Miyamoto in Haiti

H. Kit Miyamoto, president and CEO of Miyamoto International (West Sacramento, CA), has been in Haiti for a little more than a week, assessing the damage of the earthquake-ravaged country and offering his advice on what the people there can do to move on and rebuild from the devastation. He is chronicling his trip with journal entries and other multimedia opportunities, including being followed by a CNN camera crew. It makes for interesting reading and viewing and provides a good chance for other structural engineering firms to see what they might be stepping in to if they join the rebuilding efforts.

Will your firm be heading to Haiti to help with the cleanup or the rebuilding after the earthquake?

Employees follow their leaders

Last, month, Steven W. Smith, president and managing director of WSP-SELLS (Briarcliff Manor, NY), a 250-person transportation and infrastructure firm, wrote about riding out the economic downturn. This month, Smith looks at employee morale and how to deal with it when it's flagging:

"If you have an office with poor morale, don’t fall back on the easy explanation and blame the economy, because that may not be the real reason. If you are honest with yourself, you will see that poor morale starts and ends with the leadership of your managers in that office. This became crystal clear to me after a recent survey of our business. WSP performs an annual online survey through the Gallup poll to measure our staff satisfaction. The results are broken down by operating company; by manager; by office; by gender; by age, etc. It is a great tool to get a pulse of your employees.

"We have a couple offices that have been really affected by the downturn in the economy. These offices have had staff reductions and reduced work hours. One would expect both offices to score similarly in the staff satisfaction polling, but this was simply not the case. One office has high staff morale and motivation, while the other was just the opposite with a grim view of future opportunities. Taking a step back and looking at the leaders of those offices you can readily see why this is the case. Where morale is high, the leaders are strong; they communicate well; they are optimistic about life and the business; they solve their own problems. It is clear: if the leaders set the proper tone, the office will follow."

Does your firm have an issue with poor morale, either in one office or across the board? What are you doing about it?

A higher calling to bottom lines

David Kent, senior VP of finance and administration at Carl Walker, Inc. (Kalamazoo, MI), a 67-person engineering firm, was trained as a minister before shifting career gears and focusing on finance. His path to being a numbers-cruncher is one of many new features in the January issue of AEC Finance News. The latest issue, which comes out today, also includes a preview of our upcoming webinar on research and development tax credits, a look at the emerging trend of working with small banks, what kind of software CFOs are using these days, and an update on compliance guidelines with the Sarbanes-Oxley Act in June.

Did you make an interesting journey to your firm leadership position? What sort of software are you using? Have you had luck with small banks? Are you confident you'll be in compliance with Sarbox by June?

Housing crisis hits 1600 Pennsylvania Ave.

I hadn't heard that the economy was in bad enough shape to put the White House on the market, but apparently the country's most famous address has lost about 5% of its value in the past 12 months. For those of us with property on the market, we know all too well that this is not the time to be looking to sell a home unless it's absolutely necessary.

In the AEC space, firms' book values dropped slightly in the past year, not a surprise based on the rocky road many companies found themselves on in 2009. What do you see on the horizon for 2010?

What can you learn from Conan?

The saga at NBC involving Jay Leno's failed stint in prime time may not seem to apply to the AEC industry at first blush, but there's still plenty your firm can learn from the public relations nightmare that's come from the saga, including the end of Conan O'Brien on The Tonight Show at the end of this week:

1. No matter how safe you think your job may be and no matter how ironclad your contract seems, there's always a chance today will be your last day. With that in mind, it's important to never stop networking and always keep an ear open for new opportunities.

2. Make sure you cover yourself when you negotiate your contract. You probably won't walk away with the $32 million golden parachute O'Brien will reportedly get from NBC, but you'll know what options you'll have if you do get let go, or decide to leave on your own.

3. Even if you hear rumors about impending layoffs, don't assume you'll be part of the group on the way out and act in a way that could ensure your exit. Sure, it's funny to think about all the things you could do in your final days with your firm, but why burn a bridge for no reason or give your boss a reason to let you go with no chance of getting a reference down the road?

We'll be launching a new feature in The Zweig HR Letter called "The Next Time You Fire Me" that looks at the way HR directors and other firm leaders can better handle the toughest part of their jobs - letting people go. The pieces will feature tips from those in the industry who found themselves "downsized" recently. If you have any ideas to add to the feature for a future edition, let me know. Maybe the execs at NBC will read it and learn a little bit too!

Show me the money! No, wait, don’t!

“In this economy, how do you feel about cutting fees?” Joan Capelin recently asked 12 A/E firm leaders for the latest edition of her “Sound Advice” podcast series.

“The question was blunt, but if I took any of my guests by surprise, some of their answers surprised me in turn,” Capelin says. “They ranged from the expected ‘Hold tight’ to the conciliatory ‘Sometimes,’ to the audacious ‘What would be so bad?”

Some of the comments will also challenge your own decisions about how and how much you should charge in 2010. You and the other fee-setting people in your firm might want to listen to the podcast edition focused entirely on fees.

In collaboration with ZweigWhite, excerpts of Capelin’s interviews with firm leaders are reproduced in the Jan. 25 edition of The Zweig Letter, which is dedicated to cash management in 2010.

ABI ends 2009 with small jump

After a roller-coaster year that saw the monthly Architectural Billings Index languish in the 30s and 40s, the indicator of activity from the American Institute of Architects (AIA) inched up about half a point to 43.4 in December, closing 2009 with a glimmer of hope for 2010. Any number above 50.0 shows an increase in billings.

New inquiries fell three points to 55.3 in December, but AIA Chief Economist Kermit Baker is happy the figure “remains very much in positive territory,” although the high numbers of the past several months haven’t translated into new work. "It's nice that it didn't fall back even more. It's nice to see things start to recover a little bit, but we're still showing a slow decline," Baker said in an exclusive interview with ZweigWhite.

In AIA’s monthly survey of architects, Baker saw “a little bit of optimism about what the new year will bring,” he says. “It will be useful to watch what happens for the next few months to see if that translates into new work.”

The residential sector finished 2009 at 51.0, a bump Baker calls “encouraging,” while the commercial/industrial sector fell slightly to 42.7 and the institutional sector is down to 44.2.

Regional numbers were mixed, with the Northeast and Midwest each climbing a point to 48.6 and 46.6, respectively, and the South and West dropping to 43.2 and 40.0, respectively.

Baker sees the second quarter as prime time for a billings recovery, saying it should follow the path of the stock market and gross domestic product.

“It looks like we’re in to the economic recovery,” he says. “We need to claw out of the downturn a little bit more to see some construction.”

AGC gets political

I'm sure many of you joined me on the distribution list from the Associated General Contractors of America, alerting those of us in the Bay State to vote in today's special election to fill the late Ted Kennedy's vacant Senate seat. I'm wondering what's in it for the AGC to make sure its members and supporters are active politically, especially in this particular special election, since I don't recall a similar message in November, or for the 2008 presidential election for that matter. I do know that the winner of Kennedy's seat will likely determine the fate of health care reform in the U.S., but I'm curious about how that affects the AGC. I guess if there's health care reform, that will mean more hospital work for AGC members? Am I missing something here? Sure, it's great to see people stay active in the political arena - the American Institute of Architects (AIA) has its ArchiPAC to stay connected in Washington - but I feel like there's something more going on here.

How do you see today's political square-off affecting the AEC industry in 2010 and beyond? Is your firm doing anything related to the election? Who do you think will win? Who do you hope wins? Why?

Breaking out the crystal ball

Warren Karlenzig, president of Common Current, took a look at the next decade in sustainability in his most recent post. His top 10 list includes an uptick in biking, a carbon tax, fossil fuel shortages, a focus on urban agriculture, and a song, book, movie, or other art form being the impetus for a change in our thinking on sustainability.

So, what do you think of this list? How do you see the next decade playing out? Does your firm focus on sustainability, or is it moving in to that arena?

Spread the wealth. It will pay off

Irene Suchoza, associate at Gantt Huberman Architects (Charlotte, NC), read Marketing Now's coverage in the January 2010 issue of a recent Society of Marketing Professional Services webinar on generating new business and was struck by a comment by one of the presenters, saying she follows the tactic regularly at her own firm:

"I’ve joined several new networking groups over that last three years and find that the best way to network is to give leads to others. They are genuinely so appreciative that they remember you and try to return the favor. This goes hand in hand with Heather Taylor’s comment, 'People do business with those whom they like and trust.' In one case, I was attempting to introduce our firm to a local school district for which we had not previously worked. They were having trouble funding a couple of projects (and who isn’t these days). I gave them information about funds/grants possibly available for sustainable projects and noted our expertise in sustainable design practices. We were granted an interview the following week. This is just one of several cases but I thought it may be of interest."

Rebuilding Haiti

Certainly, a natural disaster is not the way AEC firms were hoping to generate new work in 2010, but the earthquake in Haiti this week will likely bring about opportunities for companies to lend their expertise to the rebuilding efforts. As most in the industry know, there will be plenty of assessment going on of what could be done better next time to prevent what some experts are predicting will be a six-figure death toll. That means stronger foundations on buildings and technologies and tools being used in the rebuilding of the nation that might not have even been invented when many of Haiti's prominent buildings, or especially the homes of the everyday citizens, were built.

Will your firm be involved in what's likely to be a lengthy and arduous rebuilding effort? How does it feel to know this work came at the cost of so many lives lost? What responsibility do you feel to try to make sure a tragedy of this magnitude will be prevented next time around?

Job creation in the crosshairs

With the stock market seeming to have stabilize in the past several months and the gross domestic product of the U.S. on the rise in the third quarter (and likely the fourth as well), the next sign of an economic recovery is the creation of jobs. There are many ideas about how to trigger growth in employment, ranging from reliance on the $787 billion economic stimulus package to focusing more intently on crumbling infrastructure. In ZweigWhite's 2010 AEC Industry Outlook, survey respondents rank government and municipal work as the hottest market for the next 12 months.

So, what do you see as the best way to create new jobs in the AEC industry in 2010?

Innovate or die

The Jan. 11, 2010 issue of The Zweig Letter tells a story of a new firm with a total full-time staff of two principals, little overhead and a focus on high profit margins. The principals, John Erickson and Ted Reeds, launched the firm in October after losing their jobs. They’re betting this is the way to go in 2010— a year that calls for innovation as a pathway to survival.
Will this fly? Perhaps it’s too soon to know, but dislodged architects and engineers are surviving and thriving by forming co-ops of sorts, instituting inverted pyramid structures or other innovations. They might be on to something.

What do you think?

Brace yourself for a bumpy ride

Bill Siegel took over as president and CEO at Kleinfelder (San Diego, CA), a 2,000-person construction management, engineering and environmental firm on April 1, the day when the lead headline in The Wall Street Journal was "World economies plummet." At ZweigWhite's 2009 Mergers & Acquisitions Summit, he told attendees he expected the first six months of 2010 were "going to be ugly" for the AEC industry. Here, he expands on that notion, giving his reasons and a few tips on how to survive the first half of the year:

"For the last year I have been telling people within Kleinfelder that 2010 was going to be harder for our industry than 2009. I had several reason for this opinion. First, many of our markets, such as commercial development, were really hurting and I did not see a recovery any time soon. Second, I doubted that the stimulus package was going to result in real money being spent on design and construction of meaningful projects any time soon. Besides the fact that infrastructure was only one-seventh of the total package, the reality was that it is not easy to quickly get projects funded and moving.

"Finally, although the stimulus package might not result in projects in the short term, the direct aid to states portion was propping up state and local spending. I felt that eventually the full effect of the reduction in tax receipts at the state and local level would kick in, and deep budget cuts would follow.

"I have to say that now, one year later, I have not seen any evidence to change my mind from the original conclusion. I see 2010 as a tough, tough year for our industry. There are only a few states that are not facing budget challenges, and that is sure to be mirrored at the local level. We are seeing many governmental agencies push off or canceling needed infrastructure and other projects.

"It is not all bad news and there are still opportunities for growth. I am a believer that, regardless of the party in power, there is a push for expenditures surrounding election cycles. I see a real push this late spring into summer to get the unspent stimulus money working, and so some projects may finally get going. Further, there may be some additional stimulus, and this time there will be a focus on infrastructure. Entities supported by specific and consistent revenue streams are still moving forward, and we see some spending in 'long-cycle' industries and market sectors.

"So, buckle up for a tough year, but smart firms can still find work and prosper."

What do you think? How does 2010 look for your firm? What will you do differently than you did in 2009?

Another record for Burj tower

Bill Lewis, the senior editor for ZweigWhite's newsletters group, noticed what he called "a telling sidelight to this week's opening of Burj Khalifa, the half-mile tall Dubai tower, billed as the world’s tallest building."

"As recently as last week, the structure was to be called Burj Dubai (Dubai Tower), but opened Monday with the new name, in honor of the president of Abu Dhabi, Sheik Khalifa bin Zayed Al Nahyan. It’s probably no coincidence that Sheik Khalifa’s nation spent $10 billion last month to help bail out Dubai from its much-publicized economic collapse. Jim Krane, author of City of Gold: Dubai and the Dream of Capitalism, called the building’s rebranding, 'the most expensive naming rights deal in history.'"

This makes the $1.5 billion New York Yankees owner George Steinbrenner and the $1 billion-plus Dallas Cowboys owner Jerry Jones spent on new stadiums in the past year or so seem a bit more reasonable, no? At least they didn't name the monuments to themselves after themselves. Somewhere, Donald Trump weeps.
 
What's your take on this? Are you surprised about this last-minute change of name for the historic edifice? Do you see it having any sort of widespread effect across the industry? I find it interesting that Sheik Khalifa waited so long to fork over the cash. Maybe he wanted to see how the tower turned out before ponying up.

Light bulbs are sooo 2009

Is it possible that lightbulbs will go the way of the 8-track, VCRs and "snail mail" -- within the next three years? If the inventors of illuminated wallpaper have their way, then the answer is a resounding, "Yes!" Even if this new technology doesn't take hold by 2012, as some think it might, just the fact it's available is a testament to creative ideas and new ways of doing business. That's what we need to send the industry heading in the right direction in 2010 and beyond.

So, what's your idea for improving the world? And what do you think about this one?