Tuesday, August 31, 2010

What To Think of a Place Where 90 Percent Owns 2 Percent of All Wealth

•The top 10 percent of Americans now earn half of our national income, while the bottom 90% collectively own less than 2 percent of the nation's wealth. There is more income inequality in America than at any time since 1928, when this statistic was first kept.
•61 percent of Americans "always or usually" live paycheck to paycheck, which is up from 49% in 2008 and 43 percent in 2007.
•Approximately 21 percent of all children in the United States are living below the poverty line, which is the highest rate in 20 years.
•Only the top 5 percent of U.S. households have earned enough additional income since 1975 to match the rise in housing costs.

•83 percent of all U.S. stocks are in the hands of just the top 1% of Americans. And the top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.  
For all its achievements, America still has a long way to go before it can be said that this is a country of fairness and basic equality, where everybody's got a fair chance in the "game" of life. Leo Hindery, Jr. recites these shocking facts in a column about Ariana Huffington's new book Third World America. He is an investor and chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations.

Saturday, August 28, 2010

The Big Difference Between the German and the U.S. Economy is Spelled WAR

David Brooks is a reasonably reasonable conservative, and his sociological insights often canny, but his political conclusions are usually off. In his column last Friday, The Parent Model he is trying to twist reality against Obama's stimulus package, but that is absurd. The German economy - like many other European economies - has built-in automatic stabilizers. The Germans didn't need to pass laws to boost the economy as it already has a system in place, which protects jobs and secures people's income and health insurance in a recession. This is not the case in the U.S., making a more forceful government action necessary. The fact that the U.S. is deeper in debt than the Germans is a result of conservative recklessness, especially the Bush tax cuts and the unfunded wars. Which brings us to the probably most consequential difference between the U.S. and Germany.... the war cost. The civilian American economy is undermined by the military expenditures, which perverts its competitiveness and increases the country's reliance on outsourcing.

Good parenting is not going to solve this issue.

Hans Sandberg 

Thursday, August 26, 2010

Transforming the American Economy Through Innovation

Thursday, August 12, 2010

Taking Green to the Platinum Level at the Empire State Building

The Empire State Building. Photo: Hans Sandberg 2010
The Empire State Building is going through a huge makeover supported by a group that includes, among others, the Clinton Climate Initiative, the Rocky Mountain Institute and the building’s owner, Wien & Malkin. The green retrofit will cut the building’s energy usage by 38 percent, but Skanska USA cut the energy costs for its new office by 57 percent compared to its previous office, reaching the top level of energy efficiency - LEED Platinum.

Elizabeth Heider leads Skanska
USA's Green Council. Photo: Hans Sandberg
We visited the Swedish construction giant’s U.S. headquarters on the 32nd floor of the iconic skyscraper and met with Elizabeth J. Heider, senior vice president at Skanska USA Building, and founder of its Green Council. Heider was recently named one of the top ten women in green building and design by the Green Economy Post, and is also a director on the board of the U.S. Green Building Council (USGBC.)

Heider knows the ins and outs of green construction, and is the first one to admit that “true sustainability is really hard.” Profit is the number one goal for builders and owners of buildings, even more so in a down market. If you can’t show that going green improves the bottom-line, it is harder to make it happen. The first argument you need to win is the business argument. But the good news is that green can be profitable. “We are beginning to see more awareness on the part of the owners, especially institutional owners and those that want to sell buildings to a more sophisticated audience,” she says.

Her passion for the environment was nurtured early on by her mom, who was an earth sciences teacher and one of the initiators of the first Earth Day. Heider started out as an architect, but soon got involved in the business side of construction. During the late 1990s she did research for the General Services Administration (GSA) studying the cost of greening the federal workplace. One result of the research was identifying a 2.5% increase in funding adopted by the Federal Government to achieve their LEED Silver mandate for new construction projects. (LEED is a certification system – Certified, Silver, Gold, and Platinum – developed by the USGBC).

“I entered the whole LEED-green arena from an economic perspective. I’ve done a lot of true value-engineering where the goal is to help owners make informed decisions about initial costs and future value, something that never has been more important than today. In my view, you should consider investing a little bit more upfront to improve the performance of your building, so that you can save big money over time” she says.

“I believe that we need to be good stewards of the environment, but that is my personal opinion, which may or may not be important to the customer,” she says, adding that ”setting aside the environmental benefits, there is a compelling business argument to be made. People want to do what’s right, but it is very difficult to make the commitment if it is prohibitively expensive, or perceived to be so.”

The business issue came up again when Skanska USA decided to move its headquarters from 136 Madison Avenue to the Empire State Building on Fifth Avenue between 33rd and 34th Street.

The building of the iconic 102-story
skyscraper began in March 1931.
Photo: Hans Sandberg
“Our leadership agreed that we could target LEED Platinum if it didn’t cost extra,” she says. “We challenge our customers to shift their perspective from initial cost to life cycle value – so our internal agreement was that the LEED Platinum tenant fit out could cost no more than a conventional fit out - over the life of the 15-year lease.” It was a challenge, but it didn’t stop the team from forging ahead, and any visitor can see the result.

At first glance, the 16,600 square-feet office looks like any modern Manhattan office, but as Heider takes us on a tour, she points out features that make it special. First, there are no closed corner offices hogging the view and keeping the sunlight out. Most private offices are wrapped around the center of the floor, towards the core of the building, with its many elevators and stairways. And where you might have had corner offices, there are open office landscapes. You can walk around the perimeter of the floor with an unobstructed view of Manhattan, and even take a seat on one of the padded file cabinets lining the inside of the outer wall. The key to the design is to let in as much natural light as possible, lowering the need for artificial lighting. And as all offices and conference rooms have walls of glass; the whole floor has a light and airy feel to it.

Another radical change Skanska made was to eliminate the typical dropped ceiling, relocating the ventilation system under a raised floor. If the ceiling had been lowered to make space for air ducts, the top of the windows would have been blocked, obstructing the view and blocking 20 percent of the sunlight windows could otherwise let in. When the project engineers compared electricity consumption before and after the change to the new system with air ducts under the floor, they found a saving of 27 percent. Smart lighting control systems adjust the light levels to take advantage of natural light. Occupancy sensors turn off lights in empty offices. The lighting system saves a tremendous amount of energy, but sometimes the light goes out in your room if you sit still in front of your computer too long.

Skanska moved in to the new office in November 2008, and by May of 2010, the annual energy consumption had come down by 57 percent compared to what it was at the Madison Avenue office (when adjusted for differences in office size and electricity prices.)

“The punch line is that we will realize a return on our investment (ROI) in less than 5 years – far faster than the 15-year challenge we set for ourselves. Over the life of the lease, we will save half a million dollars through energy savings,” she says.

“For anyone leasing space in this building, making smart choices about energy performance makes good business sense. Moreover, we are assuming only a modest escalation of energy and electricity costs, which may be understated. We are also hearing a lot about cap & trade, starting on the west coast, which makes it reasonable to expect some form of carbon metrics in the 15 years that we lease the building. Our savings projections don’t include soaring energy prices or the potential benefit of living under a cap and trade scenario,” she says. “Energy efficiency will help us avoid future risk.”

Most tenants are not thinking in terms of savings over a 15 year lease, and would like a ROI in 5 years or less. “But it is a different story if you look at universities and hospitals, the Federal Government, and institutional owners that build and hold their buildings for the life of the project. They will be very interested in how the building is designed upfront and in making appropriate investments now that will yield future savings.”

“I suggest that owners first do things that are simply smart in terms of the intrinsic design, to use efficient windows, good insulation, and position the building on the site properly, to take advantage of what the site gives you.”

10-15 years ago people talked about smart buildings in terms of IT, and Wall Street gutted buildings because they thought that they could rent them out if they sold them as IT-buildings. The idea was that customers will come if you add functionality. Is that what you are doing? More light means more productivity?

“That is absolutely right! The USGBC analyzed the potential savings of associated with a LEED building over a 20-year time span. Their study indicated a total savings of $62 per square foot. $46 per square foot of these savings came from improved human productivity, while energy savings counted for about $5,” she says.

“Savings from productivity enhancement are great, but difficult to measure, and people tend to believe what they can measure. Here at Skanska we have looked at sick leave as a measurable indicator of productivity. We compared the core office staff here with the same group at the Madison Avenue building and found an 18 percent reduction in the amount of sick leave taken. Was it because of the recession? Or was it because people felt healthier? We think it indicates that the space enhances our productivity. I was an architect for ten years and I believe in better living through good design. Our collaboration with Swanke Hayden Connell and Cook + Fox delivered a space that functions well, feels good and makes good business sense. Did I mention that it treads lightly on the environment?”

Skanska USA's green office is part of the overall remaking of the Empire State Building, which is one of the world’s most famous buildings, and also an example of the 43 percent of all office space in New York City that was built before 1945. These older buildings are responsible for two thirds of all emissions of greenhouse gases in the city, and the situation is similar in most big cities in the world. “Constructing new green buildings won’t move the needle in mitigating this problem. It is far more important to address the existing building stock,” the building's owner Anthony Malkin told the magazine Metro Green + Business in June 2008. This is exactly why the Clinton Climate Initiative, Johnson Controls Inc., Jones Lang LaSalle, and Rocky Mountain Institute decided to support a green makeover of this iconic building.

Hans Sandberg

Tuesday, August 3, 2010

Philosophy of Life at the End of Week 99

Two stories in the same newspaper and a whole world between them.

On the Op-Ed page of today's New York Times, David Brooks describes two very different, but complementary attitydes to life. His column is called The Summond Selfand when you have read it you might want to flip back to page one and read about Alexandra Jarrin, who two years ago had a decent job as director of client services, but was laid off, and now finds her self sliding into the abyss, having nothing besides her food stamps and car to sleep in once she has to leave her cheap hotel room.

Let's imagine that she picked up David Brook's well-meaning column where he offers the following piece of advice:

"I’m living in a specific year in a specific place facing specific problems and needs. At this moment in my life, I am confronted with specific job opportunities and specific options. The important questions are: What are these circumstances summoning me to do? What is needed in this place? What is the most useful social role before me?"
This is where the philosophical rubber meets the road.

Hans Sandberg