Engineering and design-build firms see no growth in 2009 and may be optimistic in predicting a 6% revenue rise next year, according to a survey of about 200 company chief executives’ sample comments at an Oct. 22 meeting in New York City.
The CEOs, whose firms had $79 billion in 2008 revenue, cut by one-fifth their prediction made last year of 2009 profit growth, but it still averaged 10%, says the survey by Environmental Financial Consulting Group, a New York City financial advisory firm.
EFCG President Paul J. Zofnass said only 3.5% of respondents predict a loss this year, but he was skeptical of CEOs’ 2010 growth projection. “The recession is not over by any sense,” he said. “The industry won’t be so quick to recover.” In fact, CEOs were almost evenly split as to whether the “worst” of the recession was over.
CEOs say they are responding by cutting costs, with 101 noting staff reductions and freezes. Eight say they will “retrench.” Zofnass said slower growth builds firms’ cash reserves, but he also noted ongoing ownership turnover challenges will force more firms to consolidate and reconfigure.
Lee McIntire, CEO of CH2M Hill Cos., Denver, said falling oil prices was a revenue deterrent. “The last time there was a drop, it took oil companies seven years to recover in capital spending,” he said. Dan Batrack, CEO of Tetra Tech, Pasadena, Calif., pointed to large municipal jobs put on hold by rushed-out stimulus work this year.
Bruce Grewcock, CEO of Kiewit Construction Group, Omaha, noted “an extremely ugly” competitive bidding scene that was “screwing up the market.” Bob Uhler, CEO of MWH, Broomfield, Colo., pointed to “scary” first and second quarters in 2009, but said backlog is “steady and rising. I’m positive about 2010.”