Monday, November 23, 2009

Race to the bottom

Ty Kicklighter, chief financial officer at Walter Schoel Engineering Company (Birmingham, AL), a 40-person civil, environmental, and surveying firm, kicks off the holiday workweek with a call to action for his colleagues in the AEC space:

"The Travels of a T-Shirt in the Global Economy by Pietra Rivoli follows the life of a T-shirt from the cotton field through harvest, production, distribution, initial sale, and finally to the used clothing market in Africa. It is an interesting take on the inner workings of economics and the global economy. One portion of the book describes the 'race to the bottom' in textile production, describing its rise and fall in countries around the world, from Europe in the 1700s to China today, as production shifts to the lowest cost producer. An interesting note is that many of the countries or areas that have 'lost' this race and been beaten out by cheaper labor and manufacturing, ultimately are better off and have a higher standard of living after having lost the race. Prior to entering the race, many of the laborers lacked skills, had very little autonomy, and were primarily in family agricultural jobs that seemed hopeless. Losing the race forced innovation, left a more skilled workforce, and also left a workforce motivated to maintain their autonomy and not return to the farm.

"Certainly in the current economy, fee pressures in the design professions seem like a race to the bottom. Firms are sacrificing profits for work, competing with many more firms for the same work, freezing salaries, and reducing labor costs to stay competitive. Even under these circumstances, it is worth being reminded that the race to the bottom in regards to fees is not sustainable, both for individual firms and for the industry. Those firms that avoid this race by innovative thinking, continuous skill building, and leveraging a motivated workforce will ultimately be the real winners."

So, what do you think? How can your firm and the AEC industry as a whole combat the race to the bottom, even in these trying economic times?

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