The Engineering Dilemma

With more than 150 bridges in NH in need of structural repair and more than 30 percent of roads in the state rated in poor condition, you would think engineering firms would have more work than they know what to do with. If only that were the case. Private clients are keeping engineering firms afloat, but slim and diminishing public funds for infrastructure projects are extinguishing the fuse that could lead to explosive business.

With the economy still in a shaky recovery, politicians and government officials at all levels are feeling the pressure to keep a lid on spending. The economic downturn has eroded the state revenues and local property tax revenue, says Alex Koutroubas, executive director of the American Council of Engineering Companies of NH (ACEC-NH). This means less funding for infrastructure needs. The demand is huge, but there is a lack of dollars to bring things forward. Once funding increases, engineering firms will see an increase in work.

GZA GeoEnvironmental Inc. in Manchester is among the firms traversing this new normal. We have contracts with state agencies and they are being squeezed in their budgets, says Ronald A. Breton, PE, senior principal and environmental group leader for the company's Northern New England region. This affects their ability to provide contracts to us. Breton says GZA's diversified client base has helped the firm to normalize our business.

Having a strong connection to clients is also important. We do not necessarily try to find projects. We try to find new relationships and build on existing relationships, says Robert Duval, president of TFMoran in Bedford. Loyal clients like Southern NH University in Manchester, which has contracted TFMoran for four to five jobs during the past year, have been vital. The firm's revenue has remained fairly flat, which Duval attributes to the sluggish economy driving competitive pricing. While lowering prices seems logical, it is not sustainable because the cost of abiding by new industry regulations creates cost pressures, Koutroubas says.

Many firms are focused on expanding their market reach to find new business, opening offices in other states. Wright-Pierce has expanded its service base beyond Northern New England to all of New England and has even taken on international clients. While 90 percent of its clients are in New England, Wright-Pierce has done business in Canada, Kenya, Norway, Australia, Brazil and other countries, says Bill Brown, president and CEO. As the economy shrunk, we have expanded our economic base of operation, he says. It's a strategy that seems to be working, as the firm generated $25 million in revenue in 2012 and expects to generate more than $30 million in 2013.

While Koutroubas says lack of public funding for infrastructure projects is holding engineering firms back, some progress may come this year. He points to a bill that would increase the gas tax by 15 cents to fund infrastructure projects. That has firms cautiously optimistic about the future. Breton says GZA has experienced modest growth during the past five years. Our plans are to continue to grow at a modest rate, says Breton. We do not anticipate any major growth going forward, but we do anticipate modest growth in the future. We are going to continue to build off of our diverse technical strengths and leverage existing relationships.