State of the Profession

[Andrew Garulay, RLA]

The project is going to get built with or without you. If you are part of it you can improve it. If you are not ……..

Stay valued by those who have projects and you will have a job while having the ability to affect projects. It is not a cop-out. It is improvement through participation. The improvement might not be perfection, but it is improvement.

Working on perfect projects is a cop-out because the project is going to be good with or without you. The net improvement is limited.

If you really want to make a difference, work on the projects that need the most improvement. Its is not easy and not always fun, but it will keep you busy and you’ll make a real difference.

[Gregory Walker]

Hi all – relatively new to this particular forum (and an architect to boot), but hopefully I can offer a little different set of observations on the topic…

First, I’m one of two partners in a small, 6 person firm in Atlanta- we’ve been in business since 2005. Like most people, we had a sharp drop in work (3 major, for us, projects canceled in one four week stretch) in 2008, just after Lehman collapsed. Irony is that we have almost never done traditional development work – our niche has been public and private institutional work. Libraries, museums, nature centers, etc. Yet, even those projects are subject to many of the same forces that have plagued everyone. In our case, lead donors on two of the projects pulled back their commitments, effectively killing the projects, while one museum that was 30 days from closing on a surplus piece of property that would finance our project had that deal fall apart. They subsequently had to layoff 7 of their 8 full time staff within 3 months.

Financial structures for any firm are such that, unless you happen to be doing incredibly high margin work, the highest single expense any firm carries is the direct labor costs. Almost no bank, financial adviser, etc. is going to recommend using your line of credit to carry payroll indefinitely if the work simply isn’t there. So, the single biggest question we all face, as a head/director is this: how long is it going to take for me to find new work to replace what’s been lost? If the answer to that is ‘very quickly’ and you like the staff you have, then almost certainly you’ll hold on to them through the short term, even with the corresponding financial hit. If the answer is ‘never’, well, the answer there is pretty clear. If the answer is ‘not sure’ (like it has been for most people), it’s a much harder decision. If you spend too much to keep staff around and have no income to replace it, then it’s just a function of how deep are your pockets. And that’s largely going to be a function of how much can the owners endure. I can say right now that almost every bank is going to be very wary about extending credit to a/e/c firms in this climate, nevermind that every firm principal is probably having to personally guarantee any loan, lease, etc. if they’re less than 50 people.

Pointing all this out to say a few things: yes, this economy sucks. I’ve seen very close friends close up shop altogether (in total, there are at least 4 firms I know of here that have closed, with a few more merging), I’ve seen too many colleagues stressed out beyond belief. I’ve seen 25-30 year career principals at large firms tossed to the curb because they could no longer bring in work. My guess is that the actual unemployment rate is close to 50%, if you count recent grads who can’t get into the profession (they won’t show up in those statistics). Here in Atlanta, there are only 2 firms that had 100+ employees who didn’t lose at least 40% of their staffs at one point. I’ve seen one 450 person firm go to their current size of 15 in less than 18 months. The root cause is very simple: there just isn’t going to be enough traditional work to keep the same number of people employed as there was 24 months ago. Period. Do any of us like it? Of course not. But that’s the way it’s going to be for another year + at least. My guess is that it will take a very long time to get back to the levels of work that were occurring in 2005-2006. It certainly won’t happen quickly.

But guess what? There are some success stories in the midst of everything that’s going on. More importantly, maybe this economy helps some of you who have been laid off to make the next logical leap and commit to doing your own business and build it up the way you’d really like to practice (as someone pointed out, most of the people replying seem to be the unfortunate right now). We’re working with an LA firm that was started a year ago by two senior level guys laid off by one of the biggest LA firms in the world. After the initial shock, they’re starting to find their niche, voice, and they’ve just won some work for one of the largest universities in the region. We’re seeing lots of crevices of opportunity, if people are willing to think fundamentally about how to structure a business and have the ability to execute well.

In our case, we bucked every piece of advice and were determined to keep everyone on board, at full pay, even though we weren’t sure where we’d end up. For a few months it meant that my partner and I didn’t take a salary (which sounds very noble, but I guarantee we won’t do that again). We also had to ‘lend’ two employees to a larger firm in town for several months – basically they hired them from us for just their direct costs (salary, insurance, etc.) They were still on our payroll, etc. and we eventually brought them back over. It also meant we froze raises, had no bonuses, and we had to stop our 401k match. We did hit about 60% of our very small line of credit to make all that work. In the end, though, keeping everyone on board started to payoff beginning in early 2009 and we closed last year having had our best year fiscally (and had a 60% increase in revenue over 2008). And we did it without sacrificing our office culture, fees, or integrity. Yes, we’re finally starting to lose work due to fee pressures – it’s just something we’re learning to negotiate through. So far, we haven’t had to lay anyone off, although we were going to have to back when everything hit the fan. After we got on person over to the other firm temporarily, we basically told them that they had 3 months of paid time to do whatever they had to to find an alternative. They did and now they’re the lead environmental coordinator for the federal reserve bank here in Atlanta. Sometimes karma does work…

[steve phillips]

Great comment! Russell, you dared to mention some real problems, which will not go over well in this LA, LA Land Forum. You will be accused of being negative just for speaking the truth as you see it. The people here want to talk about nonsense in extremely convoluted egghead languge, rather than face the truth and offer solutions. So rather than recognizing that obviously the economy is not good to us, and offering positive alternatives to our professional objectives, they just deny it. I guess intellectualizing makes even serious problems go away!

Since do I agree that 60% of L.A.s are unemployed, and of the remaining 40% at least 20% are at least “underemployed”, why are we trying to change the world and waiting for everyone to possibly need us again in the future? It would be much wiser and easier to change ourselves into a needed commodity now. Public outcry to oil is screaming for our help! I thought we were supposed to be the “stewarts of the land”? We just have to be willing to learn more and demonstrate our expertise.

Hey, you did appropriately “comment on the state of the profession” as sobering as it is. Russell, I only have one issue with your post, neither you nor Arizona are “in the eye of the storm”, I think other parts of the U.S. are harder hit, or are just about as much in the eye of the storm as you. I could be wrong.

I did not find your post negative! To the contrary, the first step in recovery is to ADMIT there IS a problem, that to me is very positive! What I did miss are any suggestions or insight for change. Russell, it is ironic that most of the people in the LAND lounge forum are in outer space.

[Nate Hommel]

Gregory –

I was intrigued by this statement “We also had to ‘lend’ two employees to a larger firm in town for several months – basically they hired them from us for just their direct costs (salary, insurance, etc.) They were still on our payroll, etc. and we eventually brought them back over. ”

To me, this sounds like a brilliant idea. It also sounds like you have established a top notch work environment and your employees must have a great deal of respect for you and your partners.

Does anyone else have experience or know of others that have tried the “Lending” idea? What are the logistics, or more directly how do you approach another firm with this idea? It does seem that this could work well in larger cities (such as Philadelphia where I am located). Very interesting.

I am curious what others think about this concept.

[steve phillips]

Great comment! Russell you dared to mention some real problems, which will not go over well in this LA, LA Land Forum. You will be accused of being negative for speaking the truth as you see it. The people here want to talk about nonsense in extremely convoluted egghead language, rather than face the truth and offer solutions. So rather than recognizing that the economy is not good to us, and offering positive alternatives to our professional objectives, they just deny it. I guess intellectualizing makes even serious problems go away.

Since I agree that 60% of L.A.s are unemployed, and of the remaining 40% at least 20% are at least “underemployed”, why are we trying to change the world and waiting for everyone to possibly need us again in the future? It would be much wiser and easier to change ourselves into a needed commodity. Public outcry to oil is screaming for our help. Aren’t we still the stewarts of the land still? The world desperately needs our help now, they just know who we are or how to find us! Finally we are best of situations…..it is just of matter of revamping our approch and mode filling the gap.

Hey, you did appropriately “comment on the state of the profession” as sobering as it is. Russell, I only have one issue with your post, neither you nor Arizona is in the eye of the storm, I think other parts of the U.S. are harder hit, or are just about as much in the eye of the storm as you.

I did not find your post negative! To the contrary, the first step in recovery is to ADMIT there IS a problem, that to me is very positive! What I did miss are any suggestions or insight for change. Russell, it is ironic that most of the people in this LAND lounge forum are in outer space.

[Gregory Walker]

Nate – it’s very simple in concept. My partner and I both left a rather large firm, which has weathered the storm well (overall – they’ve had some layoffs though). They subcontracted two of our employees for a fixed duration of time – pretty much it followed a particular phase/timeline they had. We did have a one page letter of agreement summarizing the terms. We converted each employees dpe (direct personnel expense – wages, taxes, insurance, etc. that is directly associated with the employee) to an hourly number, rounded up to the nearest dollar, and they agreed to keep them on for the time specified. If we needed to bring them back early, we could with two weeks notice. Great for both firms – we have them ‘producing’ income, they get temporary help without the hassle of a temp agency (or the inflated prices) or worry about legal issues from ‘contracting’ freelance workers. the rates were pretty much what they would be paying a fte already, so it’s easier to project cashflow. They also avoid taking a hit if they hire someone full time and then have to lay them off in 3 months. Because we know each other’s firms well enough, there’s a high level of trust that we’re not going to misrepresent their skills or vice versa. We also have an informal agreement that no overt poaching is allowed.

I’m not sure how often it gets done, but it definitely does. Lot of it depends on the chemistry of the firms involved and how well the principals all like each other. They certainly were not the only ones we reached out to, nor were they the only ones interested at the time.

Logistically, we called the principals we knew directly – you do want to be discreet about it. I don’t think it would work for an employee to call another firm to set it up.

[steve phillips]

Jason, instead of getting a reply to you very interesting post, you get somebody wanting to quibble about the semantics of the word “realist”……HUH?

[Boilerplater]

One firm I worked for did something like that, but within the company. It is a multinational civil engineering firm with offices all over the US and Canada. The manager just called around to other LA offices and asked if they needed help with any projects. Through his contacts, I got to work on projects in British Columbia, Alaska, and Utah from the office in Las Vegas, so that was a welcome change of pace. Eventually, the corporate number crunchers came down on him to justify the staff in his office, and the layoff notices came. At least he was able to delay it a bit and give us some interesting experiences. Now I’d settle for being contracted as a CAD monkey or gofer.

[Gregory Walker]

It was primarily because they couldn’t bring the fees in, per their partnership obligations. Still, I’m not sure that the days of the rainmaker are over – if you can’t bring work in… how do you pay for a practice? Firms that treat their employees as ‘cad monkeys’ are hopefully going to be killed, but that won’t diminish the fact that even the smallest of practices needs some kind of hierarchy. Otherwise, not much gets done – too many chiefs, not enough warriors. Sure, there are some lousy practices, but there are some great firms (young and old) that, hopefully, will stick around long enough and work their way in enough to get to play at the big table.

I am with you on the timing – work in the u.s., especially housing and commercial, is going to take a long time to recover. probably much more than a year + given the past month of data.

[steve phillips]

Keep in mind it is just not our profession that is screwed, look downstream. If the U.S. doesn’t completely become a third world country, I believe that there will be many public works in next 3-4 years. All of these tradesmen’s unemployment will run out, the government will have to be the one to put them to work when it runs out of teargas. The working class will demand jobs to the point of revolution, since there is a limit to how many masons and backhoe operators you can train to be a nurse. Business as we know it has obviously imploded and there is obviously no way to paste it back to its original splendor . Reform is inevitable while the middle class is still alive. Luckily, Landscape Architecture is one of the few fields that can not be easily outsourced to China and India.

[Hans C Stoll]

Damn Russ……. I hope you are wrong about “add a decade to that”. Hell, my hair may be gray or GONE by that time if true.

I do however agree with you about the end of the “rainmaker with an army of CAD monkeys”. That is good. Always hated that particular biz model. There are still guys out there who want to slap something onto a piece of trace and ‘hand-it-off’. Newest trend is dirt-cheap offshore labor to hand it off to. Sad. Our field has lost a bit of dignity since 1999 by my observation.

Hang in there Russ, this too shall pass.

[Juan Antonio Lopez]

Well out here in California, my professors have been telling me that it’s starting to pick back up. I have to admit that I would definitely not want to work for free just to earn experience in some internship. I think that honest work deserves an honest paycheck regardless of age or work experience. It’s just part of my religion.

[steve phillips]

Oye Sr. Lopez,

Tus profesores te mentiran. No, no es mejor, no te dijeron que es peor, sin duda, es muy mal. Mis profesores me mentiraron cuando era estudiante. Asi es nuestro trabajo. Sin embargo, espero que tengas muchisima buena suerte por supuesto. Los que tienen mucho experiencia trabajan sin pagar hoy dia. Temo que vayas a tener que trabajar sin ganar la vida un dia u otra. Si sea contra tu religion, debes de cambiar tus estudios, te digo la verdad grotesca. Ya tengo cinquenta anos, y muchas veces trajaba sin ganar nada, particularament cuando era un <<intern>>. No me mates a mi, solo trigo el mensaje. Sabes leer el ingles….debes de leer esto.

Juan Antonio, te digo la verdad porque ya todavia tienes el tiempo salvarte. Si tengas ganas ser <<prima dona>>, hay que cambiar tan pronto como sea posible.

[Hans C Stoll]

Not easily outsourced? Try again….. China and India and other countries in which 20 bucks-per-day is “good” are becoming a common source for just this sort of work. Owner or Manager does some sketch and then some CAD monkey in some third-world country cranks it out in the wee hours for peanuts and does the quick turn-around back to the US. No insurance, no US taxes, no holiday pay just dirt cheap labor without a degree or registration.

A very sad fact today.

[Hans C Stoll]

Great post, great perspective, and I am glad to know that there are some firms like yours still around. A bright point in a bleak year. Thanks.

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