Design firms hang on for recovery

Architect Robert Stockdale did everything he could think of in the last year to keep his staff together at Creative Ink Architects - eliminating salary increases, instituting four-day workweeks, cutting back on cleaning and lawn care services, closing off part of his building, executing a week of staff furloughs and reducing partner compensation, including his own, by one-third.

But this fall, with work not coming in and competition at an all-time high, Stockdale and partner Bill Watkins cut company staff from 10 to five employees, including two licensed architects.

"We've had to let people go unfortunately, and frankly we held onto them a lot longer than we should have. But I had a lot of loyalty to people who had worked here a number of years," Stockdale said.

'In survival mode'

Creative Ink's pain is echoed by architects across the Ozarks, including Tom Street of Erdmann Street Architecture and Planning Inc.

"We wound up laying off all of our staff, and it's just the two principals now," Street said of himself and partner Dave Erdmann. The firm previously had four employees; two were laid off in October 2008 and two more in spring 2009. A secretary/bookkeeper comes in two hours a week.

Like Stockdale, Street and Erdmann reduced their own salaries; Street said in 2009, he earned just 10 percent of what he did two years ago.

"Like a lot of folks, we're in survival mode," Stockdale said. "We're a good firm ... but if there's no work out there, it's tough to compete."

Local firms aren't alone. Stockdale and Street pointed to a recent article by MSNBC career columnist Eve Tahminciogluin in which architects were ranked the No. 1 hardest-hit profession in the recession, with 2009 unemployment approaching 17.8 percent through September.

Backlog and a bright spot

Jack Hood, vice president of architecture and engineering firm Hood-Rich Inc., said while the architecture side of his business is very slow with no backlog, the engineering side is continuing to work on a variety of publicly funded projects.

"We had quite a backlog of engineering work when the slowdown started, and projects in our engineering department are mainly funded through the government," Hood said.

But on government projects, "it's a long period of time from the beginning of the project to the end," he said.

Street said his company has no backlog of work left.

"We finished up one job last week, we are finishing up another job ... and then we're waiting for something to come in the door," he said.

About the only jobs that are coming up for bid these days are publicly funded projects such as schools, colleges, municipal water and storm-water systems and judicial facilities. Creative Ink is working on a project at Crowder College in Neosho, and it recently pursued some work with the Ava Schools.

"We were told we had an excellent proposal but we just didn't have deep enough school experience," Stockdale said.

Government-funded public works projects are a bright spot for local companies, but they don't alleviate the pressure altogether.

Scott Consulting Engineers has about 80 percent of its volume in public projects, said President Dick Scott, a licensed engineer, and the firm is well-positioned in regard to the few government-funded projects out there based on long-term relationships in place.

But since early 2008, Scott Consulting has reduced its staff to 18 from 23, and workload is down about 30 percent, Scott said. With annual billings typically around $2.2 million, that translates to a revenue reduction of about $660,000.

That reduction could worsen due to lower sales tax revenues, which are down 7 percent for the state and 10 percent in the city of Springfield. Scott said the decreases make it hard for public projects to move forward.

Credit and competition

For the few private projects out there, availability of credit continues to be a root issue.

"We have clients who are not able to pay their bills; they want to, but either lending fell through or they have cash flow issues. ... Even when we do have projects, some of the clients just get in a position where they can't pay or are very slow to pay, so cash flow becomes a real additional problem," Stockdale said.

Another compounding factor is intense competition, Stockdale said. For example, Missouri Southern State University in Joplin recently had a mandatory prebid conference for architects, and 40 firms showed up from as far away as Denver, Minneapolis and South Dakota, as well as Kansas City and St. Louis.

"Twenty-five firms ended up submitting proposals for that project. They short-listed it to six firms, and the project was awarded to a firm in Denver, Colo., of all places," Stockdale said. "The bigger firms from out of town are starting to play in our sandbox, and that's making matters worse for smaller firms around town."

Likewise, Creative Ink was short-listed for the Springfield-Greene County Emergency Operations Center in Springfield, but the job went to Florida-based Associated Design Group, which is working with local firm Pellham-Phillips Architects & Engineers Inc.

Because competition is so fierce, there is also strong downward pressure on fees.

"As far as fees go, we look at each job, figure our how much it's going to cost us to do, and bid it accordingly," Street said. In the past, "we'd lose a little on each project but we'd try to make it up in volume. Now our volume's gone away."

As a result, firms are making changes.

"We'll do things by the hour, we'll do it by the job, and if we hear somebody else is in it, we'll slash it down to the bare minimum ... because we want to win any job that comes along," Street said.

Looking ahead in 2010

While Stockdale said his optimistic side believes that things have to get better, he's not seeing any real evidence of that happening.

He's getting daily calls from contractors, asking, "Do you have anything? Are you working on anything we can bid on in the near future?" "The answer is no," he said.

Street said most projects he's seeing are remodeling or small additions, though there are some bigger projects in the works.

"If we get enough of those going, we may buck the trend and have a recovery here," he said.

And while last year's economic stimulus package helped construction in terms of shovel-ready projects for which design was already finished, local design professionals also are hopeful that any new construction stimulus would include their services, too.[[In-content Ad]]