Architectural woodworkers: holding their ground in a lean economy.

ARCHITECTURAL WOODWORKERS

HOLDING THEIR GROUND IN A LEAN ECONOMY

Construction rates are falling; there is a glut of office space. Competition is mean. How are architectural woodworking companies surviving? The architectural woodworker -- 1991 edition. Who is he? Where is he working? What are his concerns? And above all, how is his business? In a depressed economical climate, with declining construction rates and much corporate belt-tightening, how is the architectural woodworker faring?

WOOD & WOOD PRODUCTS attempted to learn the answers to these questions in our fourth annual survey of the architectural woodworking industry. Fifty-six major companies were contacted and 34 responded. From figures supplied by these companies, W&WP's Top 25 list was compiled.

The Minton Co., a Top 25 company for the past two years, no longer provides millwork but has become a door distributor. Three former Top 25 companies were not active in business during 1990, and their current status is unknown. Officials could not be reached to verify rumors of closings and/or Chapter 11 proceedings. A spokesman for another former Top 25 company said, "Our policy has changed," and declined to provide information.

Because his work varies from finished cabinetry, case goods and millwork to upholstery and store fixtures, and encompasses solid wood, particleboard and MDF, glass, stone, leather, fabric, metalwork, plastic laminates, solid surfacing and veneers, the architectural woodworker has had to become a jack-of-all-trades. This may be a clue to his survival.

Accordingly, several Top 25 architectural woodworkers are not only members of the Architectural Woodwork Institute, but also members of the National Association of Store Fixture Manufacturers. They include: Bernhard Woodwork, Columbia Showcase and Cabinet, Goebel Fixture, Hamilton Fixture, Imperial Woodworking and Standard Cabinet Works.

Sales of $482 million

If a typical architectural woodworking company were to be selected on the basis of its 1990 projects, it would be Nacoma Consolidated Inc., Nacogdoches, Texas. According to figures in this year's survey, the average architectural woodworking company's projects, like Nacoma's, were 85 percent commercial, 10 percent institutional and 5 percent residential.

Saleswise, Nacoma would be atypical. Three years out of four, Nacoma has ranked among the Top 25 architectural woodworkers in North America based on annual sales. This past year, Nacoma reported sales in excess of $11 million. In the United States, more than half of all architectural woodworkers have annual sales of less than $1 million, according to Greg Heuer, director of member services for AWI.

During 1990, W&WP's Top 25 architectural woodworking companies had total sales of $482.1 million. Of that amount, $412.4 million represented commercial installations, $40 million was institutional work and $26.8 million, residential. A total of $2.9 million, less than 1 percent of the total, was for work in the industrial category.

The economy -- first, the good news

Apparently, the depressed economy, falling construction rates and 1990's collapsing real estate market did not affect the Top 25 to the same degree as other industries dependent on new construction. Of 18 companies on last year's Top 25 list which are included again this year, seven maintained the same sales volume they had in 1989, three showed decreases and the remaining eight companies showed healthy increases: Valley City, 80 percent; Roger B. Phillips, 66 percent; Goebel Fixture, 57 percent; Parenti & Raffaelli, 22 percent; Hamilton Fixture, 10 percent; Standard Cabinet Works, 15 percent; L. Vaughn, 12.5 percent; and Interior Woodworking, 12 percent.

"Our industry isn't impacted by the economy the way residential builders are," Heuer said. "Most AWI members are high-end, premium architectural woodworkers building for the upper echelon business world. Their projects are primarily board rooms, executive offices and premium, high-end residential work.

"If corporations are not building, they are renovating," Heuer added. "If an office becomes outdated, a company will not necessarily build a new one -- lease terms are very good right now. Instead, the architectural woodworker's client may opt for a face-lift of the existing board room and the president's office."

Renovation is the key to at least one company's success. Lou Mayta of Mayta & Jensen, San Francisco, reported that his company completed $22 million in remodeling contracts for their upscale clients. That amounted to nearly 90 percent of the company's sales during 1990. In the metropolitan Chicago area, Gene Barsanti of Barsanti Woodwork Corp., said remodeling accounted for 65 percent of his sales. Interior Woodworking of New Paris, Ind., a division of Stow & Davis, captured $11.1 million in renovation work.

Large-scale residential architectural woodworking projects seem to be at the end of the spectrum where the state of the economy is not a critical factor. Last year, projects by Mayta & Jensen comprised $5 million in residential work; Midhattan Woodworking of Old Bridge, N.J., $4 million; Parenti & Raffaelli of Chicago, $3.5 million; and Creative Woodworking of Brooklyn, N.Y., $2.8 million.

The economy -- part two

The individual architectural woodworker does have strong concerns, however, about the economy's effect on bidding, securing and financing jobs:

* "The normal customer is far more conservative than usual. The market is tighter and much more competitive. People who are undercapitalized are under more pressure," said Pete Carden, national sales manager of Hamilton Fixture.

* Those who buy price, not quality, are burning the industry, according to Joe Sorelli, executive vice president of Creative Woodworking. "Companies are out there who say they are woodworkers, but are not. They are merely brokers, who know basically nothing of woodwork, but will take a job and farm it out or buy it out from various small woodworking shops they can pressure into the lowest prices."

* "Cash flow is a very big problem," said Rick Ziegelmeier of Haggerty Millwork. "We are very careful about the companies we work with to make sure they can pay their bills."

* Competitors with limited plant capacity and facilities, little or no equipment, plant and administrative expertise, and inadequate financing are bidding jobs and running the prices down, said John Mielach, president of Mielach/Woodwork. "And because of the economy, contractors, construction managers, architects, designers and owners have thrown out the old norms of pre-qualifying and pre-selecting like bidders for similar work and are reaching wherever they can to get lower bids."

* In Chicago, a six-month to one-year glut of office space is forcing management companies to fight for tenants. They offer all kinds of inducements to attract tenants, like free rent, improvements and new fixtures. The management companies then try to recoup by trying to get lower prices on remodeling bids, according to Bob Parenti of Parenti & Raffaelli.

More expertise

The architectural woodworker has to have more expertise than anyone else in the construction industry and to know more about other peoples' jobs, said Carl Morante, executive vice president of Frederick Schill & Co. of Edison, N.J. The architectural woodworking company is taking on more responsibility as interior contractors -- work which includes sheet rock, glass and marble installation. "I wouldn't even be surprised to see wall coverings and painting in a contract," he said.

"Construction managers are taking on engineers out of school with no experience," Morante continued. "They are numbers people. They haven't had time to learn how to build buildings. They can't solve problems.

"That's where the architectural woodworker can come in. People already look to him for direction. As an interior contractor, he can be there for questions and make decisions regarding grey areas between trades," Morante said. "He can install the glass, the marble and the pre-machined doors as well as anyone else -- and pocket the markup, too."

Coping with a boost from computers

The modern woodworker has turned to computers and CAD systems to gain an edge in the marketplace. Goebel Fixture Co. has added six CAD stations to the four in use to quickly "ram-up to speed on new projects." The system is especially accurate for the curved perimeter work specified by department store designers, said Dick Goebel, director of engineering. "The CAD system not only helps lay out walls accurately, but reduces assembly time in the shop as well. We had to do tapered column enclosures and all the parts were machined perfectly the first time with the CAM system and CNC router. We wonder now how we ever got along without these equipment additions," Goebel said.

Additional computers and systems were also added by Columbia Showcase and Lank Woodwork. Steve Garvis of Garvis Architectural Woodwork, said mills need to become more knowledgeable about using computers for estimating, managing plant capacities and inventories and scheduling. "No one can afford to fly by the seat of his pants when figuring time and costs," he said.

Skilled labor

A year ago, W&WP queried 50 architectural woodworking executives about the topics that concerned them most. Finishing regulations, hazardous waste disposal and a lack of skilled workers were their prime concerns.

According to AWI's Heuer, the number one concern is still finding skilled labor, training fine craftsmen and developing journeymen cabinetmakers. "I can speak with 99 percent assurance when I say in 10 years there will be no one left out there to create fine craftsmanship," he said. "Our finest craftsmen over the last 40 years were from Germany and Italy. That pool is drying up.

"I foresee wild growth in Europe in the next 12 to 14 years. We won't have immigrants coming to America to be cabinet-makers," Heuer predicted. He said that AWI is trying to offset this lack of skilled labor with its four-year apprentice training programs that have been approved by the Department of Labor. (For information, contact AWI at [phone].)

Regulations

State and federal regulations, particularly in regard to finishing, are increasing the cost of the final product by adding more steps to the finishing process, said Jack Heydorff of Architectural Woodworking. Kenneth Bowen of Roger B. Phillips added that water lacquers have not solved the problem because they are difficult to work with, take 20 to 30 percent longer drying time and are more costly. It is only a matter of time before the rest of the nation has the same air quality regulations that California has enforced, said Wayne Noecker, Northwestern Showcase.

1990 projects

Architectural woodworkers said the busiest areas last year were Hawaii, the Pacific Northwest and California, Vancouver, B.C., Chicago, New York City, Minneapolis, Boston, Orlando and Washington, D.C. According to the survey respondents, business in the Southwest is picking up, but the boom in Las Vegas is over, at least until 1992.

A lavish project was completed last year by Lank Woodwork Co., Washington, D.C., for Clyde's restaurant. The 10,000-square-foot space is richly decorated with traditional millwork, including more than three miles of mahogany mouldings on ceilings, columns and banquettes. A 52-foot bar, in white oak and mahogany, includes whimsical details such as hand-carved cat heads.

Six floors of Koto veneer were installed for a Los Angeles law firm by Architectural Woodworking Co., Monterey Park, Calif. McDonald's corporate headquarters and university were "a woodworker's delight," according to Barsanti who furnished quarter sawn oak, ash panels and maple banding for the project.

Wigand Corp., Colorado Springs, shipped by container the components for a $5 million luxury hotel in Hawaii. The project included four species -- red oak, white oak, sapele and koa -- and up to nine steps of finishing for its complex grand staircase and numerous turning and carvings.

PHOTO : At left, Goebel Fixture Co. handled the perimeter fixtures in a new 300,000-square-foot Dayton's store in the Southdale Mall, Minneapolis.

PHOTO : Mielach/Woodwork used plain sliced East Indian rosewood for this Michigan Avenue residence in Chicago.

PHOTO : Mayta & Jensen renovated this full-floor condominium located on San Francisco's Nob Hill. The living room, viewed here from the entry foyer, features new moulding and lighting and a completely restored stained glass ceiling.

PHOTO : The headquarters for Henry Crown & Co. in Chicago, done by Imperial Woodworking, feature special stile and rail doors of Australian quarter cut lacewood with glass and brass inserts.

PHOTO : The interior of the Meyerson Symphony Center in Dallas, done by Valley City, featured matched blueprint paneling made from 200,000 square feet of drape makore veneer which came from one log, framed with American cherry and highlighted with brass strips.