Pellham Phillips hoping to hold line on layoffs

Pellham Phillips Architects & Engineers has shed several employees this year and cut back hours for surviving staff members, but owner Larry Phillips says he isn't closing up shop in response to the worst economic conditions he's seen in 30 years.

"I've heard for the last three years that we're closed," Phillips said of business community buzz about his firm. "I don't have any idea how those rumors start."

That's not to say that the thought of retiring early hasn't crossed his mind in recent months.

"When things get tough and clients are hard to find and you're a little bit frustrated with what's going on in the business, I think anyone would be lying if they didn't say it crossed their mind from time to time," said Phillips, an architectural engineer who co-founded the firm with ex-partner Galen Pellham 30 years ago. Pellham is now a commercial Realtor with Murney Associates.

In the early 1980s, Pellham Phillips scraped its way through an economic slump that pales when compared to the current recession and protracted credit crunch, Phillips said. The firm's bread-and-butter clients - private developers specializing in hotels, performance venues and sporting facilities - have been in a holding pattern as financing streams have slowed to a trickle. That client base includes John Q. Hammons Hotels & Resorts, which has put the brakes on an Embassy Suites at Lake of the Ozarks.

"Last October, we had enough stuff under way that I wasn't even worried about marketing for 2009," Phillips said. "And within the span of about 45 days every one of those contracts either were canceled or on hold. I'm not talking about just some of them; I'm talking about all of them."

Though he declined to disclose the firm's revenues, Phillips has responded to the sobering market realities - year-over-year billings are down about 40 percent to an undisclosed amount - with two rounds of layoffs. Pellham Phillips employed 23 people in mid-2008; today, there are 14 employees on the firm's payroll, but not all of them are working full time. Most of the staff was placed on part-time status in June, Phillips said.

"I think at this point we're as lean as I wish to be," he said.

Pellham Phillips, which was named the W. Curtis Strube Small Business of the Year in 2008 by the Springfield Area Chamber of Commerce, now employs three professional engineers, four licensed architects, two drafters and an interior designer, according to Marketing Director Brad Parke. Other employees include a visualization specialist and two support personnel.

At one time, Pellham Phillips had as many as 44 employees, but Phillips said he's inclined to keep the downsized firm closer to its current size. Smaller firms are more nimble, he said, although breaking apart the tight-knit staff hasn't been easy.

"It's really tough to let friends go," Phillips said. "And you hate to see people out of work."

Some Pellham Phillips employees who lost their jobs have gone into business for themselves; others are dutifully sending out résumés to other local firms in hopes of finding full-time employment.

Cathleen Frank, an interior designer who joined Pellham Phillips in March 2008 and was laid off in May, is among those looking for work. But she's finding that most architectural design firms in the area are facing the same struggles as her former employer.

Frank has since picked up a couple of freelance residential design projects.

"But it's not enough to keep food on the table, so I'm officially still unemployed. ... If I can't find a job in design and/or start my own business, I'm going to look at other industries," she said.

Frank spoke highly of Phillips and his firm, but she said architecture firms typically respond to weak economic conditions by reducing staffing levels. "It made me sick that they had to do that. And I know it made them sick, too," she said.

Tim Rosenbury, principal at Butler, Rosenbury & Partners Inc., said he's received a number of résumés from displaced design professionals in recent months, but he said BRP hasn't been in a hiring mode for quite some time. The firm has cut 28.5 full-time equivalent jobs since March of last year, with the latest round claiming 10 employees in April, Rosenbury said. BRP now has 37.5 full-time-equivalent employees, down from 78 in 2007, according to SBJ's Book of Lists research.

"It's touch and go," Rosenbury said. "We have our good days, and we have our days we'd just rather forget."

For 18 months now, the American Institute of Architects Architecture Billings Index has remained below 50. Scores above 50 indicate growth, while those below 50 signal decline. In June, the index score was 37.7 - the lowest level since February. According to the index, business conditions remained weak in all regions of the country in June, with firms in the Midwest and West reporting the steepest declines.

Despite his firm's rocky start in 2009, Phillips thinks his industry will turn around.

"I'm not a pessimist to the point that our best days are behind us," he said. "I think the economy will recover. ... And when the economy does recover, there's going to be a huge pent-up demand for facilities. I think in probably two years our profession will be rockin' and rollin'."

For the time being, Pellham Phillips is subsisting on smaller projects - and fewer of them. The firm is designing the new Springfield-Greene County E-911 Center and an extended-stay facility outside the area for an unidentified client. But the highly competitive climate also has led to some missed opportunities for the firm, which designed Hammons Field, home of the Springfield Cardinals.

Last year, Kansas City-based Populous - formerly HOK Sport Venue Event - outbid Pellham Phillips to design a $39.2 million double-A baseball park for the Tulsa (Okla.) Drillers. And earlier this year, Pellham Phillips received more bad news when the U.S. Department of Defense severed a long-running business relationship.

With fewer employees doing less work, Pellham Phillips also has reduced the amount of building space it leases in the Eleven Eleven Building, 1111 S. Glenstone Ave. The firm now occupies about 4,500 square feet, down from about 7,000 square feet.[[In-content Ad]]