[See Chart Five]

        The Johnson Controls International Office Costs Index is based on a detailed model of a medium grade air-conditioned office building, which operates reasonably efficiently with no unusually high service standards or demands. The building is 160,000 rentable square feet in size, and houses 750 occupants working between 8am and 6pm 5 days a week. This model is used to compare the cost variance for each country from the average. Figures reported reflect input costs at 4th Quarter 2000.         The average is calculated using costs for each of the following facility services which must normally be provided to ensure a productive working environment - maintenance, cleaning, security, utilities, reception, communications, reprographics, internal moves, stationery, and post room services. These are then weighted to take account of the relative significance each one has on the overall service. For example, a fluctuation in maintenance costs will have a greater effect on overall costs than reception services.
        In addition 2 new countries have been added to the index this period - Japan and Singapore. However due to the extreme nature of their costs they have not been added into the average as this would cause the rest of the data to have too narrow a distribution, and would not enable longitudinal comparisons with previous reports. They have therefore been shown relative to the average of the other nine countries.

In overall terms, Singapore is significantly cheaper than the other countries, and Japan is markedly more expensive.

Key point countries (excluding Singapore and Japan)
   • Denmark has the highest overall costs
   • The Netherlands has the lowest overall costs
   • Spain has the second highest costs
   • The UK has the second lowest costs
   • Germany is shifting back towards the more expensive countries

(excluding Singapore and Japan)

Denmark is the most expensive country in the Index overall. If utilities and cleaning were not included, Denmark would be one of the lower cost countries. Denmark is the most expensive country in the areas of cleaning and internal moves, and for property operations overall. Labour costs have risen overall by approximately 1% over the last period. Communications costs have decreased by 4%, but utilities costs have increased by approximately 5%.

France is still the third lowest cost country in the index. Utilities costs have risen quite sharply, but this has been more than offset by big reductions in communications costs driven by a competitive market.

Germany has drifted back towards the more expensive countries over the period. It is still the most expensive country in the areas of security, maintenance, external landscaping and catering, but is lowest for reprographics and stationery. Costs have increased by approximately 2% for materials and 3% on labour.

Italy's relative position has improved slightly over the last six months, but it is still higher than the overall average. None of the individual service costs are exceptionally high or low, despite a significant increase in paper costs.

The Netherlands is still the lowest cost overall in the index. Costs have remained fairly static, except in security where a collective wage agreement has increased labour costs by over 5%. It is the lowest cost country for utilities, communications, and for office services overall.

Spanish costs have increased by approximately 2.5% over the last period, leading to an overall relative deterioration against the average. It is a country of extremes - still the most expensive for utilities, as well as communications and reprographics, but the lowest cost for seven other categories where low labour costs have a significant impact.

Sweden has remained the fourth lowest cost overall, but has improved compared to the average. In most areas costs have been more or less static, only maintenance experiencing an increase of 3% in labour costs due to collective wage agreements and labour shortages. Sweden has the highest cost for mail room services.

The UK is still the second lowest country in the Index. It has the lowest cost for maintenance, and is the lowest overall for property operations. The most significant shifts have been increases in maintenance, security and reception costs by approximately 2%, and decreases in utilities and communications costs by between 1% and 2%.

The USA has improved again compared to other countries over the last six months, and it is now at -3% below the group average. Labour costs have continued to rise, but materials costs have been more static in general. It is the most expensive country for stationery.

Singapore is the lowest cost country in the expanded Index overall. This is due to markedly lower labour costs than elsewhere.

Japan is by far the highest cost country in the expanded Index overall. This is due to markedly higher labour costs than elsewhere, although costs across all areas have been reducing due to the general economic climate.

How Can Johnson Controls Provide This Information?

Johnson Controls is one of the largest facility management companies in the world. It operates in more than 500 locations in 40 countries and employs over 18,000 staff.
        By building on this strength, it has developed International Performance Management (IPM), a process to accurately measure and compare the performance of facilities, not only from a cost perspective, but perhaps more significantly in terms of service efficiency and effectiveness. At the heart of IPM is a sophisticated web based knowledge database with information stored on thousands of buildings across the globe, occupying more than 500 million square feet. This database can be accessed and used by Johnson Controls managers and professionals around the world.
        Information for the USA Indices, as well as similar ones in the UK and Europe, is drawn from the IPM database.