Dave recently marked his 41st anniversary in the contract furniture industry. He joined the rep firm that he now owns in 1981, after graduating with a business degree from the University of Oregon. He became a partner in 1995 and bought the firm outright in 1999.
Dave is a 2001 graduate of the CPRM program (Certified Professional Manufacturers Representative). CPMR is a three-year accreditation program offered at the ASU School of Business.
Dave has account responsibility for Alaska, Hawaii, Montana, and Idaho, as well as responsibility for the overall management of the firm.
He and Julie have two children and two grandchildren with number three on the way.
Connect with us:
www.apexfacility.com
Connect with Matt on LinkedIn
Dave recently marked his 41st anniversary in the contract furniture industry. He joined the rep firm that he now owns in 1981, after graduating with a business degree from the University of Oregon. He became a partner in 1995 and bought the firm outright in 1999.
Dave is a 2001 graduate of the CPRM program (Certified Professional Manufacturers Representative). CPMR is a three-year accreditation program offered at the ASU School of Business.
Dave has account responsibility for Alaska, Hawaii, Montana, and Idaho, as well as responsibility for the overall management of the firm.
He and Julie have two children and two grandchildren with number three on the way.
Connect with us:
www.apexfacility.com
Connect with Matt on LinkedIn
00:00:04:00 - 00:00:08:21
Matt
Welcome to Transcending Workspace, where we talk with leaders of organizations managing the greatest rate of change in human history. I'm Matt Watson, VP of Development with Apex Facility Resources.
An integrated services company. That delivers and manages Workspace Change for clients of all sizes. We hope you enjoy this conversation. Today's guest is Dave Eaton. Dave has been in the furniture industry for 41 years. He joined his firm originally that he now owns back in 1981 after graduating with a business degree from the dreaded University of Oregon. He became a partner in 1995 and bought the firm outright in 99.
Dave is an old line graduate of the PRM Program Certified Professional Manufacturers Representative, and the CPM R is a three year accreditation program offered at the ASU School of Business. Days Rep territory includes Alaska. Hawaii. Montana and Idaho, as well as a responsibility for the overall management to the firm. He and his wife Julie have two children and two grandchildren, with the number three on the way.
Congrats. Welcome, Dave.
00:01:15:24 - 00:01:28:09
Dave
Thank you. Thank you very much, Matt. You've I listened to some of your podcast. You've had some great guests. And I'm I'm honored to be a member. And and just to clear it up, I cover those states and our firm also covers Oregon and Washington, of course.
00:01:28:11 - 00:01:57:24
Matt
Oh, yeah. Well, thank you. And Dave has been a longtime partner with our firm Apex, and I can only say great things. One thing I love about Dave is not only his subject matter expertise in the industry, having been in this industry, his old work in life. But I but also just like old school handshake loyalty, I think, Dave, which is kind of hard to find in this industry.
00:01:58:12 - 00:02:11:00
Dave
Yeah, it's, it's what's given me the success that I've had is always be straight up with people and tell them the truth. And, and it seems to pay off in the long run when you just are totally transparent with everybody. So that's trying to do it.
00:02:11:09 - 00:02:27:06
Matt
As I always like to say to my folks, the truth will set you free. Yeah. So you've been around the industry for quite a while, so give us a little background, just kind of how you got into it. I mean, kind of what it was. Did you fall into this business like the rest of us?
00:02:27:19 - 00:02:48:20
Dave
Well, when I was graduating from the University of Oregon, I had received this award from Oregon, and it got some attention. And this guy, Doug Creighton, who owned this rep firm, who is also a fraternity brother of mine, I didn't know him from from years ahead, called me and said, hey, would you like to come interview with me after you get out and I did.
00:02:48:21 - 00:03:10:17
Dave
And he had a small firm, but he said if I was to join, I would have a chance to buy it. And so the attraction of being able to own my own business was was great. I probably started off at a lower income than I would have if I'd gone to work for one of the big companies. But the thought of being my own boss was was really appealing.
00:03:10:18 - 00:03:34:01
Dave
So that's that's why I got into it. And when I first started, we were both in the supplies and furniture business, mostly mid-market product and cut my teeth, opening up our Seattle showroom and office and lived in Seattle for a dozen years before moving back to Portland. So yeah, I've been in it my whole life. It's the only job I've had and functionally unemployable, I think.
00:03:34:01 - 00:03:54:26
Dave
But yeah, I, I love it. I feel a lot of great days. He's got some tough ones in this industry, as you know, Matt, We are so closely tied to the employment levels that when when there's a downturn, we are quick to realize it is, you know. So anyway, yeah, been a long time and still really enjoy it.
00:03:54:26 - 00:04:26:10
Matt
Well, I think what's interesting about this business that we're both in and have been in a long time as we both watched the last ten years be this dramatic change to workplace workspace interiors. And obviously that I think has been primarily influenced by technology, but greatly also influenced by the generational divisions and with the workforce. You know, as Boomer, you know, we're kind of on our way out, the actors where everybody feels sorry for them on kind of taking our position.
00:04:26:10 - 00:04:51:28
Matt
But that's a smaller group in the Millennials, which is a large tribe right behind them. And now these are coming in and what wow, you know, kind of has those. I mean, you've been with manufacturers representing manufacturers, and they've had to course correct dramatically in the last eight, ten years, let alone the last couple. Three. We'll talk about how is that how have you seen that happen?
00:04:51:28 - 00:04:57:09
Matt
And kind of what's motivating I mean, obviously they're there to sell product. But yeah.
00:04:58:11 - 00:05:27:01
Dave
So the generational thing and the technology thing kind of go hand in hand and they both have an impact on it. And let me let me tell you, I'm saying that when I got in the business of typical office furniture project, 33 to 35% of it was based around cubicles. And and that's where people sat and they were tethered to their desk because that's where their computer was plugged in and their phone, their landlines plugged in.
00:05:27:14 - 00:05:48:14
Dave
And so they were tethered to that spot. They couldn't really work anyplace else. It was very or they could, but it was very difficult in the last 10 to 15 years. They're no longer tethered to that desk. They can work anywhere they can. They can work sitting in a lounge chair in the in the in the lobby while they're waiting for a client.
00:05:48:14 - 00:06:09:01
Dave
They can they can sit any number of places around the office. They're no longer tethered to that workstation, but also that and that that kind of work environment is really appealing to this younger generation. They don't want to be tied down to a desk, they want to move around, they want some flexibility. And then that was just really amplified with COVID.
00:06:09:02 - 00:06:38:10
Dave
I mean, I think that just with leaps and bounds, with COVID and this idea that I don't have to be in a spot every day to work. So the manufacturer so used to be a large client would decide, okay, we're going to we're going to we're building a new building, we want to outfit it. And they might go look at Herman Miller and Hayworth and Steelcase and and Noel and all steel and any number of people.
00:06:38:10 - 00:07:00:21
Dave
And they would put out a big request for proposals and mockups, and then they would choose a manufacturer. And then that that client was kind of locked into that manufacturer and maybe that dealer because it was all based on cubicles and one one system didn't attach to the other. So you picked one and you were kind of stuck with it.
00:07:01:06 - 00:07:27:02
Dave
And that has really changed. Nowadays, only 11% of the industry sales are in cubicles. So much more of it is is in lounge and collaborative areas so that there is a challenge. Now to get and hold onto customers that they didn't used to have. Young people don't want to sit in the cubicle, they want collaborative furniture, they don't want to be tied down.
00:07:27:02 - 00:07:58:06
Dave
And so manufacturers are having to pivot to ancillary product and users have to provide a product that is attractive to their employees, so their employees will want to work there. So it's just this total shift in how a big company decides what furniture to buy. It's much they're really considering what their employee wants now, way more, way more than they did 15 years ago, I believe.
00:07:58:19 - 00:08:18:05
Matt
Well, I think part of that reason is because the boomers are now we were all eating each other and beating each other up to get these, you know, the few jobs that were out there we were all fighting over. Right now, there's more jobs than people. And we're in my opinion, our industry has been in a recession for like two and a half, three years.
00:08:18:18 - 00:08:46:05
Matt
Yeah. Overall, our economy doesn't reflect a recession every session. But I think what's interesting is we're a microcosm of that, too, that to a large extent the larger economy and I don't know when it's going to catch up. I know my broker friends are all, you know, kind of on pins and needles and struggling to survive. Many of the ones, the older guys are just kind of coasting and semi-retired at this point.
00:08:46:05 - 00:09:06:29
Matt
And building out areas I think are going to come to a day of reckoning here in another year or two. And I'm talking with a couple of other brokers as well who are into investment and work with rights and the investment side of commercial real estate. The really big problems coming down the pipe that we haven't seen yet.
00:09:07:06 - 00:09:27:06
Matt
And so but ultimately in our industry, yeah, you so not only has the work's based, the work workstation come down from being 33% or 35% of the 5 to 11%, but I think the cost of the station has gone to from around 3000 to less than a grand or 1500. Yeah.
00:09:28:02 - 00:09:57:15
Dave
It was it was not uncommon in 19 $88, 19 $88 to have a workstation cost $3,000, which now would be, what, $6,000? Right. So and now you can get one for 1200 dollars. So it's it's. Matt when you say that we're in a recession in the industry, it's not just I think units sold are down but also the cost per station is down, the cost per employee is down.
00:09:57:27 - 00:10:11:10
Dave
So we're looking at numbers for this next year and they say that we might be down 2%. But if you consider there's going to be 8 to 10% price increases, where that means you're more down more like seven or 8%.
00:10:11:13 - 00:10:18:20
Matt
Because 2% is that coming from kind of the manufacturers you represent? They figure the industry as a whole will be down 2%.
00:10:19:12 - 00:10:44:25
Dave
20, 23, a lot of the projections. So I'd say like 2.7, I believe that's a different number. But metal, I'll verify that. Yeah, yeah, but, but but again, that's not in real dollars if you take so like manufacturers probably on average will go up 8% this year. Yeah. And if they give me a quota and they're, they're saying to me oh well don't worry about making your quota because we're going to have an 8% price increase.
00:10:44:25 - 00:11:01:18
Dave
So you're going to get an 8% automatic increase in sales, which is yeah, it's an interesting way to look at it. But so in terms of real dollars, that means we're going to be down more like seven or 8% because and so there's a there's a request by a lot of folks to say, hey, let's not talk about dollars.
00:11:01:18 - 00:11:22:24
Dave
Let's talk about units, because units are a better reflection of how much we're selling. And I think your unit sales will be down this year. I think anybody that thinks they know what's going to happen in 2023 is crazy because I don't think we know. So, by the way, back to the commercial real estate thing in Portland, there are more buildings for sale in downtown Portland than any time in history.
00:11:22:24 - 00:11:35:21
Dave
There's more buildings in foreclosure any time in history. Most of these if you have a lot of leases, as you know, matter of five year leases. And so those those people that signed those leases two years or.
00:11:36:26 - 00:11:39:22
Matt
So just before the downturn. Just before the pandemic, Right.
00:11:39:28 - 00:12:07:03
Dave
Yeah. When those come up in two years, I doubt they're going to stick around. So but on the flip side of that, we're seeing some nice opportunities in the in the suburbs in Lake Oswego and Wilsonville and Gresham and Hillsboro, because there's two issues. There is a quality of life downtown issue and people not wanting to be downtown because there's all those things that we talk about that we know are happening in the inner city.
00:12:07:22 - 00:12:28:06
Dave
They don't feel it. Their employees don't feel safe. So like, you know what, let's let's move out a little way. So we're seeing that we're seeing some opportunities in the suburbs. And some of those spaces, those commercial spaces are filling up as the downtown one's empty. So there are still opportunities out there. But the downtown core, I'm not so sure I'd want to be there for a while.
00:12:28:06 - 00:12:35:26
Dave
I think we still have a couple of years of people getting out of their leases and moving out before it starts filling up again. Yeah, we're.
00:12:35:26 - 00:13:07:28
Matt
Facing the same conditions in Seattle and Portland are very parallel in terms of how that whole phenomena, which was just a few years ago, everybody was pushing like Amazon was creating their campus, the corporate campus in downtown Seattle. And I know big firms like Microsoft have a ton of real estate. They're going to give up in Bellevue. Now they're going to turn over over a million, 5 million square feet or 1,000,000.5 square feet here in the next year, year and a half, which puts a huge hole in the vacancy.
00:13:08:08 - 00:13:37:17
Matt
And we're seeing utilization and occupancy down in Seattle, Mondays and Fridays. I bet it's under 30% Tuesday, Wednesday, Thursday. They might be getting over 40% right now. Yeah. So just managing the concept of workspace as a com as a as a company and that expense being second to labor is really, I'm sure, still a major quandary for a lot of my customers, as are my customers.
00:13:37:17 - 00:13:59:17
Matt
Are your customers right. Yeah. And so yeah. What do you see? The manufacturers. I mean, they've got to be also recognizing this is a problem. And I think we're in more of a severe area. I mean, if you're in Texas or if you're in the Southeast, you may not be seeing it as severe as you see it, the northwest, but San Francisco all up and down the West Coast, same problems.
00:13:59:17 - 00:14:24:18
Dave
So, yeah, yeah. Just so you know, one thing I just just to go back to one sec and then I'll answer that question. My lease in my Seattle showroom was supposed to be renewed in May of 2020, and they were pushing me to sign it starting in November of of 2019. And I waited. I stalled. Not not because I'm smart, but because I just didn't get around to it.
00:14:25:00 - 00:14:51:03
Dave
And then when the pandemic hit, they were looking for a 35% increase. When they sent me the letter in November or October of 2019, by the time we got done with it, because I signed in the middle of the pandemic at the start of the really challenging times, we signed our lease for no increase mat. So this this is to your friends at CBRE, you know, and I'm sure they were facing that in lots of places that's who who who manages my property.
00:14:51:18 - 00:15:11:09
Dave
And they were like, shit, they had pardon my language. They, they were seeing people moving out and bailing and yeah. So we were able so the good side for my business was I was able to secure the lease at a much lower rate. The bad side of it is there's lots of empty space out there and it's going to be that way for a while.
00:15:11:09 - 00:15:30:27
Dave
Now. What are the manufacturers doing that? So we were looking at this workspace and you mentioned that that the employee has a little bit of the power right now. Hey, I don't want to come in. I'm not going to come in. If you make me come in, I'm going to go work for somebody else. We're already seeing that change just a little bit.
00:15:30:27 - 00:15:52:01
Dave
Because of all the though there's been some layoffs in the tech sector, as you know. And I think maybe the pendulum will swing a little bit back so that the employer has a little more leverage than they did. And maybe if if you've heard that your company's going to lay off 8000 people or maybe he'll decide, well, you know, maybe I do want to show up in that office and have my boss see me.
00:15:52:01 - 00:15:58:06
Dave
And maybe I don't want to be the guy that's getting laid off. So I'm hoping that that switches a little bit.
00:15:58:16 - 00:16:23:27
Matt
I know that's definitely wishful thinking, my friend. And I know it loud and clear. And I see, you know, Starbucks and I see Amazon in our market and posing like you'll be in here by in May. That's Amazon. You'll be here for three days a week period. There's no ifs, ands or buts. So my hope is that it's a case in that the real, you know, the best followers in the tech industry will follow.
00:16:23:27 - 00:16:46:06
Matt
But I also have clients with full floor 125 station projects who will not renew. And our office space is going away completely. And I have many, many clients like that. We are doing more disk positioning and we've this positioned, you know, millions of square feet over the last ten years. We're probably doing more right now than we've ever done before.
00:16:46:06 - 00:17:06:29
Dave
Well, I heard an interesting term used on a on a call I was on the other day is that designers need to make the spaces of commute worthy. So if I'm going to get in my car and commute to work, I surely want the space to be a place that I like and I'm comfortable with. So what does that mean?
00:17:06:29 - 00:17:31:06
Dave
So one of my my reps in Seattle was at a conference for a meeting recently and the talk is that's where this, this commute worthy thing came in. And so much of the stuff that designers are asking for are collaborative furniture, maybe a touch down station. Nobody's going to really have their own space anymore. A few people have their own space, but a lot of people will just be coming in.
00:17:31:06 - 00:17:56:06
Dave
But like I said earlier with it was the tethering. I think manufacturers made a trip to the Midwest last week to see a manufacturer and their whole focus is on collaborative. Their whole focus is on the lounge lounge, I think as is typically been, you know, 15 to 17% of the in collaborative space, I think that's going to grow to 30% of the space is doubling way.
00:17:56:13 - 00:18:16:19
Dave
So the manufacturers right now, in answer to your question about what are these manufacturers doing, is they have got to enter that space in a bigger way and so you see these companies that are it. Well, there's two different ways to look at it. The big companies that are worried about Wall Street every quarter and makes their numbers look good for their shareholders.
00:18:17:02 - 00:18:37:20
Dave
They're doing certain things. They're trying to they're trying to buy companies. You know, as you know, there's been some big acquisitions recently. Yeah. They want the top line to look good. They want their revenue number high. Of course, they're going to still have to back that up at some point with profits. I am. I question whether some of these are going to lead to to bigger profits.
00:18:37:20 - 00:18:46:24
Dave
As you know, Matt, and our industry is riddled with acquisitions that have been very poor. They've turned out badly over time.
00:18:46:24 - 00:19:12:00
Matt
And we're going to talk I'd like to talk about those. I mean, yeah, two biggies that I think are front facing are Herman Miller. No. Or now Miller Knoll. And most recent is H. And I acquiring Kimball or adding to their portfolio of furniture companies. I mean, do you see more consolidation as a result of what's going on, just because singularly many of these companies can't really get it done?
00:19:12:00 - 00:19:34:25
Dave
Yeah, I think the big companies will continue to try to buy the companies that are good in that collaborative space. So if you've got a company that's I'm not going to mention names here, I got to get to, I get in trouble. But yeah, I think they'll buy if you've got a 80 to $100 million company that's really good in, in lounge, you're probably a pretty big target.
00:19:34:25 - 00:19:39:00
Dave
There's probably people those discussions are probably going on right now on.
00:19:39:09 - 00:19:40:20
Matt
Yeah just exactly.
00:19:40:21 - 00:20:09:00
Dave
Yeah and I think that the Kimball purchase by H and I again I'm not I'm not sold on that I, I don't know I'm not, I'm not throwing anything at H and I'm just saying that a lot of times two manufacturers buy another company in the culture so different. Yeah. That they just don't meld And I've seen some really good I've seen some really good ones also the Millers and.
00:20:09:00 - 00:20:11:17
Matt
Sometimes it's a fundamental of the vultures are circling.
00:20:12:03 - 00:20:13:10
Dave
Right. And so I think.
00:20:14:01 - 00:20:16:11
Matt
Perhaps that was the case here with Kimball. I don't know.
00:20:16:19 - 00:20:35:25
Dave
Well, I think that. Miller No, and I don't know much about that. I know that. Miller That no, I think they kind of felt like they had to do something they had to sell. I don't ever think these I don't ever think of one plus one equals two in these cases. I think one plus one usually equals about 1.3.
00:20:36:10 - 00:21:04:15
Dave
And I think it was probably maybe it maybe Miller got it for a great deal. Maybe they got some distribution. They wouldn't have had that. They also lost some distribution from a from my standpoint as an independent rep, this has actually been pretty good for me because, you know, we have a lot of the products that these these aligned dealers need that their manufacturers aren't good at yet or they're not priced right.
00:21:04:27 - 00:21:34:26
Dave
So this consolidation, I think, is good for the independent rep model. You know, it's going to be really interesting to see long term how these big guys do. They're very concerned about wallet share in a project. Like I said, when we first started, they used to go in and get a client and they get the whole thing. They get everything because once that client committed to their system, they kind of had to buy from them.
00:21:35:12 - 00:21:47:13
Dave
Well, now you might see a project where an end user buys from 20 different manufactures years and two different two or three different dealers. That's not that uncommon.
00:21:47:26 - 00:22:09:18
Matt
Yeah, Yeah. From the dealer perspective, it's been over ten years that the workstations where it's used to be, the meat in the sandwich is basically the door prize leaving the deal and you know, you kind of we were seeing people going at zero margins, getting those deals based on that. And I you know, I agree with you on also some of these mergers.
00:22:09:18 - 00:22:50:19
Matt
I mean, two iconic design firms, design furniture, interior companies like Herman Miller. And no, I just I'm amazed that I mean, on one side, you'd see them fold together, probably fairly interesting with aligned lined progressive design. But at the same time, on the back end or the distribution network, I know some dealers that have gone upside down with that deal, and I believe I mean, big $100 million dealers are struggling to find their way because their install bases are all in product lines they no longer serve, and that those relationships they created for that manufacturer are gone.
00:22:50:29 - 00:23:16:21
Dave
So, yeah, well, it's interesting. So you had the largest nolde dealer in the world system Source flip and flip and go to Heyward. Edward And the reason they could do that is their clients are not the workstation doesn't matter that much anymore. It used to be that would be a death knell for them. But yeah, now it's not because there's the workstation, it's just like you just said, it's the afterthought.
00:23:16:21 - 00:23:40:15
Dave
It's what you kind of you get their prize. Also at that 11%. But now when you walk into a client that maybe has a has an office full of Miller workstations, it doesn't matter because you're not adding more workstation. You're going in there getting the collaborative space. And that's why system source, a giant company could flip from from Noel to who they were that could take a lot of happened 20 years ago.
00:23:40:22 - 00:23:44:03
Dave
You would have lost your entire base because look at look what's happened. I guess you're right.
00:23:44:03 - 00:24:08:28
Matt
It's less impactful now that basically the margins and for those who are buying furniture, the margins aren't in the workstations anymore as an ancillary for sure. Yeah. A lot of the ancillary is coming online. I mean, it's really we're struggling here trying to figure out, okay, what kind of online presence can we get, you know, leveraging through a Shopify for small office home office and add on.
00:24:08:28 - 00:24:38:23
Matt
And I've got clients who were fixed in place, workstations. We've been talking to them about their move to a height adjustable and they've been buying desktop height, adjustable, you know, leverage devices, not from us just online, you know, randomly, no name stuff for a long time. And it's it's interesting from a dealership perspective to try to herd the cats and try to keep everybody in the fold when there's so much available product out there and accessible product.
00:24:38:28 - 00:24:53:23
Dave
Yeah, I'll tell you this. Some companies like sit on it and GSI. Yeah, GSI, which we just added recently, is in that collaborative furniture space and they're they're killing it right now. They're doing great. Their designs are nice. And that's what people are looking for.
00:24:54:01 - 00:24:55:17
Matt
So affordable, too, right?
00:24:55:17 - 00:25:17:12
Dave
Yeah exactly. And sit on its in that space as well. And then a back to the workstation side. So as you know, we represented a company called A.S. and because the end user, the designer does not care about the cubicle anymore are our price points with are good so we can get whereas we might not got a look years ago.
00:25:17:23 - 00:25:21:22
Dave
We're getting one now because they don't care about it being noble or Steelcase. Yeah.
00:25:22:04 - 00:25:47:03
Matt
They weren't as not relevant as it once was. Right? I've seen that come along for a while, but I guess you know more so before we wrap it up because we're talking along here, there's I think what's interesting to me and I want to see if there's any focus or intention from the manufacturers, from the groups. You know, when we saw a coworker environment starting to explode, you know, just before the pandemic.
00:25:47:13 - 00:26:14:16
Matt
And then they were really the first ones to get like just demolished with their client base. Now it seems like they're on an extreme growth mode because of people getting out of their leases and looking for a flexible workspace solution. And that's that short term lease, daily, weekly monthly lease solution offered, which is their arbitrage in that against their long term lease.
00:26:14:16 - 00:26:26:13
Matt
But still they're willing to pay more for a non obligatory use arrangement. Do you see the manufacturers at all with a focus on co work environment?
00:26:26:27 - 00:26:27:26
Dave
So you're talking about the we.
00:26:27:26 - 00:26:29:02
Matt
Workspace that we.
00:26:29:02 - 00:26:30:00
Dave
Work kind of space.
00:26:30:10 - 00:26:51:03
Matt
Yeah, we were or we have we have a number. I mean it's really interesting statistically that how in markets the growth and markets I thought Seattle was much larger but we're like 12th or 15 on the list for square footage in our market you know New York Manhattan and other being much larger for co-working firm, you know, just flexible, flexible lease solutions.
00:26:51:03 - 00:26:51:13
Matt
You know.
00:26:51:15 - 00:27:08:24
Dave
I saw one up in Anchorage recently that was really cool. And they had done a really nice kind of common area kitchen area where people could come in a fireplace and all this stuff. And it was really neat. And then they had small conference rooms and they had, you know, you could get a workstation or a little conference room if you wanted.
00:27:09:05 - 00:27:33:12
Dave
It was a great idea. They were already full. This was, I think, in November that I saw this space and and I think stuff like that where that's got, you know, Martha and I haven't been in one recently, Portland or Seattle, but when those things first started, they weren't great on the collaborative right. But now I think if they do that, if I was in that space, I'd I'd have a great collaborative space.
00:27:33:12 - 00:27:59:25
Dave
It looked really cool. I think that could be a thing. Again, I think most of these, though, will probably be I'm guessing that these the bigger ones will have a design firm and that designer firm will work with manufacturers. I think manufacturers need to be able to address that because I think it will be a thing I was very impressed with is when I went in to Anchorage and I was talking to this guy that worked out of there and said, You know what, if I was in your shoes, I'd absolutely do this.
00:27:59:25 - 00:28:07:08
Dave
Rather than go sign lease in a building for five years. So I think Matt, I gigantic, totally anecdotally, I think it's a pretty cool thing.
00:28:07:24 - 00:28:33:25
Matt
I see a huge hospitality influence entering in the workspace now as it was happening through small L you know, second and third space areas like Starbucks or coffee shops and hotel lounges and that sort of thing. And the energy you get out of those spaces for a space specifically is for and definitely for creative firms are important and creative people.
00:28:33:25 - 00:29:03:20
Matt
And I know that Amazon has a culture of connectedness within their and community and connectedness within their organization, and they could probably function as as well in an environment like that because they're meeting constantly. I mean, we had we had deepwater crews working in their firm, in their in their spaces for many, many years. And all we did was make sure there was the right number of chairs in the meeting space and clean up the white boards and clean up the space between meetings.
00:29:03:20 - 00:29:28:02
Matt
And it was a full time job, how much they met and they did not have meeting space. So, you know, the whole notion of how work habits and work styles will adjust going in coming out of this downturn that we were facing of this pandemic is fascinating to me, but I don't see it resolving itself very quickly.
00:29:28:13 - 00:29:45:09
Dave
Yeah, I think we can't give up on some of the things that have been worked for a long time. And I'll tell you one thing that I think manufacturers need to do, and the ones I'd like to align myself with understand this, that the dealer, all this we're talking about the dealer demise over the years, I think a dealer's still going to be very important.
00:29:45:22 - 00:30:06:28
Dave
I think the good ones will survive. But I think the manufacturers who understand that we're not selling product to the dealers, we're selling margin opportunity to the dealer. And again, if we if we Matt, your company has a finite number of projects that they work on a year and you have to make as much money as you can on every one of those.
00:30:07:08 - 00:30:30:05
Dave
So the my job and the job and with the manufacturers I represent is to put our dealers in a position to make money. And if we do that, if we're always thinking about that, thinking, okay, how can I how can I help you maximize your profit on this project? Still getting a good deal to the end user. Those manufacturers that recognize that and don't try to dictate to the dealers what they can make.
00:30:30:17 - 00:30:48:11
Dave
I think those guys are going to do really well and I think we we push that to our manufacturers. I tell you, I've told you this, that my job is to help you guys maximize your your profits. And I think the manufacturers that understand that and work closely with their dealer partners are going to be successful.
00:30:48:21 - 00:30:50:26
Matt
Yeah. My motto is go where that takes me.
00:30:51:09 - 00:31:02:03
Dave
Yeah, yeah. I think it would be. You'd be amazed how many people still think that I'm selling a chair. I'm not selling a chair. I'm selling you a chance to make some money.
00:31:02:21 - 00:31:25:19
Matt
So. Yeah, well, we've we've recently changed kind of a lot of things here to Apex. I mean, one of the things we've always done that we've always been diversified with our services and through every downturn we have remained cause this is our third or fourth downturn in 25 or this is our 26th year. But we I think the the recipe for success is not worrying about the top line, right?
00:31:25:19 - 00:31:58:24
Matt
It's always working about worried and concerned about profitability. So and the thing that we can control is where we focus our energy, you know, cost control, margin erosion, mistakes, warehouse writing, cracking product, you know, customer service, those types of things. And that's been always a game changer, something that we, I think have culturally adopted. And I think the other thing that we're doing with our sales people are we're talking about what's your job going to be for the year?
00:31:59:08 - 00:32:18:28
Matt
We don't care if you sell 8000 or 1.8 million, but yeah, you're going to need, you know, at least a 300 or three or 50 or $4,000 gross margin brought into the company. And so now their focused on not what the top line is about, but to your point that the gross product or the gross margins.
00:32:19:14 - 00:32:40:22
Dave
Yeah. So when a manufacturer when a manufacturer buys another manufacturer because that makes their top line sales look good, does that really mean anything unless they hit bottom? But also if now that manufacturer is going to go to their distribution, say, hey, by the way, we want you to sell this line instead of the one you're selling. Well, maybe you are making really good money with that when you're selling.
00:32:40:22 - 00:33:01:22
Dave
So let's say that you were a $1,000,000 dealer and now you're being told, Well, you know what, guys? We need more of your of your wallet. So you got to stop buying that particular line. Well, wait a second, Mr. Manufacturers making really good margins with that line. Well, that's too bad. So those those manufacturers that forced those things, they're it's not going to work in the long run.
00:33:02:00 - 00:33:04:10
Dave
It's not going to work. So. Okay. So, yeah.
00:33:04:24 - 00:33:21:26
Matt
On our exit out of this awesome shot, we can keep going all day. I know you and I have these kind of conversations. The next thing I know, it's an hour or two. So what you know, Mr. Dome, is prediction for either the next big consolidation or merger out there or is there word on the street of anything fantasy tastic?
00:33:21:26 - 00:33:31:28
Matt
I know that neo cons coming up. I'm not going. I call it neo covert, but I'm not going to it as me as a dealer, I'm sure more and more people are going back to it. I well.
00:33:32:18 - 00:33:54:04
Dave
The best in my mind. The best thing about it is I got to I didn't have to go to an air con, which was great. It's a big expense and I don't I think product has changed somewhat. There's there's no big revelations coming in the market that I see. I think there's going to be more consolidation. I think some smaller companies, I think the big companies are scared.
00:33:54:04 - 00:34:21:05
Dave
I don't think Steelcase wants to be second or third. I think they're probably looking for somebody to buy. I'm guessing right after I bought Kimble, Does Steelcase want to be second? Probably not. So I think more companies will be bought and they'll try to have some efficiencies. I wish I wish I had a big one. I think 2023 is going to be a when business is down, you've got to go take market share, right?
00:34:21:05 - 00:34:43:13
Dave
So that's what we're focused on. We're focused on let's go find a chunk of business that we're not getting now and go get it. I think 2024 could be better, but I you know, the good ones will survive. We'll be all work together. We'll survive. I don't have a big prediction, man. I, I, you know, when times get like this, I, I stick my head down and say, okay, what aren't we doing?
00:34:43:13 - 00:34:48:11
Dave
What can we do? And the other thing is, what am I spending money on that I really don't need to spend money on?
00:34:49:08 - 00:35:07:16
Matt
And those are the things those are the things within our control. You can't control pandemics. We can't control crazy, you know, workspace, change thoughts, right? Clients. But we can control the things that we can, you know, our internal expenses and management and so forth. As always, it's great to chat.
00:35:07:16 - 00:35:08:18
Dave
Thank you. Thank you, sir.
00:35:08:23 - 00:35:19:13
Matt
Guess. And I think it was really an interesting conversation about kind of our manufacturer, furniture dealer, representative dynamic.
00:35:19:19 - 00:35:23:16
Dave
So I agree. I agree. It was a pleasure and it's always great talking to you. Take care, man.
00:35:25:07 - 00:35:30:14
Matt
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