By Jim Buchta, Star Tribune (Minneapolis) –
MINNEAPOLIS — While the recession is fading and the housing market is recovering, many architecture firms are still caught in a mighty struggle.
A national survey shows billings have plummeted at an unprecedented rate, firms are smaller and companies have had to venture into new corners of the industry to try to rebuild their business.
“I don’t think anyone has ever experienced anything of this magnitude,” said Steve Fiskum, who was the 2011 president of the Minnesota chapter of the American Institute of Architects.
According to the AIA’s Business of Architecture survey, revenue has fallen an average of 40 percent from 2008 to 2011. During the worst four years of the downturn — from 2007 through 2011 — more than a quarter of all architecture-related jobs were eliminated, peeling back an 18 percent growth spurt during the previous four years. Among the hardest hit were technical and support staff positions — jobs that didn’t result in direct billings.
Such sobering news comes at a time of double-digit growth for home sales and new construction. But the architectural and construction industries are still waiting.
“We’re the first to get sick, and the last to get well,” said Dave Norback, president of RSP Architects in Minneapolis.
He said before the downturn, his company was on track for unprecedented growth, but in a matter of months it saw a 25 to 30 percent decline in revenue. That meant a comparable cut in staff levels, Norback said.
Thanks to Minnesota’s diverse economy and a significant increase in sustainable and “green” projects that require the services of skilled architects and engineers, RSP is now better than it was before.
Still, Norback isn’t overly confident.
“We’ve replaced it all and are ahead of where we were, but we’re still wondering, ‘How strong is the ground you’re standing on?’ ”
Clearly, the downturn didn’t affect all firms in exactly the same ways. Many large firms survived because of the diversity of their client base, while others were too big to be nimble enough to adapt and adjust to new market conditions. Those that fared the best were often those that reacted soonest. And for many, adaptation has been the name of the game. For firms that specialized in designing houses, the housing crash was particularly devastating, forcing architects to search for smaller projects that were being done by homeowners who chose to spend money on their existing house rather than designing and building a new one.
Dale Mulfinger, founding principal at SALA Architects, a Minnesota residential firm, said he and his partners made the difficult decision to close one of three offices and trim staff from 40 to 25.
“The crash was a dramatic period, and I had to say farewell to a lot of talented individuals and friends,” he said. “We hung on as long as we could, sharing the burden, but eventually thought it best to set some folks free to find new opportunities and to stabilize with others who formed a core group.”
He said the tide is turning, and that for the past two years, business has been more stable. “There appears to be a bit more optimism,” he said. “Those who can take building action have decided this is the economy we face, and time is fleeting in their lives, so why not build that new home, add that family room or invest in the family legacy at the cabin?”
Fiskum didn’t wait for the darkest days of the recession to start making tough decisions.
The chief operating officer of architectural firms HGA initiated a round of cuts that slashed about 7 percent of the company’s workforce. But the company’s decisions ultimately brought it enough new business to replace the positions it had cut — and more.
“We invested and had the financial wherewithal to make those investments and it paid off,” he said.