Engineering firm CEOs put on their optimistic faces at an annual invite-only industry conference in New York City on Oct. 21. Amid market uncertainty, a record turnout of more than 300 executives gathered to give their take on sector conditions; some see growth ahead, others see new missions for firms in helping clients through the recession.
Design firms project a median of 3% growth in 2010 and better the following year, says EFCG Inc., the industry financial and acquisitions consultant that sponsored the meeting. The numbers are based on a survey of 210 large and small firms with total revenue of $83 billion. EFCG President Paul J. Zofnass says that, by region, work in Canada ranks highest in growth and profits. The U.S. is growing slower but more profitable, and Europe is last in both categories.
With 70% of firms terming internal ownership transition a challenge, expect mergers and acquisitions to continue as a key trend. Zofnass says respondents rated 500 buyout deals since 2005, finding 62% as quite successful and 11% as disappointing. Said one CEO, “Over the next year, balance sheets may fall apart as firms bid below cost and build backlog. There will be bargains out there.”
CEOs pointed to possible silver linings. “Existing assets must perform better, requiring more integrated engineering,” said Keith Clarke, CEO of W.S. Atkins, London. Dan Batrack, CEO of Tetra Tech, Pasadena, Calif., said, “This is the busiest year we’ve had on the front end. It portends well down the road.” Richard Fox, CEO of CDM, Cambridge, Mass., committed to retaining the firm’s employee ownership, but he said, “I’ve had to reinvent myself in every recession.”