New York's consulting engineers remain resilient

Engineers, by nature, take a long term view of their work, with an emphasis on durability. Most of what they design has to last. Bridges, roads, buildings and all their internal systems, have to be resilient to changes - in temperature, climate, and varying load and usage patterns. Fortunately for the industry, engineering firms themselves are proving to be hardy in the face of shifting, and somewhat turbulent, business conditions. A recent survey of 111 consulting engineering firms, conducted in June by the American Council of Engineering Companies of New York (ACEC New York), indicates the industry overall is holding steady against the difficult challenges of a diminished construction market and rising costs. Background: survey participants The 111 consulting engineering firms that participated in the survey represent a cross-section of ACEC New York's membership. By category, 44% are civil or civil/transportation firms, 26% are full service firms and 15% are structural. The remaining participants are MEP and energy firms. Large firms, with more than 200 employees accounted for 40% of the firms surveyed, while small to medium size firms accounted for 60% of the respondents. By location, nearly two-thirds of the companies are headquartered in the metropolitan area and one-third is located in upstate New York. In describing their work, 42% of firms surveyed said they work exclusively or predominantly in the public sector, 32% split their work between private and public sector projects, and 25% work exclusively or predominantly in the private sector. First-half 2009 results Notably, over half of the firms surveyed in June rated their 2009 business in the first half of the year as "good" or "excellent," despite the fact that revenues and profits are not as good as the prior year. When compared to 2008 - a record setting year for New York's design and construction industry - 51% of respondents report that revenues are down and 57% report that profits are off. Another 31% report no change in either income category year over year. Some segments of the industry are holding up better than others, according to the survey. Firms that work exclusively or predominantly in the public sector are faring better than firms that work exclusively or predominantly in the private sector. Among firms working primarily in the public sector, only 28% report a drop in revenues and 34% report a drop in profits. By contrast, 79% of firms working chiefly in the private sector report a decline in both revenues and profits versus last year. Likewise, DM/WBE firms and full-service firms appear to be directionally better off than the industry as a whole, with these segments reporting lesser declines in revenue and profits year to date than the general survey population. A cautiously optimistic outlook Despite the downturn or leveling off of revenues and profits, almost half of the firms surveyed describe their business outlook as optimistic or somewhat optimistic, followed by 29% who say they are neutral. Only 25% claim to be pessimistic or somewhat pessimistic in their outlook. Top reasons for optimism include anticipation of federal stimulus money and new infrastructure projects, trailed by the demand for renovation and rehabilitation of existing structures. Reasons given by firms that are less optimistic are increased competition and costs of doing business, tight credit markets and some of the state's fiscal policies. Hiring is also an important indicator of the resilience of the engineering industry and the continuing need for engineers. While employment responses were mixed, with 63% of firms reporting new hires and 54% reporting cuts in staff through June - indicating that some firms hired new employees while cutting existing personnel - the near future looks brighter. Of the firms surveyed, 47% plan to hire additional staff before year's end, while only 15% have cuts, or further cuts, planned. Among the firms that added staff in the first half of 2009, almost all - 94% - hired engineers. Additionally, 18% hired administrative/clerical personnel and 16% hired CAD operators and business development staff. Efforts, however, are underway by 84% of the firms to cut costs where possible, primarily by reducing business travel and delaying salary increases. Less than 20% of the firms surveyed report a reduction in hours, pay or benefits. Eighteen percent of firms are taking energy conservation measures. There's no question that these are difficult economic times, but engineers are a creative and resilient group, and their work is essential to building and maintaining the infrastructure of our cities and towns. Our industry remains positive as we look forward to an acceleration in the release of stimulus funds and their prudent investment, not only in fixing our aging roads and bridges, but in ambitious new projects that will provide the transportation, environmental, energy and business infrastructure necessary to create jobs, increase tax revenues, improve our quality of life and get this economy turned around. Jay Simson, CAE, is the president of ACEC New York.