As this eventful year comes to a close, most of the major news headlines are still gloomy. But as the world at large, and our industry, enters a new transition phase, it appears that a bit of cautious optimism goes a long way. I’ve said it before, and I’ll say it again, this is an industry comprised of individuals and companies whose industrious spirit has allowed for growth under the most trying of circumstances.
The core element to business survival in commercial AV installation has long been touted as “diversification,” but this idea might be better expressed as “diversification through specialization.” A large part of this business is tracking the growth curves of various vertical markets. If one area is on the decline, replace that business with a more reliable profit center. That may be oversimplification, but in talking to various systems integrators, designers, and manufacturers over the last few months, it is evident that the ability to adapt and change is protecting many businesses in this time of great economic turmoil.
“We’re busy—very busy—right now,” observed Jimi Gonzalez, vice president of sales and marketing for Island Systems and Design in Rockledge, FL. “We have a lot of opportunities and things that we’re bidding on as well, but it’s really changed a lot. Two years ago we were really into the hospitality market. That’s always been our thing. But over the last couple of years, we started diversifying more, getting into corporate and government work, and if we were still doing hospitality we’d be singing the blues, if that’s all we had going on. But it seems like the smaller jobs, within the last couple of weeks, are going away. But the bigger jobs with established companies or government are still happening. So it’s just a shift. Luckily we’ve managed to change our business a little bit to react to that.”
With the exception of some slowing in the smaller project segment—projects under $30,000—Island Systems is finding that its back log and sales opportunities are strong. “We need more people, we’ve got so much work going on,” Gonzalez said. “Overall our outlook is very positive. The key is to be diversified.”
For those companies serving the church market, the outlook is similarly uplifting. For Audio Video Electronics (AVE) in Maple Grove, MN, the prospect list is substantial. There has been at least one case where a church client was hesitant to spend a donation earmarked for a new sound system for fear that it would be an affront to those in the congregation who’d lost their jobs in the recent downturn. But AVE president Stefan Svard advised those in similar predicaments plainly: “We politely have to educate our clients that if they don’t spend the money, they are actually putting more jobs at risk.”
AVE is finding plenty of prospects in churches and casinos at the moment, and in fact the company was recently recognized by Twin Cities Business Journal as number 18 in the magazine’s “Fast 50” list of fastest growing businesses. Having just returned from WFX last month, Svard was optimistic about the worship market. “The biggest churches are still budgeting for an increase in income. There’s still growth on the horizon.”
On the manufacturer side, the commercial installation market is a real boon in tough times. “We’re having a pretty good year in our pro audio and installed sound segments,” noted Jeff Alexander, vice president of sales and marketing at Sennheiser.
While he concedes that the consumer retail landscape has hit a rough patch, Alexander remains upbeat about commercial AV installation. “There’s still a lot of construction going on, and there are a lot of projects underway,” he said. Once again, diversification seems to be the key to survival, as Alexander explained: “I think the main reason we’re okay as a company is because our fingers stretch out into so many areas.”
The report from Steve Young, vice president of sales and marketing for Atlas Sound, is that while retail and hospitality have contracted a bit, the word at the International Business Music Association (IBMA) show was good. “No one was talking doom and gloom, they were cautiously optimistic for 2009,” Young observed. In general, “government and schools are staying strong,” Young added.
NSCA is also prescribing cautious optimism for 2009. The HD transition in February is the first area of potential, according to Chuck Wilson, NSCA executive director. “Schools and hospitals still aren’t certain what they’re going to be doing in the transition to digital television, and that’s an opportunity for business.”
In talking with NSCA members, Wilson has found that “regardless of the national economy, many of our people have plenty of commercial projects and there’s no inclination that work is going to be shut down. What I’m a little more worried about is next year if we don’t work our way out of this recession. But I still believe that commercial construction has the ability to lead us out of this, because it’s strong where residential is not.”