I am away this week and next, so I'll reprint the second blog from last year, it concerns the state of the design industry. I would like to report that things are getting better, but they are not. Fees are still being driven down, there are far fewer firms than eleven months ago, and the future is, at the moment, not brighter.
So here you go:
June 23, 2010
I remember talking to a client over a year ago about the condition of many of the consulting firms that he uses in his master plan communities, "Jim, we won't be here when you want us," I said. "Every architecture, engineering, and planning firm is half the size they were in 2007." He smiled and said he wasn't worried. I wonder how he is feeling now.
Firms are now from O% (zero) to 20% of the size they were in 2007. Yes, many of the older firms do not exist now (the principals have had enough and retired - they ain't gonna do this again) - no associates left to take over, they were let go during the collapse. To the point, now, that one of the trade and management groups that work with the design and engineering field (PMSJ - Resources,Inc. see www.psmj.com), states that the middle size firm (15 to 30 professionals) may not even exist by 2020.
Frank Stasiowski's new book Impact 2020; 10 Giant Forces Now Colliding to Shake How We practice Design in 2020, the mid-sized firm can not afford the technology, the insurance, health care costs, local employee's minimum requirements (see San Francisco), and the continuing problems that HR demands - all overhead. Sure rent may be cheaper - but not if you still have 2 years on that lease you made in 2007.
What does this mean to the development industry two years from now? It will get less service on a one-on-one basis, the experience level of the professional consultant will be gone, and the cost will be higher. All at a time when the ability to react to radically changing markets is critical.
We all won't be gone, but the few that remain may not hold the strengths that they had at one time. Partnerships are dissolving and the partner's call to fund the company have probably drained their personal coffers to the point that they have to break up the company or risk bankruptcy. None of this bodes well for the future. I wish I could hold hope for a better outcome but as the "Great Recession," proceeds and every aspect of the development industry, commercial, retail, housing and office languishes; the ongoing survival of most firms not doing gov'ment work or TI improvements for census takers is sadly in doubt.