Yes, we tried to rally. For a while The American Reinvestment and Recovery Act (ARRA)-or stimulus funds-passed in February sustained us, but those too have dried up, leaving engineering firms, much like the construction and real estate sectors, without a white knight. They are reinventing themselves and getting creative in order to survive. It's been a challenging time for the economy in general and certainly the stimulus funds helped a lot of the firms, the transportation firms, the environmental firms, cleaning up the sites, bridge work and bridge design, that kind of thing, says Alex Koutroubas, executive director of the American Council of Engineering Companies in Concord. But the stimulus is pretty much exhausted. At the same time, the municipalities their tax bases have been eroded. It's a challenge. In general, I think some of the firms are trying to get work any way they can.
The purpose of ARRA was to create jobs, save existing ones and kick-start economic activity while investing in long-term growth. This manifested in, among other things, $275 billion being made available for federal contracts, grants and loans. New Hampshire's share of this was 1,136 grants, 210 contracts and 12 loans totaling more than $981 million that was pumped into the state's economy. By comparison, states like Texas and New York received more than $16 billion in stimulus funds. The top recipients of the stimulus money in NH were the Department of Transportation, the Trustees of Dartmouth College, the State of NH Executive Office and the Manchester School District, according to Recovery.gov, the official ARRA website.
Quests for New Business
With projects finishing up and funds drying up, firms have to do something new to remain viable. For a company like Appledore Engineering, a division of Tighe and Bond in Portsmouth, that means expanding its reach. Because there's not as much work in New Hampshire, we're working around New England; we're doing a lot of work in Massachusetts. Actually, we're doing a lot of work in New Jersey, so we've expanded our geographic reach as a result of the recession, says Gregg Mikolaities, vice president of Appledore, who explains the company is going where clients have money to spend. Where maybe two or three years ago, when there was plenty of work in our region, you wouldn't necessarily agree to an assignment in New Jersey. Now, with less opportunities in New Hampshire, you have to follow where the work is. Some firms are even looking overseas, says Koutroubas, who knows of firms helping with the rebuilding efforts in Afghanistan.
Also among those drumming up business outside of New England is Tim Stone, one of the principals of StoneHill Environmental Inc. in Portsmouth. He says the success of environmental firms in cleaning up contaminated sites in New England has actually meant less work in the region. You don't have your industrial facilities pouring their waste materials out the back door anymore, underground where there might have been hundreds of underground storage tanks (pulled out of the ground per year) there are now a couple dozen, the numbers are staggering. Environmental firms in New England are now competing for jobs in the South and Midwest where states have been slower to clean up contaminated areas, Stone says.
Finding a Niche
For some smaller firms, expanding their geographical reach is not a viable option. So those companies are seeking out niche markets. Corey Colwell, president of MSC Engineers in Portsmouth, says his company dabbled for years in the permitting process, but it wasn't the firm's forte. That changed in 2008 when the state drew up new shoreland protection regulations, making the permitting process more complicated. We realized that if you are doing the drawings, you seem to be the one who knows most about what's going on with the site, Colwell says. So why not do the whole permit? The firm is now able to take a client straight through the process and thereby creating a marketable niche for itself.
The sustainability sector is another market where engineering firms are finding success. Much of the stimulus funding involved renewable energy and green building-issues that are on the minds of many clients looking to build. Smart engineers are doing what they can to keep up with the trend. You have to be constantly looking at new technologies, new innovations-that's what clients want, Koutroubas says. Certainly it's going to require some investment in training and some retraining.
Those who do invest, he says, can expect it to pay off in the long run. Koutroubas says professional groups such as his offer webinars, online classes and other resources to help firms retrain employees. Koutroubas says the American Council of Engineering Companies has seen about a 15 percent increase in attendance for live seminars and webinars since the beginning of the year over the last six months of 2010.
Among the Association's most popular webinars are: Getting Inside Your Customers' Minds For Success in Business Development and An Inside View of Rural Development Programs and Funding of the U.S. Department of Agriculture.
We recently had a sold-out Green Infrastructure and Sustainable Communities course, Koutroubas says.
James Petersen, president of Petersen Engineering in Portsmouth, says his firm keeps up with changes through sustainability associations that hold annual conferences to review the latest innovations and best practices. He says his company fared well in the recession because of its extensive experience with sustainability practices.
H.E. Bergeron Engineers in North Conway partners with people who have the sustainability expertise, such as architects who are LEED certified, in order to be more cost effective for its municipal clients. We do occasionally work with other firms, says Elizabeth Lajoie of H.E. Bergeron. Our industry in general is always looking to collaborate and that helps in a bad economy.
Back to Basics
Engineering firms are also getting back to basics, and that includes more networking to get their names out in front of potential clients, says Rob Hitchcock, an engineer with SVE Associates in Keene. Since he started in the business 25 years ago, he's always had business just walk through the door based on word of mouth. But since the recession, he increasingly has to get out of the office to get on people's radar. [We] just try to be out in the community as much as possible, he says.
For the most part engineers are cautiously optimistic that if the economy is not yet in an upswing that at least the worst may be over. Koutroubas says he thinks that as local governments start to recover and as the economy recovers, communities will begin taking infrastructure projects off the back burner. This is already happening in Concord where the city's latest budget is full of road, water and sewer projects. Hitchcock says he's starting to see an increase in survey work, which is the precursor to engineering and construction projects. And Mikolaities of Appledore Engineering says the firm is starting to see an uptick on the private development side, albeit slight and slow.
According to an employee census Koutroubas conducts of the Association's membership annually, employee counts have remained flat in 2010 and 2011 after a spike in layoffs in 2009. We're not seeing the huge shift we saw in '09 where we were seeing a loss of 10 to 20 people a year. Multiple firms have hired some of those folks back, he says. They haven't gotten back to the level they were in '06 and '07, but some of the bleeding has stopped, I think.
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