paper done at reprographer production centers (some call them stores). The reverse of that, reprographers who are active in promoting, selling and operating FM business segments and companies that sell/lease wide-format imaging equipment are benefiting from “distribute, then print”. Files downloaded at GC and sub-contractor offices can be printed on “local” plotters (and multifunction systems) placed at their offices by reprographers who offer FM services. As this trend continues, reprographers will be faced with downsizing their “production center” volume capabilities, because they may not need, in the future, all of the high-volume production capacity they now have. This shift will affect margins to some extent.
FACT: A material portion of the “total” - of “all” printing revenues derived from the typical non-residential construction project – comes at one point in the project life-cycle; that point being “bid-set” printing time. For real estate development projects that are “hard-bid”, reprographers are not only tasked with printing sets for the GC’s who are going to bid, but for the sub-contractors of each GC. For real estate development projects that aren’t hard-bid [i.e., where the GC is (or a few GC’s are) pre-selected by the Owner], bid-set printing still has to happen – the pre-selected GC needs (or plural, GC’s need) to get pricing from its (plural, their) subs. Pricing the cost of construction is a very critical part of the real estate development business. All GC’s take that part of their business very seriously. All GC’s are looking for ways to reduce the cost of estimating and for ways to improve the productivity and accuracy of their estimating processes.
FACT: As I said earlier, “anything” that threatens the volume of large-format prints-on-paper done by reprographers is a serious threat to the reprographics industry. About 5 years ago, I visited the offices of one of the largest GC’s in the U.S. and met with a young man (Doug) who was, at that time, second in command of that GC’s “Estimating / Pre-Construction” group. We asked him about his firm’s needs. We were there to develop a relationship with his firm. (We later implemented a staffed FM service for one of his firm’s regional offices.) While talking, he shared with us his opinions on, and views about, the “estimating process”, “now and future.” He said, “nowadays most of our estimating is still done by manual “take-off”; our estimators (he was speaking not just about his firm’s estimators but about his sub-contractors’ estimators as well) use scales and rulers and they measure and count based on information that’s shown in the plans (printed large-format drawings) and in the specifications. He went on to say that “that process is changing. We are already beginning to use computer estimating programs, programs that allow our estimators to do their take-off work “on screen” rather than from printed large-format drawings." (NOTE THAT ARC’S PLANWELL AND SUB-HUB SOFTWARE PROGRAMS BOTH HAVE SOME SORT OF ELECTRONIC ESTIMATING FUNCTION AND THAT REPROMAX’S DFS PLANROOM SOFTWARE CAN “PLUG-INTO” ON-CENTER SOFTWARE’S ON-SCREEN TAKE-0FF PROGRAM.) He (Doug) went on to say that, “a few years from now, when all of our older estimators are gone and have been replaced with younger, IT-computer-savvy guys, probably all of our estimating functions will be done directly from digital files – in other words, we think we will be printing substantially less (large-format prints on paper) in the future.” And, being the nice young man that he was, he said something along the lines of “I hope you didn’t mind me saying that.” Doug did say, however, that he expected this change to be generational (meaning evolutionary, i.e., over time) rather than “revolutionary" (overnight.) Okay, to conclude this “fact” paragraph, let me just say that the use of on-screen or on-line estimating software, software that permits take-offs to be done without having to do take-offs from large-format printed drawings, could, in itself, cause serious erosion in the volume of large-format printing work done by the reprographer community. However, before any reprographers begin obsessing about this (the affect of on-line or on-screen estimating software on the volume of large-format printing being done by our industry), let's go on to the next paragraph. For, to me, I think the next paragraph contains the BIG QUESTION.
QUESTION: If someone invented a technology process that would enable construction cost estimators to do extremely accurate “take-offs” without having to even look at large-format prints on paper and without even having to bother doing electronic take-off’s using on-screen or on-line software programs, what effect would that technology process have on the A/E/C reprographics business and industry? And, let me take this one step further. “What if” that same technology enabled the A/E, GC and Owner “team” to get “constructability” and “collision” information in addition to “estimated-project-cost” information?
Enter BIM.
The first time I looked into BIM (what it was, what it did, how it worked), I came away with the impression that reprographers might be able to make money by offering “3D Printing Services.” And, after speaking with reprographer friends over the past two years about BIM and 3D printing services, some reprographers do believe that BIM represents an opportunity to make money from providing 3D printing services. I’ve heard many reprographers say that BIM will create greater demand for large-format color printing services.
The foregoing paragraph goes to show you how narrow-thinking some people (i.e., I) can be - - - if they (i.e., me) don’t really know what a new technology represents and, failing that, don’t realize that there is a much bigger picture to be looked at.
As I said in the previous post, KP Reddy (of RCMS Group) gave a thoroughly thought provoking presentation about BIM at the IRgA Convention in Pittsburgh last week.
In the IRgA brochure that listed this year’s education breakout sessions, the title given to KP Reddy’s presentation was …. “Leverage Intelligent BIM to Stay Ahead of the Curve.”
I’m not going to go into detail about the RCMS Group, KP Reddy’s company, but, if you want more details about KP’s company, visit his web-site at www.rcmsgroup.com
After listening to KP’s presentation, I was provoked to do more research about BIM.
I still don’t know as much as I should about BIM, but I think I do know enough about BIM to say that BIM could have a serious adverse impact on reprographers, long term (3 to 5 or more years from now?) , but I don’t see much of an adverse impact in the short term. (1-3 years).
BIM came about, in part, because of the need for “interoperability” in the A/E/C (and Owner) community. Once most A/E firm team members are trained in how to use BIM (and that will likely take a while; that time frame stretched, somewhat, because of the recession) and the same applies to GC’s, fewer quantities of large-format prints on paper will be produced; simply because large quantities of prints on paper will be unnecessary. But, again, I don’t see that happening in the near term; this will be an evolutionary change, night an overnight one.
BIM is not just a 3D CAD program. BIM is a Building Industry Modeling Program. BIM programs (REVIT, Bentley BIM and ArchiCad and others) have extensive database capabilities. And, BIM programs offer several, very important, benefits to project participants:
• Draw all elements of the project, and not just in 2D but in 3D
• Enable the data-basing of all elements of the project
• Enable project-cost estimating using the database of elements and using standard costs for those elements, the latter imported into the database from sources such as R.S. Means
• Enable “constructability” reports
• Enable “collision” reports
• A/E teams will have better feedback (as to the reality of their designs), before construction begins
• GC’s can identify many of the potential problems before construction starts
• Owners will experience less surprises
I don't yet have a complete handle on all of the benefits BIM will offer to A/E/C project participants. I'm certainly no expert on this subject.
So, please now look back at the QUESTION I posed a few paragraphs earlier in this post, and then ask yourself this question: If BIM automates the estimating process to the extent that estimators will not need to do take-offs from prints on paper and will not need to do take-offs using on-line (or on-screen) take-off software and, instead, will be able to get project-cost-estimates directly from the database that’s within BIM (along with other very important by-product reports), then what, really, will the effect of BIM be on the A/E/C reprographics industry? If you are a reprographer, you should, by now, be able to guess what my answer to that question would be!
Okay, I’ve made the point I wanted to make. BIM could end up being a very negative thing for reprographers. (And, I don't just mean a big pain in the ass, I'm saying that from a financial perspective.) I hope that doesn’t end up being the case, but facing reality, it certainly could end up that way.
Now, I’m going to share with you some information I looked at on the web - information related to BIM and reprographics (or BIM and reprographers). Some of this information is from blogs, in other words, opinions from others.
First up, John Cronin, who is the President of PLP, a software vendor to firms in the reprographics industry and who is one of the brightest light bulbs in the pack, wrote a couple of “BIM-related” posts for his blog back in April 2006. His blog is called “The Blueprint” and his blog’s address is:
http://theblueprint.typepad.com/theblueprint/2006/04/index.html
On April 27, 2006, John wrote this post:
"BIM Will Create More Demand for "Content Brokers""....
"I had a meeting yesterday with two principals from Gensler. Gensler is a renowed architectural firm that has been voted Contract Magazine's Most Admired Firm by their peers for two consecutive years. The primary topic of the meeting was Building Information Modeling (BIM) and how it would affect the construction industry and specifically the AEC commercial reprographics industry. Gensler has adopted AutoDesk’s Revit application [interactive overview] and is using it more and more each day. I learned a lot about the use of BIM and how it will affect the industry. More to come in later posts...”
And, on April 28, 2006, John wrote this post:
"Years to Build – Lost in a Day"....
"As AEC commercial reprographics firms take on more responsibility for controlling project critical construction content, the perception of reprographers is improving. My cousin who worked for an engineering firm questioned why I would want to buy a company that sold to “blueprinters”. Three years later he commented “I get it now. We are turning over more and more responsibility to our blueprinter”. This was also confirmed in my meeting with Gensler. Stakeholders in the construction industry are feeling more and more comfortable with their reprographics firm being the custodian of their project critical content. But what happens when they can’t get to that content or it gets destroyed? A minor blip is manageable, but frequent minor blips or a serious data loss could lose that customer forever."
Okay, I mentioned these two posts from John’s blog for a couple of different reasons. (1) John's initial posts about BIM were nearly three years ago (April 2006). He had just met with two principals from Gensler’s Washington, DC area office. Gensler is one of the largest Architecture firms in the U.S., if not in the world. (2) In his second post, which was related to his first post, John basically gives an opinion – that opinion being that A/E firms are comfortable with reprographics firms being the “custodian of project critical content” and I guess you could go on to conclude (which is the point I think John wants to make) that A/E/C reprographers must recognize the importance of “document management” to their A/E/C customers and be fully prepared to provide document management (and distribution) services to their A/E/C customers.
Most reprographers, nowadays, offer document management services to the A/E/C (and Owner) community – PlanWell, ReproMax DFS, NextPlans, OCE PlanCenter, yada, yada, there are many others. E-plan-rooms give GC firms an easier way to keep all project documents organized and to make available to their sub-contractors the plans and specs subs will need to bid jobs. But, we also know more about BIM now than John knew about BIM back then.
And, knowing what we now know about BIM (or, I guess I should say, what I think I know about BIM)......... after BIM is fully rolled out, years from now, and people understand the real power of BIM, will there even be a need for “document management service providers?” [Reprographers provide DM services to keep digital files of drawings and specs totally organized and up-to-date and to ease the file distribution (or paper print distribution) process.] In the fully-deployed BIM world, where all information about the project is stored in databases and 3D computer-models – will not estimators be using these tools to estimate construction costs, and, if so, where will large-format paper prints fit in to that world?
Next up, I copied some information off of TPM’s web-site. (www.tpm.com) TPM, which used to stand for “The Print Machine” is one of the premier A/E/C reprographics companies in the Carolinas. (I believe TPM is still owned by Jerry Cooper, a long-time reprographics industry veteran who has a very solid reputation.) Below, in the information I copied from TPM’s web-site, “OnLine Planroom”, you’ll see a list of questions that respond to one very basic question - why would I want to use an OnLine Planroom?”
“Online Planroom
More than an ordinary planroom, this planroom allows you to download easily, view quickly, distribute globally, track efficiently and print anywhere.
* Click and print to one or multiple locations or your local HP printer
* Easily create professional invitation bid packages
* Save time and money on costly printing and shipping fees
* Do online take-offs with On Center software
* Safeguard your drawings and specifications
* No more long, painful downloads
* Track your project from start to finish
* Archive your entire project on CD-ROM”
Okay, TPM offers ReproMax’s DFS planroom software/services. You will notice in the writeup where TPM mentions that one can “do online take-offs with On Center software. (That’s an option (and it costs extra.) The question is not whether the bullet points on TPM’s “reasons-why-list” are valid today, for they are probably very valid today. The big question is, “will any of the bullet points on TMP’s reasons-why-list be valid when and after BIM is fully deployed?
Next up, you’ll see an article from the Daily Journal of Commerce, Portland, OR. This is a fairly recent article that talks about BIM. I’m pretty sure that Tyler Graf, author of this article, is not a reprographer. I thought Tyler’s article was very well done. Read my specific comments after the article concludes. Here's the complete text of Tyler's article:
“Builders say BIM can be competitive tool during recession".....
By Tyler Graf, Daily Journal of Commerce - Portland, OR ......
"Despite the tough economic times, many contractors and engineers are pushing three-dimensional modeling software as a way of maintaining a competitive edge. But with fewer construction projects available, and builders and designers generally reluctant to spend more money, will the use of software such as Building Information Modeling stagnate, or will it flourish?
Leonard Klein, an engineer at Glumac, said he hopes BIM’s progress doesn’t slow. The 3-D modeling software lets engineers, contractors and architects view all aspects of a building digitally while seeing how all the parts interact. It has helped Glumac on numerous projects, Klein said. “If used wisely, it could save you a lot of money,” he said. His company began using BIM a few years ago, and it continues to use it on most of its projects. Hoffman Construction also was among the first to start using BIM. The company believes the technology will give it an advantage over its competition during the recession.
“Whatever the tool is that can make a project faster, easier, more efficient in the long run – those are good investments,” said Bart Eberwein of Hoffman Construction. Not everyone agrees. There are some who have declined, for financial reasons, to join the BIM bandwagon. Architect Carol Mayer-Reed said spending money on new technology has not been on her mind. What is? “It’s called ‘getting work,’ ” she said. Mayer-Reed said she’s spending more time and energy on marketing efforts than in the past. The introduction of BIM also demands more downtime on the front end, said Ken Klein of BIM manufacturer IMAGINiT Technologies, due to the amount of extra training required. “That’s one of the reasons more people traditionally haven’t done it, in addition to the cost,” Klein said. He’s concerned that firms will choose not to adopt the use of BIM during the recession. That could hurt construction efficiency, he said. The reason, he said, is a lack of interoperability within the built-environment community: “You have all these people working together … but they’re all working on a linear path, so these folks don’t talk to each other or work on a common platform,” he explained."
"The National Institute of Standards and Technology estimates that the lack of interoperability costs the construction industry roughly $16 billion a year. And last month, McGraw Hill Construction released a report on the comparative advantages of BIM use. According to the report, in the coming year 62 percent of BIM users will use it on more than 30 percent of their projects. Nearly half of all current adopters will advance to become heavy BIM users, using it on at least 60 percent of projects. In 2008, contractors used BIM on about 35 percent of their projects, the report states. There’s still uncertainty. Financial plans can change quickly during a recession, contractors said. Eberwein, for one, said whether BIM is used during the recession will depend on the types of projects that contractors are building. High-tech manufacturing facilities and medical and pharmaceutical buildings tend to benefit most from new modeling software because those buildings are never quite finished, Eberwein said. Most hospitals that Hoffman works on are almost constantly under renovation, even when they are new, due to the medical field being a “dynamic” industry, he said. Klein said health care construction could help BIM progress during the recession, when hospital projects are expected to be available. But as the number of overall projects dwindles, Klein added, building professionals may start looking for any edge they can get – even if it costs more. “In some ways, the recession is pushing the progress,” he said.”
Okay, I think one can easily draw at least two conclusions from the above article: (1) BIM will evolve and, at some point, will be in wide-spread use throughout the A/E/C community. It will end up being the “preferred way” projects are conceived, created, designed, planned and estimated. (2) the current downtown in the A/E/C industry will temporarily delay the rollout and adoption of BIM technology.
Next up, I’m going to make mention of a couple of slides (within a multi-slide presentation) that were contained in a presentation given at the Eastern Regional Reprographics Association’s fall 2007 conference. [That presentation was prepared and given by Ken Sandlin, a very bright young man who is the CTO (I think that’s his title, but I’m not sure) of A&E – The Graphics Complex. At the time Ken prepared this presentation, A&E was an independent reprographer and a member of the ReproMax group. Later, A&E was acquired by Thomas Reprographics, the U.S. reprographics industry’s 2nd largest company. TR is a member of the ReproMax group.]
“B I M - What Does it Mean to the Reprographer?”
• Presenter: Ken Sandlin, AIA A&E - The Graphics Complex
(Note; The person who introduced Ken said this before Ken gave his slide-show presentation: "We all have heard the word BIM and most of us know it stands for Building Information Modeling. We will explore how this fits into a larger revolution that is currently underway in the AEC industry and talk about how this will change Reprography. Ken will offer his views on what the Reprographer can do to survive and flourish in this new world.")
From slide 29:
• The new paradigm will be as follows:
• The Design Team will include the Owner, Architect, Consultants, GC and Suppliers. All of them will be involved in the process from the start.
• How information is distributed and in what form will Change.
• Information will be shared via BIM
• Centralized Information Sources
• More Electronic Delivery
• More Demand for Color
• Projects will be priced sooner and more often
From slide 30:
• As this process takes hold, the function of the traditional reprographer may decline to the point where print services are marginalized.
• There will be a gradual, general decline in traditional printing.
• Huge bid events will no longer be necessary. Bid sets will be smaller, more targeted and more frequent. Many bid sets will be eliminated as contractors and subcontractors are able to retrieve construction process and specification data directly from the BIM model.
Well, there ya’ go. A very tech-savvy-guy (Ken Sandlin) who was with (and I think is still with) one of the leading reprographers in the U.S., said, nearly two years ago, that BIM will bring about a change that reprographers don’t want to see happen! – - Look at the sentence from slide #30 that says this: “Many bid sets will be eliminated as contractors and subcontractors are able to retrieve construction process and specification data directly from the BIM model.”
In spite of what Ken said nearly two years ago, most reprographers are ignoring what’s coming down the pike. In my opinion, THE MOST SIGNFICANT FACTOR AFFECTING THE LONG-TERM VIABILITY AND HEALTH OF THE A/E/C REPROGRAPHICS INDUSTRY IS BIM. Yet, only one educational breakout session at this year’s IRgA Convention addressed BIM head on, and, while it was good that we had that session on the agenda, that session was only attended by 20 to 25 people! Apparently, “BIM’ is a subject that reprographers don’t want a lot of discussion about …… because reprographers have not yet been able to determine how they can benefit from BIM (and, more importantly, if they can benefit from BIM or if BIM will negatively affect their businesses.)
Another bit of information to share with you: Here’s a link to the “BIM” committee formed by the Smart Buildings Alliance organization:
http://www.buildingsmartalliance.org/nbims/committee_members.php
National BIM Standard Project Committee Members
If you visit that the page at that web-address, you will see that (a) there are 412 members of the NBIMS Project Committee and that (b) the list of committee members (and their respective firm names) is a veritable “who’s-who” list of players in the A/E/C community, US-country-wide. BIM development and deployment is being taken very seriously by our customers.
Next up, here’s a link for the A/E/C CEO Roundtable conference that was held in Dallas, TX last fall (Sep 2008.)
http://www.cimastrategic.com/files/Sept08-Dallas-RoundtableSummary-eVersion.pdf
“IPD Through BIM: What's Working and What's Not?”
AEC CEO Roundtable Conference, Dallas, TX, Sep 2008
“We are 5-10 years away from full implementation of BIM
Note the above quote regarding how many years we’re away from full implementation of BIM. That comment was made at a conference that was held during the current A/E/C industry recession. The primary reason given for the 5-10 year timeframe mentioned - the recession itself. Back then and right now, firms in the A/E/C are primarily concerned about survival. Everything else takes a back seat, at least until conditions improve.
Next up, below you will see an excerpt from an article about (actually, it was a review of) “DProfiler” a BIM “macro” software product developed by Beck Technology Group. (I have not cut and pasted into my blog post the entire article that appeared on aecbyte’s site, so, if you want to read the entire article, go to the web-address that appears below.) Here’s what the author of that article said about DProfiler:
Beck Technology Group
Product: DProfiler
http://www.aecbytes.com/review/2008/DProfiler.html
“In my recent article on the AIA 2008 National Convention and Expo, I provided a brief overview of a relatively new application called DProfiler, which was being exhibited at the AIA show for the first time. DProfiler is being marketed by its developer, Beck Technology, as a “macro” BIM software intended for use at the planning and conceptual design phase to get an accurate cost estimate of a proposed design.”
After you read the full text of the author’s review of Beck’s Dprofiler software product, you will probably want to, and I urge you to, visit Beck Technology’s web-site. I did, and I found what they’ve developed to be quite fascinating, if not intriguing. For those of you who do not know Beck, The Beck Group (which, until a few years ago, was known as HCB Contractors) is one of the premier GC’s in the U.S. We did a LOT of business with Beck in Florida.
After you’ve read about DProfiler and after you’ve visited and read more about RCMS Group (KP Reddy’s company, which offers iBIM services), you should (presuming you managed to make it all the way through my blog post) have enough information TO PROMPT YOU TO BEGIN THINKING VERY HARD ABOUT THIS QUESTION – WHAT EFFECT WILL BIM HAVE ON MY REPROGRAPHICS BUSINESS – AND TO THINK EQUALLY HARD ABOUT WHAT YOUR STRATEGY SHOULD BE, NOW AND GOING FORWARD, TO DEAL WITH THE EFFECT THAT BIM WILL HAVE ON YOUR REPROGRAPHICS COMPANY.
One last note.... Two days after I posted the article that's the subject of this post (BIM and its affects on the A/E/C Reprographics Industry), I was visiting the web-site of Wide-Format Digital Imaging and saw this press release from back in 2008:
InfoTrends Releases New Wide Format LED Forecast
InfoTrends Press Release: Updated: July 8th, 2008
"The wide format LED market represents a massive portion of total wide format print volume. Market trends that InfoTrends has identified in the past, such as distribute and print, the influence of color, and the trend toward electronic document transfer, continue to have a considerable impact on the market."
"InfoTrends expects worldwide shipments of wide format LED hardware to grow from over 42,000 units in 2006 to almost 52,000 units in 2011, for a CAGR of 4.0%. While North America, Western Europe, and Japan represent the largest markets for wide format LED printer and copier hardware, InfoTrends believes that Eastern Europe, India, and China will receive more attention in the coming years as architectural and engineering projects are increasingly outsourced to less expensive design centers."
"Low-end units, which account for half of all unit shipments, are expected to drive overall market growth. Similar to the way that the office printing market has evolved, InfoTrends believes that end users are adopting more cost effective printing and information sharing processes, and this is dramatically impacting the wide format LED hardware and supplies markets."
"The continued move toward decentralized printing and the growing use of color, combined with the electronic information sharing and smaller size printing, are eroding demand for high-end systems and driving growth in low-end digital systems," commented Tim Greene, a Director at InfoTrends. As users adopt these new processes, it often reduces their need for professional wide format technical document production services."
"To sustain their growth, print-for-pay companies that have primarily served industries that use wide format technical documents are now offering document management services (including scanning and archiving) and/or wide format digital graphics production. Hardware manufacturers have enabled these changes by offering more reliable and productive wide format LED hardware. At the same time, vendors are using aggressive sales and marketing tactics to drive new unit shipments."
Okay, now for my comments about that press release. From a "reprographer's perspective", there is one important point InfoTrend's LED forecast touches on:
Demand for high-volume large-format printing orders (the type of work done at reprographer production centers) is expected to fall over the years to come. It will go up in the short term as the reprographics industry comes out of the recession it is now experiencing, but, later on, the volume of that type of work will fall.
IRgA Convention (Apr/May 2009) - Notes and Comments
I attended the 2009 IRgA Convention in Pittsburgh, PA, last week, and, while I hate to put it this way, the mood (of attendees) was glum. Certainly the events of the past year – the design/development/construction experiencing a recession and reprographers, of course, feeling the recession as well - had a numbing affect on the mood of the attendees who did make it to the IRGA Convention this year; the number of attendees this year was well off last year’s IRgA attendance numbers (and well off the numbers from the year before last year); attendance at this year’s IRgA Convention was the lightest I’ve seen in many years. Perhaps part of the reason for that was the location of this year’s convention? Pittsburgh isn’t known as a major tourist destination. But, after having visited Pittsburgh last week – my first time there in probably 20+ years, I must say that the downtown area is quite interesting – beautiful riverfront – new sports stadiums – lots of interesting older buildings, with new ones mixed in.
Being out of the U.S.A. reprographics industry for now, I’m no longer a competitor of any U.S. reprographer. Nor am I an associate of any U.S. reprographer. I guess this makes me an “outsider.” One thing I have noticed over the past 4 or 5 years at IRgA Conventions – and I think this is unfortunate for the industry - is the growing “clique-ishness” of IRgA members who are members of reprographics industry “sub-groups.” The industry now has four different “sub-groups”:
• ARC folks (ARC management team and ARC folks who work for divisions and subsidiaries)
• ReproMAX folks (R/M management team and the folks from individual independent reprographers who belong to the R/M association)
• RSA folks (RSA management team and the folks from individual independent reprographers who belong to the RSA association)
• PEiR Group members (individual independent reprographers who are members of the ARC-owned PEiR Group)
Years ago, there was a lot more mixing of folks from different industry sub-groups. My observation, this year, is that it’s more a “them vs. us” mentality. ARC’s groups met before the IRgA convention started, ReproMax’s group met after the IRgA convention ended (I don’t know when the RSA group met.) I would like to say this, for whatever its worth (not much, huh)…… IF ONE OF THE MAIN BENEFITS OF ATTENDING AN IRGA CONVENTION IS THE OPPORTUNITY TO DO SOME SERIOUS NETWORKING AND TO LEARN FROM OTHERS (AND TO SHARE WITH OTHERS), then this trend towards “clique-ishness” is terrible. Message: Step out of your clique!; don’t ever think that the members of your clique know everything there is to know!
Okay, enough moralizing for now. Back to my comments about the convention - -
Of the educational breakout sessions at this year’s IRgA convention, the most interesting presentations (of course, this is just my opinion) were the ones given by Jim Ryerson of Sales Octane, Inc. and by KP Reddy of RCMS Group, LLC.
Unfortunately, I attended only one of the two presentations Jim Ryerson gave. (“Hi, I’m Joel Salus, ….and you are?”) I’m planning to follow up to find out more about what Jim’s company offers. The presentation Jim gave (the one I attended) was not just excellent, it was quite thought-provoking. And, it contained actionable information.
KP Reddy (of RCMS Group) gave a thoroughly thought provoking presentation about BIM. In my opinion, KP’s presentation was “worth the price of admission” to this year’s IRgA convention. KP’s presentation was given at 4:00 pm on Friday, last day of the convention and last educational breakout session of the convention – in other words, not a great “time slot” for a presentation – and, because of that, there were probably only 20 or 25 attendees in the room. Given what KP talked about, EVERY REPROGRAPHER IN THE COUNTRY SHOULD HAVE ATTENDED THIS SESSION. The fact that only 20 or 25 people heard what KP said, when everyone at the convention should have heard what KP said, is, in itself, quite interesting to me. Do we in the reprographics business really know what the effects of BIM will be on the reprographics business and industry down the road? Do we not care? Or, is this simply a matter of, “if we don’t want to hear what’s coming down the pike, let’s bury our head in the sand so we don’t have to hear it?” KP’s presentation was so thought provoking that I’m now working on a separate post about “BIM and reprographics.”
Being out of the U.S.A. reprographics industry for now, I’m no longer a competitor of any U.S. reprographer. Nor am I an associate of any U.S. reprographer. I guess this makes me an “outsider.” One thing I have noticed over the past 4 or 5 years at IRgA Conventions – and I think this is unfortunate for the industry - is the growing “clique-ishness” of IRgA members who are members of reprographics industry “sub-groups.” The industry now has four different “sub-groups”:
• ARC folks (ARC management team and ARC folks who work for divisions and subsidiaries)
• ReproMAX folks (R/M management team and the folks from individual independent reprographers who belong to the R/M association)
• RSA folks (RSA management team and the folks from individual independent reprographers who belong to the RSA association)
• PEiR Group members (individual independent reprographers who are members of the ARC-owned PEiR Group)
Years ago, there was a lot more mixing of folks from different industry sub-groups. My observation, this year, is that it’s more a “them vs. us” mentality. ARC’s groups met before the IRgA convention started, ReproMax’s group met after the IRgA convention ended (I don’t know when the RSA group met.) I would like to say this, for whatever its worth (not much, huh)…… IF ONE OF THE MAIN BENEFITS OF ATTENDING AN IRGA CONVENTION IS THE OPPORTUNITY TO DO SOME SERIOUS NETWORKING AND TO LEARN FROM OTHERS (AND TO SHARE WITH OTHERS), then this trend towards “clique-ishness” is terrible. Message: Step out of your clique!; don’t ever think that the members of your clique know everything there is to know!
Okay, enough moralizing for now. Back to my comments about the convention - -
Of the educational breakout sessions at this year’s IRgA convention, the most interesting presentations (of course, this is just my opinion) were the ones given by Jim Ryerson of Sales Octane, Inc. and by KP Reddy of RCMS Group, LLC.
Unfortunately, I attended only one of the two presentations Jim Ryerson gave. (“Hi, I’m Joel Salus, ….and you are?”) I’m planning to follow up to find out more about what Jim’s company offers. The presentation Jim gave (the one I attended) was not just excellent, it was quite thought-provoking. And, it contained actionable information.
KP Reddy (of RCMS Group) gave a thoroughly thought provoking presentation about BIM. In my opinion, KP’s presentation was “worth the price of admission” to this year’s IRgA convention. KP’s presentation was given at 4:00 pm on Friday, last day of the convention and last educational breakout session of the convention – in other words, not a great “time slot” for a presentation – and, because of that, there were probably only 20 or 25 attendees in the room. Given what KP talked about, EVERY REPROGRAPHER IN THE COUNTRY SHOULD HAVE ATTENDED THIS SESSION. The fact that only 20 or 25 people heard what KP said, when everyone at the convention should have heard what KP said, is, in itself, quite interesting to me. Do we in the reprographics business really know what the effects of BIM will be on the reprographics business and industry down the road? Do we not care? Or, is this simply a matter of, “if we don’t want to hear what’s coming down the pike, let’s bury our head in the sand so we don’t have to hear it?” KP’s presentation was so thought provoking that I’m now working on a separate post about “BIM and reprographics.”
Thursday, May 7, 2009
When you consider what the reprographics industry has been facing these past few months, ARC's Q1 2009 results are stunning!
Okay, ARC reported its Q1 2009 results this afternoon, and after looking over the numbers ARC reported, I AM ….. STUNNED! ….., and here’s why I’m stunned.
First, as I’ve previously explained on this blog, I was, until I left the company we sold in December 2007, deeply involved in the reprographics business and industry – and was involved for many years – two different extended careers – and both of the companies I was involved with were fairly sizable enterprises. Second, I’m a financial person by educational background (Accounting/Finance/CPA), and it has always been my habit to look at the performance of companies in the reprographics industry both from a management and strategy perspective and a financial/performance perspective. What I’m trying to point out is that, while I may not be a genius (nor even particularly smart), I do have an excellent understanding of the numbers involved in the reprographics business and industry, and ego aside, I’m probably in the top 5% in the industry regarding those who understand the numbers, including what had to have happened behind the scenes to make the numbers happen.
That out of the way, let me explain why I’m stunned by ARC’s Q1 2009 numbers:
#1 – ARC’s total revenues, Q1 2008 vs. Q1 2009, declined approximately 25%, YET, in spite of that sizeable decline, ARC STILL EARNED A SUBSTANTIAL PRE-TAX PROFIT! Holy cow - - - if you surveyed 100 companies in the reprographics business and asked them, “would you be able to continue earning a profit if your sales very quickly dropped 25%?”, the substantial majority would say, “probably not”, followed by, “please don’t pursue this, because I’m already getting serious heartburn just thinking about it.”
#2 – What makes ARC’s Q1 2009 pre-tax profit performance even more remarkable is the fact that ARC’s “reprographics services” revenue segment declined by nearly 30% when compared to Q1 2008. All reprographics companies have significant investments in their “production centers” (some of us call them “stores.”) And, production centers do require substantial fixed-cost investments. FOR A “reprographics” COMPANY TO EXPERIENCE A 30% DECLINE IN SALES AT ITS PRODUCTION CENTERS, BUT STILL BE ABLE TO EARN A SUBSTANTIAL PRE-TAX PROFIT (NEARLY 10%), IS TRULY REMARKABLE.
I did notice that there was only about a 10% decline in FM sales, YOY, Q1 2008 vs. 2009, and I’m guessing that that “not- so-bad decline” was aided by the “national” FM deal ARC announced, last year, with a very sizeable company, HDR, one of the premier engineering/architecture companies in the U.S. (and a bunch of very nice people, speaking from my own personal experience with HDR.)
#3 - Most reprographers who experience a 30% drop in sales would go from earning profits to realizing losses! Of course this is just my opinion, but I DO THINK THAT ARC’S MANAGEMENT TEAM HAS (AND, HERE, I’M EXTENDING THIS TO ARC’S REGIONAL CEO TEAM AND TO ARC’S DIVISION OPERATING TEAMS HAVE) DONE AN AMAZING JOB AT “RIGHT-SIZING” ARC’S BUSINESS UNITS.
Early this evening, I learned that Morningstar’s analysts had issued an updated report on ARC, so I visited Morningstar’s report on ARC (I am a Morningstar subscriber.) I don’t think that Morningstar’s analysts yet have a firm grip on what a reprographics company is and how the business and industry work.
Here’s a small excerpt from the commentary that Morningstar’s analysts said this afternoon:
“Despite ARC's size, we have a few concerns. First, the construction industry accounted for almost 90% of ARC's revenue during 2008. Not surprisingly, the downturn in the construction industry has hurt demand for ARC's solutions. Second, the firm can be outbid by regional reprographers for smaller jobs that don't require the superior delivery and information flow management that are ARC's forte. On the national level, wide-format printer distributors vie to place and service their equipment at clients' facilities, thus capturing ARC's facilities-management revenue. Finally, the copy and printing businesses with large hub-and-spoke networks can be replicated by other firms, such as FedEx Kinko's FDX.”
Okay, now for my comments about Morningstar’s comments:
a) ARC cannot be outbid by any reprographics firm in the U.S. (or, for that matter, in the world.), unless ARC wants to be outbid. ARC has a cost-advantage over every company in the reprographics business. Evidently, Morningstar doesn’t have a clue about that …or why that is.
b) The industry’s largest wide-format equipment vendor does not compete for FM business in the A/E/C segment in the U.S. This vendor does do that big-time in Europe, but not at all in the U.S. [And, according to that company’s president for wide-format equipment in the U.S., who I do know and did query personally about this particular issue, that vendor has zero plans to compete with reprographers (including ARC) in the A/E/C FM space.] And, the industry’s second largest wide-format equipment vendor does not compete for FM business in the A/E/C segment in the U.S. (or, for that matter, not at all in Europe.) I don’t know what the guys/gals at M’Star are smokin’ (must be some good stuff), but A/E/C firms who truly understand the reprographer-FM concept would not bother to even consider acquiring equipment (from the industry’s equipment manufacturer-vendors) via purchase or lease.
c) Fedex’s Kinko’s business unit is a complete “non-factor” in the A/E/C space. Kinko’s has never been a player in the A/E/C reprographics industry and, unless Fedex hires someone who has significant experience in the A/E/C reprographics space (and, that presumes that Fedex management wants to do that, which I seriously doubt is the case), Fedex’s Kinko’s business unit will continue to be no competition to ARC or the A/E/C reprographics industry overall.
Finally, I’d just like to say that I extend my congratulations to ARC’s management team (not just to the corporate team but to the regional CEO’S and their teams as well) on another excellent quarter. Q1 2009 was, in all likelihood, the most challenging quarter the reprographics industry has faced since the beginning of the Great Depression …. And ARC still managed to earn very decent money. Damn, that’s outstanding performance!
First, as I’ve previously explained on this blog, I was, until I left the company we sold in December 2007, deeply involved in the reprographics business and industry – and was involved for many years – two different extended careers – and both of the companies I was involved with were fairly sizable enterprises. Second, I’m a financial person by educational background (Accounting/Finance/CPA), and it has always been my habit to look at the performance of companies in the reprographics industry both from a management and strategy perspective and a financial/performance perspective. What I’m trying to point out is that, while I may not be a genius (nor even particularly smart), I do have an excellent understanding of the numbers involved in the reprographics business and industry, and ego aside, I’m probably in the top 5% in the industry regarding those who understand the numbers, including what had to have happened behind the scenes to make the numbers happen.
That out of the way, let me explain why I’m stunned by ARC’s Q1 2009 numbers:
#1 – ARC’s total revenues, Q1 2008 vs. Q1 2009, declined approximately 25%, YET, in spite of that sizeable decline, ARC STILL EARNED A SUBSTANTIAL PRE-TAX PROFIT! Holy cow - - - if you surveyed 100 companies in the reprographics business and asked them, “would you be able to continue earning a profit if your sales very quickly dropped 25%?”, the substantial majority would say, “probably not”, followed by, “please don’t pursue this, because I’m already getting serious heartburn just thinking about it.”
#2 – What makes ARC’s Q1 2009 pre-tax profit performance even more remarkable is the fact that ARC’s “reprographics services” revenue segment declined by nearly 30% when compared to Q1 2008. All reprographics companies have significant investments in their “production centers” (some of us call them “stores.”) And, production centers do require substantial fixed-cost investments. FOR A “reprographics” COMPANY TO EXPERIENCE A 30% DECLINE IN SALES AT ITS PRODUCTION CENTERS, BUT STILL BE ABLE TO EARN A SUBSTANTIAL PRE-TAX PROFIT (NEARLY 10%), IS TRULY REMARKABLE.
I did notice that there was only about a 10% decline in FM sales, YOY, Q1 2008 vs. 2009, and I’m guessing that that “not- so-bad decline” was aided by the “national” FM deal ARC announced, last year, with a very sizeable company, HDR, one of the premier engineering/architecture companies in the U.S. (and a bunch of very nice people, speaking from my own personal experience with HDR.)
#3 - Most reprographers who experience a 30% drop in sales would go from earning profits to realizing losses! Of course this is just my opinion, but I DO THINK THAT ARC’S MANAGEMENT TEAM HAS (AND, HERE, I’M EXTENDING THIS TO ARC’S REGIONAL CEO TEAM AND TO ARC’S DIVISION OPERATING TEAMS HAVE) DONE AN AMAZING JOB AT “RIGHT-SIZING” ARC’S BUSINESS UNITS.
Early this evening, I learned that Morningstar’s analysts had issued an updated report on ARC, so I visited Morningstar’s report on ARC (I am a Morningstar subscriber.) I don’t think that Morningstar’s analysts yet have a firm grip on what a reprographics company is and how the business and industry work.
Here’s a small excerpt from the commentary that Morningstar’s analysts said this afternoon:
“Despite ARC's size, we have a few concerns. First, the construction industry accounted for almost 90% of ARC's revenue during 2008. Not surprisingly, the downturn in the construction industry has hurt demand for ARC's solutions. Second, the firm can be outbid by regional reprographers for smaller jobs that don't require the superior delivery and information flow management that are ARC's forte. On the national level, wide-format printer distributors vie to place and service their equipment at clients' facilities, thus capturing ARC's facilities-management revenue. Finally, the copy and printing businesses with large hub-and-spoke networks can be replicated by other firms, such as FedEx Kinko's FDX.”
Okay, now for my comments about Morningstar’s comments:
a) ARC cannot be outbid by any reprographics firm in the U.S. (or, for that matter, in the world.), unless ARC wants to be outbid. ARC has a cost-advantage over every company in the reprographics business. Evidently, Morningstar doesn’t have a clue about that …or why that is.
b) The industry’s largest wide-format equipment vendor does not compete for FM business in the A/E/C segment in the U.S. This vendor does do that big-time in Europe, but not at all in the U.S. [And, according to that company’s president for wide-format equipment in the U.S., who I do know and did query personally about this particular issue, that vendor has zero plans to compete with reprographers (including ARC) in the A/E/C FM space.] And, the industry’s second largest wide-format equipment vendor does not compete for FM business in the A/E/C segment in the U.S. (or, for that matter, not at all in Europe.) I don’t know what the guys/gals at M’Star are smokin’ (must be some good stuff), but A/E/C firms who truly understand the reprographer-FM concept would not bother to even consider acquiring equipment (from the industry’s equipment manufacturer-vendors) via purchase or lease.
c) Fedex’s Kinko’s business unit is a complete “non-factor” in the A/E/C space. Kinko’s has never been a player in the A/E/C reprographics industry and, unless Fedex hires someone who has significant experience in the A/E/C reprographics space (and, that presumes that Fedex management wants to do that, which I seriously doubt is the case), Fedex’s Kinko’s business unit will continue to be no competition to ARC or the A/E/C reprographics industry overall.
Finally, I’d just like to say that I extend my congratulations to ARC’s management team (not just to the corporate team but to the regional CEO’S and their teams as well) on another excellent quarter. Q1 2009 was, in all likelihood, the most challenging quarter the reprographics industry has faced since the beginning of the Great Depression …. And ARC still managed to earn very decent money. Damn, that’s outstanding performance!
CONTEST WINNER!
ARC JUST REPORTED ITS Q1 2009 SALES .... AT $139.5 MILLION
THE CONTEST WINNER IS JOHN SCHER ZELLER, A REPROGRAPHICS INDUSTRY VETERAN OF MORE THAN 40 YEARS, WHO RETIRED JUST A FEW YEARS AGO. JOHN'S GUESS WAS THAT ARC'S Q1 2009 SALES WOULD BE $135 MILLION. HIS GUESS WAS CLOSEST TO ARC'S ACTUAL Q1 2009 SALES.
CONGRATULATIONS JOHN!
THE CONTEST WINNER IS JOHN SCHER ZELLER, A REPROGRAPHICS INDUSTRY VETERAN OF MORE THAN 40 YEARS, WHO RETIRED JUST A FEW YEARS AGO. JOHN'S GUESS WAS THAT ARC'S Q1 2009 SALES WOULD BE $135 MILLION. HIS GUESS WAS CLOSEST TO ARC'S ACTUAL Q1 2009 SALES.
CONGRATULATIONS JOHN!
Tuesday, May 5, 2009
Contest to GUESS ARC'S Q1 2009 SALES REVENUES - no more entries!
Okay, no more entries permitted to the “Guess ARC’s Q1 2009 Sales” Contest!
Guesses at ARC’s Q1 2009 Sales ranged from a low of $119.4 million to a high of $159.5 million. That, readers, is a very large gap. (The guy who submitted the low number has to be smokin’ some REALLY good stuff! – I think he’s way off the mark.)
Just as a reminder, ARC’s Q1 2008 Sales were right around $187 million.
Okay, now I’m going to weigh-in with my guess …. at $157 million.
Thank you to all who entered the contest, and, good luck, ARC will be reporting its Q1 2009 Sales very shortly.
Guesses at ARC’s Q1 2009 Sales ranged from a low of $119.4 million to a high of $159.5 million. That, readers, is a very large gap. (The guy who submitted the low number has to be smokin’ some REALLY good stuff! – I think he’s way off the mark.)
Just as a reminder, ARC’s Q1 2008 Sales were right around $187 million.
Okay, now I’m going to weigh-in with my guess …. at $157 million.
Thank you to all who entered the contest, and, good luck, ARC will be reporting its Q1 2009 Sales very shortly.
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