Working at home; but is she happy?

www.smallbizpod.co.uk

Not many years ago all of the research indicated that there were few, if any, downsides to telecommuting. It made employees happy; they worked harder; and the company might save some office space. But now companies like AT&T, HP and Intel seem to be changing their minds. According to Deb Perelman writing in Eweek.com, "Sixty-one percent of executives surveyed in January 2007 by Korn/Ferry International … said they saw career stagnancy among telecommuting workers. Nearly half of CIOs felt that remote employees' quality of work suffered due to reduced in-person contact with colleagues, and one-third said that these employees were less productive due to a lack of supervision…." Organizations gave different reasons for rethinking telecommuting. Perelman writes, "AT&T and HP, a company said to have invented flextime, both said it was to consolidate operations. Intel reported that it was to improve team relations through increased face-to-face interactions. And the federal government cited security worries from laptop theft to hackers on wireless networks …." "Work-life balance—originally seen as one of the boons of telecommuting—had been cited by others as something that could be hard to maintain when working from home." According to one study, "remote employees found it more difficult to disengage from work and tended to work longer hours due to the lack of boundaries between work and home life. He [the researcher] suggests that remote employees set routines and make clear to managers when they are not available." Note that fast rising gasoline prices will increase the workers’ interest in telecommuting, but the management concerns described above will still stand. How this ultimately shakes out cannot be known at this point.

The Fed would like to hold interest rates at the current level for a time in order to evaluate inflation. Overly aggressive rate cuts in some economic circumstances can lead to faster inflation six to 18 months later. A Reuters article reporting on an interview with San Francisco Federal Reserve Bank President Janet Yellen says, "U.S. interest rates have now been cut to the right level to bolster the economy and will need to be raised in a timely fashion as growth picks up." Doing a classic piece of Fed posturing, Yellen notes, "a rate hike would be a sign that the economy had picked up, but that further weakness before then would not be a surprise, nor make an automatic case for more rate cuts." So, those borrowing for commercial real estate projects should not assume the Fed will cut interest rates automatically if there are isolated indications of economic weakness. On a positive note, Yellen notes, "I would be pleased if futures markets turn out to be right in their call for the Fed to start raising rates late this year."

Fed Chairman Bernanke knows that low interest rates do not necessarily mean qualified borrowers can get the credit they need. To some extent, that’s what’s happening right now: banks have raised credit standards leaving some financially sound developers and building owners without access to new working and investment capital. Mortgage New Daily says, "Continued tight credit and worries about inflation worked to keep mortgage rates essentially locked into place during the week ended May 1 according to the Primary Mortgage Market Survey conducted by Freddie Mac." The just-released April consumer inflation data edged up by 0.2 percent, less than most experts had expected. This outcome gives the Fed a little room to lower rates further if the economy needs more stimulus.

An analysis by Realpoint.com finds a rising trend of delinquencies and liquidations among commercial real estate loans making up commercial mortgage backed securities (CMBSs), which are packages of loans sold as investment securities. Realpoint’s report says, "Liquidation activity … has slowed somewhat amidst the current credit market climate." "Increased delinquency for the more recent vintages [years] remains at the center of our concerns, especially that of 2005 and 2006 vintage transactions.  Over 39 percent of delinquent unpaid balance through March 2008 came from transactions issued in these two years, with nearly 21 percent of all delinquency found in 2006 transactions," notes Realpoint. The report blames the high delinquency rates on "aggressive lending practices…."

Source: www.bankrate.com

John Mentzer’s article "7 Keys to Facility Location" provides an outline, if not the full content, for a university associates degree in supply chain facility location. Facility location is more critical to supply chain success than it used to be. Mentzer writes, "Site location matters. Indeed, it has become a more critical decision for supply-chain leaders as supply chains have stretched, companies have expanded, and transportation costs have soared. Today, a poor location decision can have much greater and more immediate effects on operating efficiencies and cash flow. Yet it is surprising how few of the executives responsible for the location of a new distribution center (DC) or production facility can explain the basic principles behind choosing the location. In fact, it is alarming that more and more business leaders are relying on the results of sophisticated computer analyses to make their location decisions without fully understanding the underlying logic—or its potential impact on their supply chains," he contends. In his soup-to-nuts treatment, the author covers the physical site, workforce cost and availability, capital and incentives, proximity to suppliers, production issues, location and proximity to final markets the logistics network. Mentzer sums up by saying, "It is not the purpose of this article to do a deep dive into the details of the network analysis computer models that are designed to recommend facility location. Rather, my objective is to review the business logic that should underpin those models."

Supply chain schematic

Source: http://www.productionplanning.com/supplychainmanagement.asp

Joel Kurtzman’s presentation to IAMC’s Phoenix Professional Forum looks behind the traditional international site selection factors at the social, political and legal matrix within which the traditional factors operate. For instance, country A may have the lowest labor costs, but local corruption might overwhelm these, even so. Country B may have the best incentives package, but a porous legal system might render the company unable to protect its patents and copyrights. And Country C’s quality of life may be Edenesque, but without modern financial markets the company may not be able to borrow capital to operate. Kurtzman’s presentation is entitled "Global Edge: Risk and the World Economy." He pulls all of his factors together to generate what he calls the "opacity index." Opacity is the opposite of transparency. Opacity is bad. He concludes the presentation with a list of countries ranked according to their opacity. He proposes that the higher the opacity number the higher the risk of failure to foreign businesses started there.

Source: Joel Kurtzman

A roomful of empty cubicles

Source: www.visualeditors.com/.../industry-woes/

Occupancy cost management was cutting edge and all the rage back in the 1990s. Today, it's not talked about much, but has become a standard tool in most CREM departments' repertoires. The article "Manage Corporate Occupancy Expenses" by Michele J. Flynn says, "An effective occupancy cost management program requires a foundation of a few key elements. First and foremost, the senior management of the organization needs to acknowledge that management of these costs is critical, and they need to support the development of such a program companywide. Second, in order to leverage a company's buying power and manage internal behaviors, it is imperative the company be able to track and report on hard performance measures. A comprehensive program needs to address all aspects that contribute to total occupancy costs, including the financial aspects of the transaction, tenant improvement costs, infrastructure support costs and expenses related to managing the transactions." As part of the program, Flynn recommends, "Implement standard lease language with clear, strong base-year operating expense definitions and rights to audit. Track operating costs by location and highlight unusual expenditures. Institute a formal lease auditing program to validate all base-year and escalation bills." The article concludes saying, "As with any major undertaking, the success of an occupancy cost management program is dependent upon the ability to measure and report on the key behaviors and activities that drive costs."

Commercial roof repair

Source: http://dallasroofrepair.com/

Managing and maintaining important capital assets like land and facilities requires marshalling information on their status. For a large company with many complex facilities, this means tracking millions of data points. The article "Assessment of Assets for Capital Planning" by Ray Dufresne starts with a caveat: "It is important to note that capital planning software systems are ultimately only as good as the processes on which they are modeled." This means even great software cannot overcome corporate disorganization, weak leadership and lack of internal consensus. "A complete picture of the organization's current condition of capital assets and associated requirements-whether for upgrades to building systems such as roofs or HVAC, or for construction of a new outpatient clinic or research lab-is critical to effective capital planning," writes Dufresne. Next, "With a complete inventory of capital requirements, organizations can begin the process of ranking these needs by urgency." Software can help with decision making, such as "By providing life-cycle modeling tools, such software can also help identify assets that are at the end of their useful life and compare the cost of repair and maintenance to that of replacement in order to target those that are more economical to replace than continue to repair." Last, the author points out "Controlling ongoing capital spending against the planned budget requires a reconciled view of overall capital spending that many organizations lack."

Many Americans have heard of "manufacturing's decline" and assume this means we are making less than we used to. Actually, the opposite is true; we're making more than ever, although U.S. industry is employing fewer workers to accomplish this. A Wall Street Journal (WSJ) article on the Institute for Supply Management's (ISM's) updated forecast for 2008 manufacturing sector growth finds that this will be "marginal" in 2008 with revenue and capital investment each rising 1 percent. Norbert Ore, who manages ISM's manufacturing forecast effort, told WSJ that "The manufacturing sector will continue its 'slow deceleration' through the rest of the year. We don't expect anything in terms of a big downturn."

U.S. manufacturing output has experienced long-term growth.

Quantitative research by Site Selection magazine to identify the top economic development organizations has found that they are mostly in heartland locations. The article "Triumph of the Heartland: Middle America sets the pace in economic development performance" by Ron Starner says, "Every year, Site Selection selects the winning organizations based upon the following criteria: total capital investment; investment per capita; total jobs created; jobs created per capita; the contributions of the local or regional economic development organization toward the attainment of these numbers; overall economic vitality; depth and breadth of economic strength; diversity of industry; ability to generate breakthrough deals; and the ability to provide verifiable documentation for all projects." The article provides an individual summary for each winner of its significant achievements for 2007. And a number of organizations are included as honorable mentions.

Honda Aircraft Company Inc. breaks ground on a new facility in Greensboro, N.C. The Piedmont Triad Partnership represents Greensboro, High Point, Winston-Salem and a number of other cities and counties in the upstate region of North Carolina.