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Reginald K. Layton
Supplier Diversity & Business
Development Director
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A more comfortable,
safe,
and sustainable world.
Our Vision:
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Business Profile:A global $38B diversified multi-industrial company
Automotive ExperienceBuilding Efficiency
Power Solutions
Leadership positions in growth markets worldwide
Delivering world-class technologies that differentiate vehicle interiors and increase
consumer demand
Creating quality indoor environments that are
energy efficient, safe and comfortable
Providing the highest quality, lowest cost automotive
batteries to help customers grow their market shares
Johnson Controls3
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Company Highlights
Founded in 1885
Listed on the New York Stock Exchange since 1965
$38.1 billion in 2008 sales
Revenues more than doubled in the last decade
140,000 employees in more than 1,300 locations serving customers in 125 countries
Johnson Controls4
17.218.4
20.1
22.6
25.4
27.9
32.2
34.6
00 01 02 03 04 05 06 07 08
105112112
118122
136140140
120
00 01 02 03 04 05 06 07 08
Employees(in thousands)
Net sales (in billion USD)
38.1
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Supplier Diversity & Business Development at Johnson Controls
More than $1Billion in First Tier Diverse Purchases each year since 2002
More than 420 diverse suppliers covering 50 purchasing categories
Two Minority Equity Joint Ventures Generating More than $1 Billion in Revenue and Employing More than 1500
First Tier Suppliers Spend Another $200 Million with Diverse Suppliers
Diverse Suppliers Support Operations in Canada, Mexico, Brazil, South Africa, Czech Republic and Spain
Corporate Member of National Minority Supplier Development Council and Woman Business Enterprise National Council
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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Today’s Discussion
• The Business Case for Diverse Business Engagement
Demographics
Economics
Competitive Advantage
• External Environment
• Internal Environment at Johnson Controls
Organization & Governance
Our Approach
— Processes
— Systems
— Capacity Building
• Path to Sustainability
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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Today’s Discussion
• The Business Case for Diverse Business Engagement
Demographics
Economics
Competitive Advantage
• External Environment
• Internal Environment at Johnson Controls
Organization & Governance
Our Approach
— Processes
— Systems
— Capacity Building
• Path to Sustainability
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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The Business Case
Long-term competitiveness of a corporation lies in developing business models which create both shareholder and stakeholder value
Supplier diversity & business development initiatives create value for both shareholders and key stakeholders
For several vertical markets, minority consumers will account for significant share of future revenues (Automotive, Telecommunications, State & Local Governments, K-12 Education, Energy and others)
Three Drivers
Demographics
Economics
Competitive Advantage
Source: Asaba Group; US Dept. of Commerce/MBDA
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Demographics
In 48 of America’s 100 largest cities, minorities are now the majority.
This was true in 30 of America’s largest cities in 1990.
Latino populations in 32 cities doubled between 1990 and 2000.
California is now 50.2% people of color.
The largest consumer markets in the U.S. are located in regions with the highest representation of minorities.
1995 Less than 15%15% to 24.9%25% to 49.9%50+%
2025
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Demographics
Source: DiversityInc.com
Fact: Minority group members are almost half the population in this age group
Fact: Older generations experienced less diversity with customers and co-workers\
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Suppliers/EmployersSuppliers/Employers
$$ExternalExternal
PurchasesPurchases
$$ExternalExternal
PurchasesPurchases
$$WagesWages
&&SalariesSalaries
$$WagesWages
&&SalariesSalaries
$$ConsumerConsumerPurchasesPurchases
$$ConsumerConsumerPurchasesPurchases
$$RevenuesRevenues
$$RevenuesRevenues
Economics of the Marketplace
Business Case Deep Dive
CorporationsCorporations
Products/ServicesProducts/Services
Individual HouseholdsIndividual Households
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Minority Business EnterprisesMinority Business Enterprises
$$ExternalExternal
PurchasesPurchases
$$ExternalExternal
PurchasesPurchases
$$WagesWages
&&SalariesSalaries
$$WagesWages
&&SalariesSalaries
$$ConsumerConsumerPurchasesPurchases
$$ConsumerConsumerPurchasesPurchases
$$RevenuesRevenues
$$RevenuesRevenues
Business Case Deep Dive
CorporationsCorporations
Products/ServicesProducts/Services
Supplier diversity equips rapidly growing population segments so they can purchase products/services
Economics of the Marketplace*Minority firms hire minority workers to a greater extent than majority firms, Northwestern University, Dr. Steven Rogers
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Company-wide Competitive Advantage
Supplier Diversity Expands Our Revenue
Increases sales revenue from customers that embrace supplier diversity Enhancing customer satisfaction
Facilitating proactive responses to diversity subcontracting requirements
Enhancing government relations in municipal, academic, health care markets
Develops stronger barriers against competitors with weak supplier diversity initiatives
Augmenting brand building strategy
Proactively differentiate ourselves from competitors
Proactively position ourselves as industry leaders
Enhances Sustainability Image Meets needs of special interest consumer advocacy groups
Leverages purchasing decision makers who are increasingly minorities
Enhances ability to meet government mandates/compliance without sacrificing profits or increasing cost
Assists customers with government contract/sourcing requirements
Enhances relationship with government entities
Market AccessMarket Access
Customer LoyaltyCustomer Loyalty
StakeholderSatisfaction
StakeholderSatisfaction
Johnson Controls has received $6 billion in new business by offering diverse business solutions to customers
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Supplier Diversity Expands Our Revenue
Nearly $2.3 trillion was held in socially responsible accounts used by individuals and institutions at the end of 2007, up from $639 billion in 1995.
Organization Summary Common usage
Johnson Controls added September 2005
Considered the “most recognized sustainability index; total assets under management in DJSI-based investments amount to over $5 billion
Greatly influences the decisions of investors and asset mgrs; financially oriented
Johnson Controls added 2004
World-renowned global brand leader in the financial services industry with more than 100,000 equity, bond and hedge fund indices; all fund licensing revenues go to UNICEF
Provides a benchmark index for investors to measure the performance of responsible businesses
Johnson Controls added July 2003
Launched in 1990 and modeled on the S&P 500 Index; first benchmark for equity portfolios subject to multiple social screens
Contributes to investor benchmarking and research; used to develop list of 100 Best Corporate Citizens
Johnson Controls added July 2006
Includes top 100 companies from 15 countries that KLD expects will provide near-term solutions to global warming.
Highlights leading companies that are finding sustainable and profitable solutions to climate change
Supplier Diversity Reporting for Sustainability Indexes
Company-wide Competitive Advantage
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Company-wide Competitive Advantage
Supplier Diversity Expands Our Revenue
Building Efficiency Business Diverse Supplier Participation by Vertical MarketAll Lines of Business – Closed Amount (March 2009 YTD)
Federal Civilian, $89,000
Federal Military, $850,634
Miscellaneous, $3,976,579
Real Estate, Financial and other Offices,
$167,570
Health Care, $10,229,701
Higher Education, $3,035,723
Other State Government, $26,298,390
Other Local Government, $12,577,807
Manufacturing/Industrial, $43,746
Life Sciences, $120,732
K12 Schools, $20,506,324
Airports, Airlines and Public Transportation,
$7,876,215
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Company-wide Competitive Advantage
Suppliers’suppliers
SuppliersJohnsonControls
CustomersCustomers’Customers
Product & Services Flow
Order/Cash Flow
Can include “Go-to-Market” relationships, ie, JVs, Alliances,
Teaming Partners
Can include “Go-to-Market” relationships, ie, JVs, Alliances,
Teaming Partners
Purchasing Domain Sales Domain
Can include managing key
suppliers’ suppliers ie, 2nd
tier diverse content
Can include managing key
suppliers’ suppliers ie, 2nd
tier diverse content
Supplier Diversity Strengthens the Supply Base
Supplier Diversity & Business Development:Supports Purchasing Teams
Assists departments in identifying and qualifying diverse supplier candidates
Maintains database of certified diverse suppliers
Maintains supplier diversity certification records
Develops programs to accelerate growth of diverse suppliers
Supports Sales Teams
Acts as subject matter expert for customer strategies
Develops strategies to win business using portfolio of diverse-owned firms
Reports diversity purchasing performance quarterly internally and externally
Supplier Diversity & Business Development:Supports Purchasing Teams
Assists departments in identifying and qualifying diverse supplier candidates
Maintains database of certified diverse suppliers
Maintains supplier diversity certification records
Develops programs to accelerate growth of diverse suppliers
Supports Sales Teams
Acts as subject matter expert for customer strategies
Develops strategies to win business using portfolio of diverse-owned firms
Reports diversity purchasing performance quarterly internally and externally
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Company-wide Competitive Advantage
Diverse-owned firms are a resource to replace incumbent suppliers when the incumbents :
Have poor performance
Refuse to follow Johnson Controls’ business processes
Lack engineering/design capability
Refuse to participate in cost reduction strategies
Are located in unfavorable locations relative to our facilities
Strengthens relationships with a new class of suppliers
Larger firms but privately held
Fortune 500 trained management teams
Many have same customers as Johnson Controls
Highly visible in their communities
Supplier Diversity Strengthens the Supply Base
Value ChainFlexibility
Value ChainFlexibility
One strategy to value creation in the chain is to expand the scope/scale of offerings, providing integration and efficiency, or even expanding diverse business’ role in the chain.
One strategy to value creation in the chain is to expand the scope/scale of offerings, providing integration and efficiency, or even expanding diverse business’ role in the chain.
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•DemographicsDemographics
•EconomicsEconomics
•Competitive AdvantageCompetitive Advantage
The Business Case
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Today’s Discussion
• The Business Case for Diverse Business Engagement
Demographics
Economics
Competitive Advantage
• External Environment
• Internal Environment at Johnson Controls
Organization & Governance
Our Approach
— Processes
— Systems
— Capacity Building
• Path to Sustainability
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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External Environment
Government/Public Sector Zone
Local contract compliance and minority business development departments
U.S. Government, SBA, State Agencies
Community Action Groups Zone
Urban League
NAACP
Hispanic Chamber of Commerce
Corporate Associations Zone
National Minority Supplier Development Council (NMSDC)
Women Business Enterprise National Council (WBENC)
The Billion Dollar Roundtable Inc.
Most of Johnson Controls’ customers are aligned with corporate certification organizations
Most of Johnson Controls’ customers are aligned with corporate certification organizations
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External Environment
National Minority Supplier Development Council (www.nmsdc.org)
NMSDC is headquartered in New York City and has 39 regional offices around the country. NMSDC has more than 4,000 corporations as members and has certified more than 15,000 minority businesses as owned, operated and controlled by ethnic minority management teams
NMSDC
– Certifies that a firm is owned operated and controlled by minority management team
– Maintains an diverse supplier data base for corporate members
– Facilitates relationships between corporations and minority firms
– Educates and trains practitioners and corporations
– Lobbies government agencies
– Tracks diversity business trends and corporate performance
– Publishes best practices
MBE- Minority Business Enterprise is a company that has been certified that it is owned, operated and controlled by minority management team
Women Business Enterprise National Council (www.wbenc.org)
WBENC is headquartered in Washington DC and has offices around the country and certifies that businesses are owned, operated and controlled by woman management teams
– Certifies that a firm is owned operated and controlled by woman management team
– Maintains a diverse supplier data base for corporate members
– Facilitates relationships between corporations and minority firms
– Educates and trains practitioners and corporations
– Lobbies government agencies
– Tracks diversity business trends and corporate performance
– Publishes best practices
WBE- Woman Business Enterprise is a company that has been certified that it is owned, operated and controlled by woman management teams
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External Environment
The Billion Dollar Roundtable Inc. (www.bdrusa.org)
The BDR is headquartered in Alabama and is comprised of only 16 U.S. corporations that spend more than $1 billion annually with minority- and women-owned businesses.
The BDR seeks to lead, influence, and shape supplier diversity excellence globally.
The BDR’s mission is to drive supplier diversity excellence through best practice sharing and thought leadership.
*
*
* Lockheed Martin and Boeing are major Federal Contractors
BDR only accepts spend from NMSDC and WBENC because of the stability of NMSDC/WBENC certification rules
BDR only accepts spend from NMSDC and WBENC because of the stability of NMSDC/WBENC certification rules
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Johnson Controls has world-class processes
2008 Corporation of the YearNational Minority Supplier Development Council
2003 Corporation of the YearNational Minority Supplier Development Council
2 6.8 17.436.786 116
235
465505
10211070
11311023
1004
1500.8
1656
0100200300400500600700800900
10001100120013001400150016001700180019002000
Mill
ions
Johnson Controls Diverse SpendJohnson Controls Diverse Spend
•Local and National Diverse Business
• Association Membership•CEO/Senior Management Involvement
• and Policy Statement•Dedicated Resource Deployment
•Require Certification•Outreach•Prime Contractor Initiative
• Linked into Corporate Procurement and • Sales/Marketing Processes• Innovative Specific Development Initiatives• Communications Strategy• Accountability Systems
Supplier Diversity Process Implementation
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Today’s Discussion
• The Business Case for Diverse Business Engagement
Demographics
Economics
Competitive Advantage
• External Environment
• Internal Environment at Johnson Controls
Organization & Governance
Our Approach
— Processes
— Systems
— Capacity Building
• Path to Sustainability
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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of the United Kingdom
Empowe
rdex of South Africa
of the Brazil
Global Purchasing Council Organization and Reporting Relationships
Reginald LaytonDiversity Business
Development DirectorCompanywide
Reginald LaytonDiversity Business
Development DirectorCompanywide
Lozenzo Bell Supplier Diversity
ManagerBldg. Efficiency
Lozenzo Bell Supplier Diversity
ManagerBldg. Efficiency
Erin HenryAssociate Supplier Diversity Specialist
Corporate
Erin HenryAssociate Supplier Diversity Specialist
Corporate
Albert LouisSupplier Diversity
ManagerAutomotive Experience
Albert LouisSupplier Diversity
ManagerAutomotive Experience
Operations(buyer /supplier) Activity
Commercial (customers/ associations)
Activity
SteveRoellCEO
SteveRoellCEO
Charles HarveyVP Diversity &Public Affairs
Charles HarveyVP Diversity &Public Affairs
Shelly BrownManager
Power Solutions
Shelly BrownManager
Power Solutions
Corporate Zone Bldg Efficiency Zone
AutomotiveExperience
Zone
Power Solutions Zone
Carolyn WoznickiBE VP GlobalProcurement
Carolyn WoznickiBE VP GlobalProcurement
Michael BartchantAE VP GlobalProcurement
Michael BartchantAE VP GlobalProcurement
Rodger HallPS VP GlobalProcurement
Rodger HallPS VP GlobalProcurement
Global Purchasing Council
Kenneth Gardner Diverse Supplier
Development ManagerCompanywide
Kenneth Gardner Diverse Supplier
Development ManagerCompanywide
International Zone
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International Initiatives
United Kingdom – Minority Supplier Development UK
British Blacks, Chinese, Asian Indians, Pakistanis and Bangladeshis
Johnson Controls is a member
Brazil-Center for Business Integration (INTEGRARE)
Afro-Brazilians, Amerindians and disabled
Johnson Controls is a member
Canada-Canadian Aboriginal and Minority Supplier Council (CAMSC)
Canadian Aboriginals and Visible Minorities
Johnson Controls is a member
China - Minority Supplier Development China
Chinese citizens who belong to one of the following 55 ethnic minority groups:
Zhuang, Manchu, Mongolian, Hui, Tibetan, Uygur, Miao, Yi, Bouyei, Korean, Dong, Yao, Bai, Tujia, Hani, Kazak, Dai, Li, Lisu, Va, Lahu, Shui, Dongxiang, Naxi, Jingpo, Kirgiz, Tu, Daur, Mulao, Qiang, Salar, Maonan, Gelo, Xibe, Gaoshan, Blang, Achang, Pumi, Tajik, Nu, Uzbek, Russian, Ewenki, De’ang, Bonan, Yugur, Jing, Jino, Tatar, Dulong, Oroquen, Hezhe, Lhoba, Moinba.
Johnson Controls is a member
South Africa-Corporate SMME Development Forum (CSDF/Emplowerdex)
Black South Africans African, Asian Indian and Colored South African Citizens
Council is in formation stage
Johnson Controls has diverse suppliers identified
of the United Kingdom
Empowerdex
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Today’s Discussion
• The Business Case for Diverse Business Engagement
Demographics
Economics
Competitive Advantage
• External Environment
• Internal Environment at Johnson Controls
Organization & Governance
Our Approach
— Processes
— Systems
— Capacity Building
• Path to Sustainability
Alignment of resources and sustainable construction processes to leverage diverse business involvement
on Projects
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Path to Sustainability
Sustainability doesn’t require sacrifice;it requires a new frame of mind
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Social Responsibility
• Community workforce participation
• Local MWBE participation
• Workforce development
• Job creation
• Economic development
Environmental Stewardship
• Emission reduction• Environmental Health• Improved Quality of Life
Economic Benefits
• Energy Savings• Emissions Savings• Water Savings• Operations &
Maintenance (O&M) Savings
• Improved Productivity and Health Value
Path to Sustainability
Economic Benefits + Environmental Impacts + Social Responsibility
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Johnson Controls’ Strategies Despite the Economy
Management Focus:
Spend with diverse suppliers automated for review each month, discussed in operations meetings
JCI leaders serve on regional council committees (Executive, Certification, Fund-raising)
Active Supplier Measurement:
300 location scorecard metric requires at least 5 diverse active vendors
Quarterly review of supplier diversity roadmap actions with owners, actions, dates
Leverage Scale:
Suppliers already in use at one location with breadth to go to neighboring branches/regions are pursued (grow existing suppliers!)
Engagement Enhancement:
Supplier mentoring relationships led by local personnel.
Locations compete for Diversity Business Award recognition
Branch/region engagement with local NMSDC council.
Use 2nd tier as a diverse supplier recruiting strategy
Training:
Branch led training of suppliers to increase supplier capability (or done at HQ with field location endorsement of suppliers)
HQ led training for broad JCI organization understanding of diverse sourcing and opportunities
JCI Leadership Institute led training on strategic plan development and regional council board development.
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2008 Summary of Impact
Leadership Purchased the operations of our largest MBE out of bankruptcy, saving more than 7000
jobs Produced and distributed a DVD to 3000 corporations showcasing NMSDC best
practices Johnson Controls employees served as officer s on the boards of directors of five
NMSDC regional councils
Procurement Spent $1.23 billion with 284 CERTIFIED NMSDC MBEs on a first tier basis in 2008.
Economics The $1.23 billion spent with CERTIFIED NMSDC MBEs supported more than 9,000
jobs at MBE firms and generated more than $243 million in wages and salaries.
Development Seventy-nine CERTIFIED NMSDC MBEs participated in capacity building activities
with Johnson Controls. Nine CERTIFIED NMSDC MBE owners attended executive education programs at
Tuck and University of Wisconsin. Five CERTIFIED NMSDC MBEs competed with 400 non-minority firms and won
supplier performance awards from Johnson Controls in 2008.
Engagement Johnson Controls supported more than 223 NMSDC/NMSDC regional council events. More than fifteen Johnson Controls teams were recognized with diversity business
leadership awards for doing deals with CERTIFIED NMSDC MBEs
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Walking the TalkWe’ve committed to a 30%
reduction in carbon intensity by 2012
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Glendale Campus Building/ Renovation Project
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Our newly renovated facility is the first Platinum-certified LEED®
campus in the world
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Johnson Controls Corporate Headquarters Campus
• 33-acre site
• Gutting and renovating two buildings with a combined 134,000 square feet (Corporate and Power Solutions HQs); more than 75% of demolition “waste” from existing buildings was recycled)
• New construction:
--94,700-square-foot Power Solutions HQ
--29,700-square-foot Amenities building (cafeteria, meeting rooms, fitness center)
--Four-level parking structure for 400 vehicles with hookups for “plug and drive” electric vehicles
• Total 258,000 square feet of new and completely renovated office space
• Locally harvested and manufactured materials account for more than 25% of project materials, including drywall, concrete, steel and stone
• New construction waste recycling is at 89% vs. 75% target
• Participation by women- and minority-owned contractors is over our goal of 20 percent
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Johnson Controls “Walks the Talk”
Our global headquarters boasts:
• Solar thermal on roof of new Power Solutions HQ; 1,330 square feet produces 2837 therms annually.
• Ground-mounted solar photovoltaic array; at 31,115 square feet, 250 kva,
Wisconsin’s largest.
• Laminated solar on roof of Corporate North building, 14,355 square feet.
• Solar generation will produce the electricity needed in Corporate North
• Reducing greenhouse gas emissions by 1.1 million pounds/year;
• NOx emissions reduced by 2000 pounds/year.
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Geothermal
272 wells at 300 feet deep that use subsurface temperatures for warming or cooling the water supply.
Heat pumps vs. current natural gas boilers will reduce winter heating costs by about 29%.
Geothermal for removing condenser heat in summer will reduce chiller operating costs by 23%; heat pumps’ operating costs about 57% lower than natural gas.
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Other Sustainable Features:
• “Green” (growing) section of the Amenities Building roof.
• 30,000 gallon cistern to capture rainwater -reducing water consumption by 77%, a savings of 595,000 gallons annually.
• 3-acre parking lot surfaced with permeable pavers
• Day Light harvesting and shade controls
• Under floor HVAC system with personal
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Diverse Participation in the Corporate Campus Project
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Environmental
Economic
Healthy Communities
MBE Name2008 Amount
($Millions)Employee
CountCorporate Construction
Scope
1Prospect Technologies, LLC 0.2202$ 33Cabeling - low voltage Corporate North & South
Affi rmative Supply 0.1019$ 1 Miscellaneous supplies
B&D Contractors, Inc. 0.1024$ 32
Installed aluminum glazing building 3, powers solutions, amenities door/hardware. Deck installed with pressure treated wood
Copy N' More, Inc. 0.0594$ 4
Copy services for large scale blue prints
Hurt Electric, Inc. 1.4904$ 31
Site electric, parking deck electric
Midwest General Construction & Steel Fabricators, Inc. 0.3759$ 35Steel fabrication
Price and Sons, Inc. 0.0986$ 5Miscellaneous supplies
Rams Contracting, Ltd. 0.7419$ 9 Trucking
SmithCFI 1.1916$ 69Furniture provider
Sanchez Painting & Decorating, Inc. 20Painting for coporate north and south
Sonag Company Inc 0.5530$ 35Concrete contractor
Sonag Ready Mix LLC 55Concrete supplier to site
Thomas A. Mason Co., Inc. 0.0733$ 100
Carpet, vinyl tile and installation
2008 Total($ Millions) 5.0085$ 429
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Diverse Participation in the Corporate Campus Project
39
Environmental
Economic
Healthy Communities
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RESULT:
Increased participation in Green Construction
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Thank You for Attending!Any Questions?
Reginald K. Layton
Johnson Controls, Inc.
Phone: 414 524-2041
Email: reginald.k.layton@jci.com
This concludes the American Institute of Architects Continuing Education Systems Program.
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