“Sleepless in San Diego” Anticipating and Preparing For The Impact of The Minimum Wage Increase International Facility Management Association – San Diego Chapter July 8, 2015

Today’s Agenda Who is this guy and why is he here? Why is this important to a professional Facilities Manager What to expect going forward. Feel free to interrupt!

Expense Reduction Analysts 700+ Consultants (30+ countries) negotiate terms and pricing with hundreds of suppliers every year. Our world-class category experts specialize in dozens of common overhead cost categories. We’ve completed more than 14,000 cost-reduction projects in the last 19 years with average savings across all categories of 20%.

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Where Are We Today?

California Minimum Wage 6

Consumer Price Index 7

How Did We Get Here? Minimum

9 Blue collar jobs provided middle class income opportunities

Global Economic Reality

The result: A shinking Middle Class

Today’s Reality

Why the movement for increasing minimum wages? V-O-T-E-S.

Overall Impact Positive or Negative? Difficult to quantify: Will higher pay result in less turnover (reduced training costs, reduced recruitment costs, improved expertise)? 2006 case study for Costco pointed toward less shrinkage, fraud and errors. Higher paid workers may feel the pinch as scarce resources are redeployed. When low income families earn more, they spend more.

The Opportunity

“It is what It is …” The train has left the station on the Minimum Wage. That being said, there are some things that we can do to minimize the impact of the impending increases. Let’s discuss some options we CAN control:

1) Work with Your Service Providers to Examine and Adjust your Scope of Work or Specifications Documents 17

Example: Tips to reduce solid waste costs. -How often are your current trash bins picked up? -What’s in those bins? (“Wet” trash? Mostly paper? Recyclables?) -How full are the bins? -What size bins are you using? -If recyclables were segregated (which would require some internal training and separate bins) what impact might that have on “regular” trash? -Could a compactor be used effectively?

It’s Not Garbage Anymore … CA AB 1826: Mandatory Recycling of Organic Waste – food, green, landscape & pruning Beginning 4/1/16, all businesses that generate 8 CuYds/week require one large bin for organic recycling. By 1/1/17, 4 CuYds/week, one regular recycling bin. On-site or organics pickup service for compost, mulch or anaerobic digestion for enery or fuel Currently >30% of landfill waste and major contributor to greenhouse gas global warming

2) Revisit Market Prices! 20

3) Evaluate your service provider’s capabilities objectively 21

4) Calculate potential cost increases accurately.

5) Identify Offsetting Cost Reductions in Other Expense Areas Janitorial Supplies MRO Supplies Landscaping Supplies/Chemicals Alarm Equipment Maintenance Physical Storage What about areas not typically under Facilities? Wireless Telecom Office Supplies Payroll Processing Packaging Materials Shipping Costs

24 “The Show Must Go On” Sports Franchise Case Study – Service First, but cost a close second

25 Client Profile Major sports team and their facility. Approximately 1,000 employees. Besides the sports team activity, the facility hosts numerous events Long-standing vendors for over 10 years. Service was the most important factor, price a close second

26 Maintenance / Janitorial One vendor supplied half of entire spend Vendor quickly realized we knew what the benchmark prices were Vendor was able to renegotiate with his suppliers saving our client 30% and his other clients also! The other half of spend included 8 vendors Able to consolidate with one buying group saving 20% Soft cost savings – only dealing with one vendor

Q & A Gregory Brown, Director Expense Reduction Analysts (O) (C) 27