Central Penn Business Journal
Friday, March 12, 2010
Central Pennsylvania architecture firms are feeling the pinch of the economy.
Some are downsizing, others are taking on new types of projects, cutting costs and getting more creative to stay afloat because businesses are not building or expanding into new facilities. And the education, health care and public sectors are not building as many buildings either.
The economy last year hit the U.S. architect profession the hardest, according to a recent MSNBC report.
The report is based on U.S. Bureau of Labor Statistics that show through the first three quarters of 2009, unemployment in architecture increased by 17.9 percent compared with the same period a year before. There were 230,000 employed architects in the U.S. through the first three quarters of 2008. That fell to 180,000 during the same period the following year, according to the bureau.
The problem is multifaceted.
Banks still are more restrictive with their financing in the economic downturn, government funding has all but dried up and companies are being overly cautious, architects said.
"When you have unemployment rates increasing the way they have, there is less need for facilities," said Dale Yoder, president of Lancaster-based Cornerstone Design-Architects. "We have over eight months' worth of backlog, but a majority of that work is static."
Last month, Cornerstone had to part ways with two business partners and two employees. The firm went from 19 to 11 employees within the past year because work has gone away and fees have gotten so competitive, Yoder said.
Four years ago, when Upper Allen Township-based Crabtree, Rohrbaugh & Associates Inc. advertised an open position, the company received four applications from people who had a few years of experience after college. Now, the firm receives applications from dozens of people who have 18 or more years of experience, said Doug Rohrbaugh, the company's board chairman and vice president.
"Three out of four Fridays for the last year, I have gotten a call from someone who has been laid off," Rohrbaugh said.
Crabtree, Rohrbaugh is one of few midstate firms that actually grew in the past year. Within the past 14 months, the company added nine people and employs 94 at its Central Pennsylvania and Virginia offices combined. The firm grew because it diversified, he said.
"By expanding our project types and geographic region we have been more successful than firms that let the economy dictate business for them," Rohrbaugh said.
Most of the company's employees work in the midstate, but two and a half years ago, Crabtree, Rohrbaugh opened an office in Virginia. About four years ago, the company did little to no work outside the region. Now, 50 percent of its work is outside the region.
Architecture is ailing because construction is, too, Rohrbaugh said.
Federal stimulus money has been pumped into the construction industry, but the money has gone to infrastructure projects. That means only firms that design and build bridges, roads and sewers benefit from the government funding, and that only makes up about 10 percent to 15 percent of the industry, he said.
Competition is eating up firms, too, and architects said the profit margin has dwindled because firms are so competitive.
Lititz-based Beyond Architecture recently was one of 72 firms to bid a job in Philadelphia, said Brian DeCew, managing partner at the Lancaster County firm. Beyond made it to the short list of three remaining firms, but didn't get the job. The three firms were considered not only because of price, but for qualifications, DeCew said. Qualifications can help a firm during tough economic times, he said.
"Some of the very competitive projects have been qualification-based," DeCew said. "If it's price-based we don't look at it because that's dangerous. A lot of our work is relationship and repeat-based."
Beyond has not had to lay off workers in the down economy, but it is not looking to hire. The firm has 12 employees. The group's partners are working longer hours and taking fewer vacations to keep the status quo, he said.
Cornerstone and other firms have become more efficient and creative in the sour economy.
Cornerstone recently moved past traditional computer-aided drafting by incorporating building information modeling designs, Yoder said. Building information modeling provides clients with three dimensional images instead of sheets of drawings, he said.
The technology has made the firm more efficient, but also cut Cornerstone's fees in half because it takes less time to finish a project. That means the company has to take on a larger volume of work, Yoder said.
Building information modeling is opening other opportunities to Cornerstone, however. The firm now offers a service called facilities information management, which allows it to create three-dimensional images of existing facilities for property owners who own and manage large amounts of building space. For example, clients can use the firm's facilities information-management service to view their facilities and pull up plans for measurements if they have a prospect for leasable space. Yoder said he plans to incorporate building information modeling with the green building movement.
To keep moving forward, Crabtree, Rohrbaugh works in retail, banking, office buildings, higher education
and health care. The firm turned its attention to health care and higher education as the economy grew worse so it would have more projects to bid, Rohrbaugh said. The firm is licensed to work in more than 40 states.
Architects are sacrificing to get by right now, DeCew said, but things should start to balance toward the end of this year.
"There is a firm that we know that hasn't gotten work since last February and another since last March," DeCew said. "Architects are grateful to have work."
http://www.centralpennbusiness.com/banking-a-finance/80441-midstate-architects-improvise-to-survive