The U.S. construction market remains mired in a recession, with few, if any, markets spared. In 2009, design firms looked for a turnaround this year, but so far there has been little relief. Industry companies now await a bounce back in 2011. However, leaders of the largest U.S. design firms, those on the cutting edge of any recovery, say there still are too many economic, political and financial uncertainties to predict when the marketplace will turn a corner.Related Links:Top 500 Design Firms Ranking
The impact of the industry recession can be seen on the ENR Top 500 Design Firms list. The Top 500, taken as a group, had overall design revenue of $80.02 billion in 2009, down 11.7% from 2008’s figure of $90.85 billion. Domestically, Top 500 revenue fell 13.1%—to $59.22 billion in 2009 from $68.14 billion in 2008—while revenue from projects outside the U.S. dropped by 7.3%, to $20.80 billion last year from $22.44 billion.
The industry falloff showed no favoritism when inflicting pain on design firms. All 10 major markets measured in the Top 500 survey showed a decrease in design revenue. Hardest hit were the industrial process market, down 40.2% in 2009 from 2008; general building, down 20.1%, and telecommunications, down 20.6%. Other doubt-digit losers were power, down 14.3%; petroleum, down 11.8%, and hazardous waste, down 10.4%. The remaining markets generally were flat, including water, off 0.2%; sewer and waste, down 1.3%; transportation, down 0.1%, and manufacturing, down 0.8%.
Of the 458 firms appearing on both 2009’s and this year’s Top 500 list, 323, or 70.5%, reported a decline in design revenue, while only 135 saw it rise. Instances of large revenue increases are attributed to acquisitions.
Design firms continue to search for signs of revival in the market, but none are willing to point to anything solid. “I am hearing more economists say the American economy has turned the corner,” says Glenn Bell, CEO of Simpson Gumpertz & Heger. “I hope that in 2011 or early 2012 we will see a recovery.”
Other firms are skeptical of positive predictions. “People are rooting for a better market in 2011, but that comes more from optimism than actual signs of a turnaround,” adds Greg Graves, CEO of Burns & McDonnell.
The recession remains deep, which means belt-tightening, focusing on management and marketing harder than ever. “The worst thing you can do in a downturn is cut back on marketing. You have to sell your way out,” says Paul Yarossi, president of HNTB Holdings.