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08/23/2010

Impact of Recession on Design Firms Hard to Measure

 

WAYLAND, MA – In the last two years, countless A/E firm have perished during the deep recession; however, experts agree, no one seems to know exactly how many, according to The Zweig Letter, ZweigWhite's flagship publication.

"I don't think that anyone tracks this information systematically," notes Kermit Baker, chief economist for the American Institute of Architects. "A few months ago, we asked our Work-on-the-Boards panel to estimate how many firms in their area had gone under, and what share that was off all firms in their area. The ballpark, as I recollect, was that somewhere between 5 percent and 10 percent of firms have closed down. This was a very crude estimate but I was curious as to the general range. I'm not sure how to get a more accurate estimate."

Given the often-quoted estimate pointing to the existence of more than 20,000 architecture firms in the Unites States (AIA lists 18,500 member-owned architecture firms in its membership, but the number of firms is certainly higher, taking into account those not affiliated with AIA), that would mean that up to 2,200 firms may have disappeared into thin air.

The American Council of Engineering Companies (ACEC)—which lists more than 5,300 firms among its membership—has no concrete answer either.

"Firms have downsized in certain areas, particularly where there was a large developer market tied to residential construction growth. But we have no data on closings," says Jeffrey Beard, ACEC vice president and director of the Institute for Business Management.

Just a few examples of firm closings in the last two years includes:

  • Cubellis, a large architecture firm in Boston, closed in December.
  • Lucien Lagrange Architects Ltd. in Chicago, filed for bankruptcy in July.
  • Rink Design Partnership Inc. in Jacksonville, FL, started a process of winding down in April.
  • Grad Associates in Newark, NJ, a 104-year-old firm responsible for shaping part of the New York and Newark skylines, shuttered its doors in February.
  • CMX Inc. in Manalapan, NJ, a multi-disciplined engineering and consulting firm, announced its closing in April, selling part of its assets to Birdsall Services Group (BSG, Sea Girt, NJ). At one time CMX employed more than 1,000 people, evidence that bigger firms also fall. CMX also ranked 156 on The Zweig Letter 2009 Hot Firm List.

About ZweigWhite
ZweigWhite is one of the nation's leading sources of business management services for architecture, engineering, and environmental consulting firms. The ZweigWhite team consists of experts in strategic business planning, business valuation, ownership transition, human resources management, finance and administration, mergers and acquisitions, market research, marketing, project management and project delivery methods who collectively produce a comprehensive suite of products and services, including newsletters, industry reports, executive training, business conferences, and advisory services covering virtually every aspect of firm management. The firm is headquartered in Wayland, MA, with additional offices in Chicago and Washington, D.C.

View this press release on zweigwhite.com.

 

 
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