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By Jeff Pett, Fleetwood Group

It’s mid-July and the country is experiencing the worst drought since 1955 according to the news broadcasts. This morning here in west Michigan we had a nice rain, the first in almost four weeks. We did not get enough rain to declare the end of the drought, but maybe it’s a first sign of turning.  It does give everyone a bit of hope.

In the K-12 Furniture and Equipment manufacturing world we have been experiencing the worst sales-drought in memory for three-plus years. During our fiscal 4th quarter, January through March, our order inbox was particularly parched. But since April 1, our fiscal new year, we have seen a nice uptick in our incoming orders and are having a busy summer as a result.  It’s not enough to declare the end of the sales-drought, but maybe, just maybe, it’s a good first sign of a turn in the business.

Yes, there are lots of negative signs out there yet, but take a look at state coffers and you can see that many have significant upticks in their cash on hand. That money comes from taxes, and increased tax income is from companies doing more business and workers earning more money. It has been slow, but it has been happening. Schools get a significant portion of their operating money from their home state, and there is some reason to believe that we have passed the bottom for many state’s income woes.

I know it’s just a glimmer of hope, but we are all so ready for the end of the drought that any positive sign is welcome! Hope you are also seeing some good signs in your business this summer that point to the end of your sales-drought! 

Slow – And Intense

By Jeff Pett, The Fleetwood Group

In a past life I worked for a company that manufactured original equipment for the auto industry.  While there were always plenty of things to work on improving in that industry, one thing we did have was plenty of market data.  Every Monday morning we would pour over the latest inventory numbers… for every maker, and every model on every lot in every state.  Sales were tracked each week and month and adjusted for the seasonal impact – called SAAR, for Seasonally Adjusted Annual Rate of sales.  And all inventories of cars were expressed in terms of days-on-hand.  So as the rate of sales changed in addition to the actual supply of vehicles, that key measure would reflect it.  The “ideal” seemed to be 60 days on hand.  A little higher and we could expect some downward adjustment in the call for our parts.  A little lower and we could predict an uptick in our sales.  And if that number got up over 100 days-on-hand you could predict a halt in our orders as well as an advertising blitz and rebates pushing that model.

Ah, those were the good ole’ days!

My boss recently asked me for a solid projection of our school furniture sales for the next 14 months.  I am a planner, and I love being able to put together a good sales projection as much as the next person.  But all I really have to rely on for data points are the results and forecasts of a couple of publicly held companies in our industry, and the input we get from our dealers in each state.  The problem is that our dealers are pretty much made up of good sales people, and we all know that sales people are almost terminally optimistic.  And I wouldn’t have it any other way!!  But we can’t see much past the next couple of months let alone the next couple of quarters.  So as an industry we aren’t the best prognosticators.

So how is business?  I’ve begun telling people that sales are slow and the work is very intense.  We’ve never worked so hard to be everywhere we need to be to both know about, and have a shot at, the reduced number of business opportunities that are out there.  We are blessed with a great sales team both inside and out, and our dealer network is excellent.  We are getting our share of opportunities. 

But, how is business? It is slow and intense!

By Jeff Pett, Fleetwood Group

One of my favorite parts of this job is when I get into school buildings and talk to teachers and administrators.  We can get so caught up in the nuts and bolts of supporting education as businesses that we drift into our own worlds and forget what we are really supporting.  There is nothing like a stroll down a school hall, seeing the staff doing the work of teaching our kids, to bring it all back into perspective.

A couple of weeks ago I had another opportunity to do just that.  I was in Tuscaloosa, Alabama for a visit to Holt High School.  We had been asked to help with an “extreme makeover” of a band room there in November, and we were doing a follow up visit to talk to the staff about how it all went and to see how our Harmony instrument storage product looked in the room.  It turned out to be an even better visit than I could have anticipated, and the story behind it all was so good we made a video short out of it.  (If you would like to see the video, go to YouTube and search for “Fleetwood Group Rachael Ray”.)

What really struck me beyond the whole extreme makeover story were the stories of that community, the high school and the staff we talked to.  Now, you have to know first of all that this is small town America, population just over 4,000.  The town was once a prosperous small community built around a steel foundry, but has since fallen on hard times.  Set in geographically beautiful rolling, woody hills, Holt is now a poorer community struggling to overcome the devastation of the tornado that ripped through it last April.  And yet, you would not get a sense for any of that by talking to the staff there.  They are upbeat, positive and working hard to make their school a great place for the  students in that community.

The principal, Neal Guy, is a graduate of Holt High School, as is the second year band director, Dwight Caddell.  Neal married the local legendary high school football coach of over 40 years whose picture is framed on the wall just inside the main entrance to the building.   Just inside the office door is a memorial plaque to the 14 people in that community who lost their lives on April 27 last year to the tornado.  You have to love seeing people who grew up in a community come back to make a difference in the local school.  You have to really love seeing that happen in a poor community like Holt.

Donna Niblett is the special ed teacher who got the whole ball rolling with the Rachael Ray makeover by entering a contest.  Here again is another local saint who has dedicated her professional career to helping the kids and staff of a poor school.  She is not a band teacher, or involved in the music program, but here she is jumping at an opportunity to do something positive for Dwight and the band students and for Holt High School in general.

None of these three individuals has to be at Holt High School.   They choose to be at Holt doing what they can in some small way to make a difference in the lives of the students and the community.  And they represent so many others who commit their lives to education in our country.  It was great to be able to visit with them and help keep our business world in perspective.  Thank you to all the Neals, Dwights, and Donnas out there who strive daily to make our schools work.

By Jeff Pett, Fleetwood Group

This year’s NSSEA Furniture and Equipment show is fading in our memories as we head into the holidays and gear up for the New Year.  The show was a good one for us… our booth was full most of the time and we had a lot of fun new stuff to show off.  We even made a YouTube video tour of our booth this year which allowed those who could not make it to San Antonio to see what we were displaying.  (Check it out by searching for Fleetwood Group on YouTube.)  It was a good way to close out 2011.

Is everyone as ready as I am to move on, to leave 2011 behind?  My sense is that most of us in this industry are a bit fatigued.  This was another tough year.  It’s been a long down-cycle, hasn’t it?  By my count it has been two and a half years since the wind came out of our sails/sales. 

What will 2012 have in store for us?  Most people we talked to at the show seem to think that next summer will look a lot like last summer.  Then the summer of 2013 will “take off”.  I’m now in my sixth year in this business which is probably less than 1/3 of the average tenure of all of you, but long enough to have figured out that business forecasting is not our strength.  I heard very similar forecasts last year at about this time.  Our industry seems to be a trailing indicator of the economy – – that is, we peter out months after the economy in general does, and we kick it back into gear months after everyone else is out buying cars and boats.

There is some good news in our business, however.  The number of students continues to go up, and parents generally want to spend money to assure their kids have good schools.  States are beginning to figure out how to fund schools better and there are bonds passing at an increasing rate in pockets around the country. Communities are better when there are good schools in them, and people want to move into those communities.  Employers like to have good local schools in order to attract the best talent to work for them.  Aging pieces of furniture and equipment that have been nursed along to last a few more years will eventually have to be replaced.  In our industry, a long down cycle suppresses demand, it doesn’t eliminate it.  This business will come back.  And I believe it will come back strong.

Will it be this year?  It is an election year, after all, and those seem to be magically better financial years than most.  Even here in Michigan a lot of industries have been hiring and the national unemployment numbers are beginning to show signs of improvement.  So as a trailing indicator maybe our industry is getting ready to join the trend.  Whether that happens in 2012 or 2013, take heart!  This is an industry that will come back, maybe stronger than ever.

Meanwhile, enjoy the holidays with family and friends!  Here’s to a Happy New Year for all of us!!

Occupy….. What?

By Jeff Pett, Fleetwood Group

We have heard a lot lately about “the 1%”, and “the 99%”, the “9-9-9 plan”, and who makes how much, and who pays more taxes, and who should pay more, and on and on and on.  It’s enough to make your head spin, and is more than a little hard to follow.  I don’t think I’m alone when I say that I have had a hard time getting a real grasp on what the “Occupy” movement is trying to achieve.  Even some of my quite-left-leaning friends refer to it as having “a fuzzy agenda” and, as such, cannot support them.

My take on it is they are unhappy with two things: the people with a lot of money are making too much, and corporations are getting too much “corporate welfare.”

While I don’t agree that anyone should have their income potential limited (why would we put handcuffs on the Steve Jobs of the world?), I do agree on the corporate welfare thing.  As much pain as we’ve been through the past few years I tend to think that there should have been no such concept as “too big to fail.”  Had we allowed the strong corporations to survive and the errant ones to die, it might have been very painful for a shorter period of time, but we might already be looking back at the painful times instead of wondering when they will end.  All those corporate moguls of the companies that would have been allowed to die would have been properly “rewarded” for their poor leadership, and it would have been a wakeup call to business leaders and investors at all levels that you really can lose it all.

The Occupy movement has gotten me thinking more about the tax burden we have saddled ourselves with, too.  Yes, ourselves.  We elect people to represent us, and we donate money to organizations that lobby those elected officials to try to influence their votes in our favor.  And so, in the end, we have met the enemy, and it is us.  We need to be more personally involved in the system to make it change.

I have heard it said more than once recently that over 50 percent of the US population does not pay any federal income tax.  That can’t be good.  What nongovernmental organization in the world gives you free membership?  If what they say is true, the bottom 50 percent have full membership privileges in the USA club, but pay no dues.  We don’t tend to put much value on things that don’t cost us anything, right?  So this is really unhealthy, both for those paying $0 and for the country.  It seems to me that everyone should pay at least a minimum federal tax, even if that is only $100.  Then every citizen would have some skin in the game and would likely value their citizenship that much more. 

I did a little online research on taxes and pulled these facts off the National Taxpayers Union website (all figures are for 2009):

  • The top 1% of income earners paid 36.7% of all federal income taxes.
  • The top 5% paid 58.6% of all federal income taxes.
  • The top 10% of income earners paid 70.5% of all federal income taxes.
  • The top 25% of all income earners paid 87.3% of our federal income taxes.
  • The bottom 50% in terms of income level paid only 2.3% of all income taxes that the federal government collected.

What do all those stats tell me?  Mainly that our tax system already taps the top 5% heavily.  Our system is quite “progressive”, that is the more you make the higher portion of your income you pay to the government.  The top 10% of all income earners already pay over 2/3 of the income tax revenue collected to run our government. 

The Occupiers are frustrated, and I get that.  Times are not good, so jobs are less plentiful and making ends meet has never been tougher in our lifetimes.  But I think their anger is misguided, and their agenda is too “fuzzy” to get anything done to help our situation.  Here are some of my suggestions to redirect the energies of the Occupy people:

  • Rather than vilifying the “1%” maybe we should be “Occupying” the White House and the Capital for putting tax loopholes in that allow businesses and individuals to reduce their taxable incomes, and for spending more than they are taking in;
  • Maybe we should be insisting on a government tax freeze (no new taxes and no tax cutting!), and task them with “doing more with less” as all of us in non-government jobs have been forced to do for a decade or two;
  • Maybe we should task our lawmakers with cutting each year’s budget to spending no more than 95% of revenues until the payments on our debt load is less than 15% of our annual revenue;
  • Let’s insist on eliminating the practice of projecting savings several years out.  Savings have to occur in the current budget year;
  • And let’s task them with no new spending plans without offsetting expense cuts elsewhere.

I’m not smart enough to know which tax code option is best.  Throwing out the whole system may be throwing the baby out with the bath water.  The Occupy people and the Tea Party people, whether you love them or hate them, know the status quo is hurting all of us.  Each of us has a responsibility over the next 12 months to get involved, or Occupy, the system in a way that brings about meaningful change.  Don’t sit this one out.

By Jeff Pett, Fleetwood Group

Last week I had the opportunity to chat with an architect who is serving on a committee of sorts tasked with thinking through school design for the federal government.  It seems the government is taking a little heat for not walking the talk of educational standards when it comes to schools for families of our service men and women.  As many schools as there are on military bases around the globe, and with many of them being very old and outdated, these architects have been tasked with thinking through how new school buildings should be designed to deliver 21st century learning before the government launches into a slew of rebuilding/renovation projects.

The phrase “21st century schools” is already getting a little overused, and there is a whole cottage industry of consultants who claim to be able to guide schools to this Promised Land.  Those of us providing products and services of various kinds to schools are always trying to figure out where trends in delivering education are going so we can help create the best environment to make that happen.  For those of us at Fleetwood Group that means furniture and electronic audience response keypads.

One thing that piqued my interest early in this chat was the statement that they are working to keep the learning spaces as flexible as possible.  I think that is wise.  Our company has been dedicated to making learning spaces flexible since it was established in 1955 building mobile cabinets.

The challenge, though, in school design goes beyond the simple decision to use flexible furniture and casework.  It really falls into 4 components:

1.    Flexibility in the building (brick & mortar)
2.    Flexibility in the furnishings (casework, storage, student tables)
3.    Flexibility in the curriculum (books, media, delivery methods)
4.    Flexibility in the teaching staff/methodology (teaching solo or on a team, support staff, delivery options)

Will teaching always be delivered, primarily, by one teacher to a relatively small group of students?  Or will it be determined to be best if multiple teachers work with larger groups of students in bigger spaces?  If the latter is the case, then will schools gravitate to creating buildings with fewer small rooms in favor of larger rooms?  The answers to those questions will have huge implications for school design.

Frankly, keeping the furniture flexible might be the easiest component of the four listed above.  If you make a decision to build a school with gathering spaces of differing sizes and shapes with NOTHING “built in” — putting every cabinet, teacher’s desk, student table, lab station, book shelf, locker and technology cart on wheels — your school will be the ultimate in physical flexibility and adaptability going forward for decades.

The least flexible component of those four is the brick and mortar.  You can keep the design concepts super flexible until the day you start pouring the cement.  At that point you have narrowed, to some extent, the flexibility in your school design.

With all of those variables to consider it can start to seem like one of those story problems we all loved back in school.  At some point, though, you have to “paint or get off the ladder.”  Decisions must be made.  I heard one architect describe school design in a way that makes it a little simpler in my mind: he said to think of schools as an assembly of “caves and commons”.  That is, smaller spaces and bigger spaces.  The mix of spaces will be determined based on what the school is trying to achieve with a particular building, and there is no one-size-fits-all concept.

In the 50s and 60s schools were primarily “caves”, that is they were a line of rooms on either side of a long hall.  Add a library and a multipurpose room (gym & cafeteria), the “commons” spaces, and you have your school.  In those days architects weren’t needed much, and school boards often launched new school buildings with little outside input.

In the early 1970s we were sold the “open classroom” concept where there were as few walls as possible inside of these new schools.  They were designed with mostly “commons” spaces and very few “caves.”  I was an education student in college back in those days and I remember well a local school that went that route.  It was an exercise in chaos!  Within a couple painful years the school board brought the construction people back in to add walls and return to the comfort of “caves”.   We do not want to go back there, I would submit.

My recommendation to school boards, school administrators and architects is to provide a mix of caves and commons spaces somewhere between the 1960s version of all caves, and the 1970s all commons, while keeping the furnishings unattached.  The big question for individual schools to decide is that mix of types of spaces.  I don’t think a one-size-fits-all answer is out there.  There is no single “21st Century” school design.  We are definitely trending toward less cave-based learning, but there will always be value in being able to work with a smaller group of students behind a closed door.  Ideally curriculum and how it is delivered should be the key determinant for how a particular school is laid out, but that is in a state of unprecedented flux right now with schools trying to keep up with the pace of technological change.  We might have to accept the added up-front cost of planning school buildings to be at 80% of capacity max so that whatever mix of caves and commons you go with your educators will still have some elbow room to make changes over time.

One thing that can be done today in every new or refurbished school that would help keep a building adaptable for a longer timeframe is to keep the furnishings as mobile as possible, building in as little as possible.  That way whatever spaces you have will always be able to be easily repurposed for tomorrow’s as yet unknown needs at minimal expense.

By Jeff Pett, Fleetwood Group

I had an old lesson, learned long ago, and brought home again to me recently that I’d like to share with you.

Last week our entire sales team was back at the home office in Holland, Michigan for the first time in several months.  We have been trying to reduce our travel costs, so rather than meet here every month, as we have in the past, we opted this year to go to an every other month, or even a quarterly schedule.  It felt like the right thing to do when we set it up last spring, and we increased the use of online tools like Skype to help feel like we were together.  But I think we may have lost more than we gained in the process.

Not because our day here was sub par.  In fact we had a good day of working through the details of selling into our education market.  It’s amazing how many things there are to cover when you haven’t been meeting regularly.  While we did not agree about everything (when does a room full of sales people ever fully agree on anything?!), the discussions/debates were good and we came out of the day with a much better sense of unity on who needs to do what by when.

What did we lose by not meeting more often?  The sense of “team” gets strained, for one thing, when people are not face-to-face as often.  And sales people who are in different regions of the country can start to feel like they are out there all on their own before too long.  Being back in the office allows for both the hard work of sales “nitty-gritty” along with the informal exchange of stories and laughs that strengthens the bonds of a team.  And the interface with the engineering and manufacturing sides of the business do not happen as well or as efficiently as they do when the interchange happens face-to-face.

The day we had here last week was a very good day of work with a lot of catching up and following up, but the lesson that really came home to me was that we need to be in the same room more often than we have been recently.  We just haven’t had enough of this kind of focus on the job at hand this year.  The money that can be saved by not traveling is easy to account for and may feel good in the short term, but the longer term hidden costs of lower team effectiveness might be costing you more than you think.  There is a lot of value in “huddling” together on a regular basis.  It is good for our sales team, and it is good for our business.  And that is a good lesson to remember.