Architects Brace for Prolonged Recession
As summer gave way to fall, some economic indicators suggested the Great Recession was ending, and yet many architects continue to struggle in an environment that provides only scattered reasons for optimism.
Much of the gloom can be explained through numbers. For example, the Dodge Index from McGraw-Hill Construction, which measures all current construction activity in the U.S., from homes to highways, has stood at an average of 85 for 2009, which is far below the average of 135 for 2007. “And if you adjust for inflation, it’s even worse,” says Kim Kennedy, an economist with McGraw-Hill Construction Research.
Projections for 2010 seem comparably grim.
In September, the Architecture Billings Index, an indicator of construction activity nine to 12 months hence, registered at 43.1. The index, which is compiled by the AIA based on surveys sent to firms, has fallen below 50 for 20 consecutive months. “It’s basically been flat since March [when it hit 43.7], and this is not good news,” says Kermit Baker, the AIA’s chief economist. “There was hope that the low 40s would turn into the mid 40s by now, but it hasn’t really moved at all.”
That stagnation has cost thousands of jobs. While specific figures about architects and unemployment are not available—the U.S. Labor Department doesn’t systematically track them, and neither does the AIA—the unemployment rate in the architecture and engineering sectors jumped to 7.3 percent in the second quarter of 2009, with 113,000 people looking for work, according to the U.S. Bureau of Labor Statistics. In the previous quarter, the unemployment rate was 5.6 percent. A year ago, just 3.2 percent of the industry—54,000 people—was unemployed.
Suzanne Mecs, membership director at AIA New York, has seen the effects of the recession firsthand. Since last December, the chapter’s “Not Business as Usual” get-togethers, which focus on coping with a lack of work, have drawn a total of 730 people, with almost a third streaming through the door in the past two months. In fact, the meetings have been so popular that the chapter converted a gallery into a classroom and now offers tutorials in ArchiCAD and Revit, as well prep classes for LEED exams. “We felt from the vibe of the first meeting we had struck a chord,” Mecs says.
Even industry stalwarts have been pinched. Over the course of this year, Perkins + Will, for instance, shed 8 percent of its staff, from 1,730 to 1,600 employees, says president Phil Harrison, AIA. While the firm is landing new commissions, they’re slow to get going, in a delay Harrison attributes not to a lack of credit, which was the common explanation for the slowdown a year ago, but to overly cautious attitudes. “Our hope is to have sufficient work to keep moving forward,” Harrison says.
Any commissions up for grabs are now fought over with ferocity, says Randy Regier, the president of Taylor, a California-based firm that laid off 8 of its 66 employees in February. To wit: Taylor, which focuses on health-care facilities, lost a hospital remodeling job this summer when it was underbid by another firm by $4,000, Regier says.
In the meantime, Washington, D.C., is providing little cushioning, architects say. Tangible levels of stimulus funding haven’t trickled down to most firms yet. And although health care is supposed to be a bright spot, the current impasse among lawmakers over health insurance has had a chilling effect. “We’re waiting for a resolution,” Regier says.
Not all is universally gloomy. Recent ABI figures about inquiries for new projects, including requests for proposals, were at 59.1 in August, besting July’s 55.2 score. Plus, Snøhetta, the Norwegian firm behind the visitor center at the World Trade Center site, hired 10 of the 17 employees in its New York office since December 2007, when the recession began, says managing director Vanessa Kassabian. And the firm’s other projects—mostly campus buildings whose funding is secure—have “insulated it through the year’s end,” Kassabian says. “But when that ends, we could have a problem.”
View more economic news in our special section, Recession and Recovery.