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Based on the job market (at least in Dallas) it would appear the recession is over. My question for those who weathered it and remained in the profession what sectors do you work in and how was it affected by the recession. If you were in one of the sectors that took a huge hit and managed to survive what do you think was different about your firm that allowed you to survive while others shut down. Now that the dust has cleared learning from those who made it may just help some of us survive the next one.
Myself, I work in the K-12 education market, we boomed through the entire recession. I would put it mostly to luck that the two biggest districts in the area passed bonds right before the crash and got to build during a time when they were getting recession prices on construction with a bond passed at the peak market. Typical bond duration for a major district is about 5 years (very convenient No?) We also had some success convincing other districts that even though its a recession it was the time to build. Those that did probably got 50% more building than they would have pre or likely post recession.
Big question but I can't take another who is an Architect thread.
I remained in the profession, but closed my sole prop residential remodel firm and took a non-traditional job as on-site architect for a cultural institution.
I miss self-employment every day. Health insurance is nice, though.
good sign things have changed: offering a job to someone and having them choose another job offer instead. that scenario was rare last year.
Let's not get ahead of ourselves... all it takes is another war on Isis or another involvement in Ukraine and then we're back on track to what it was like around 9/11... Ironically, just two years prior to 9/11, there was another big stock market crash. So let's not jinx ourselves...
For me, being a sole-proprietor, the lucky part was not amounting a nightmarish business debt. This allows me to stay in business so to speak. There is room for things to improve.
War isn't aways good for economy. It kind of help get us into this mess in the first place.
Many people are unaware of this, but one of the biggest bull markets for stocks in US history was the period 1932-1937, during which the broader indexes skyrocketed by more than a 130% in a short period of time. That was in the middle of the Great Depression.
We are currently experiencing an economic depression about an order of magnitude larger in scale than the Great Depression. Within that, we can expect some localized bull markets, just as occurred in the 1930s. But the broader economic trend is sharply negative. Unemployment rates are not improving (in fact, the government is doctoring the figures significantly in order to hide the damage to the economy). Credit demand seems to have stalled intractably. Real wages are declining. Disinflation is rampant. The financial system is still essentially insolvent despite years of unprecedented bailouts.
So, make hay while the sun shines.
I noted that institutional clients (schools, colleges, governments, healthcare) remained strong. Also, firms that remained domestic did better than ones that did a lot of offshore work.
Pump and dump, baby.
Coming soon - another opportunity for the uber rich to increase their holdings for pennies on the dollar. Look for a repeat of the RTC of the early 90's where investors were given assets for 0.01% of book value and 50% of the profits they could generate from them. Assuming the accounting was honest, they walked away with around half-a-trillion. For comparison, US debt in 1990 was about $3 trillion, GNP was < $6 trillion.
Of course that's back when a trillion dollars was actually worth something.
Interesting, gruen. My experience has been exactly the opposite.
At first, firms that did a lot of public work were fine, because public financing has substantial time lag (biennial capital appropriations cycles, approved bond issues, etc.). But that became more of a problem later, and school bond votes are still failing at a much higher rate than pre-downturn. It still hasn't recovered, and district building plans have been scaled way back in acknowledgement of the new reality.
International work, especially Asia and MENA, has remained much more profitable than domestic since 2008. The domestic market is still vastly weaker than overseas.
I raked it in during the recession by shifting into a niche we'd had; Litigation support and repairs which follows the construction 2-9 behind occupancy. Handling $5mil + reconstruction projects. Still mad at myself for allowing public work projects to drop by refusing to get my fees competitive with the starving architects trying to break into the market during the recession just for the portfolio maintenance.
Now I'm dying... no building during the recession means my market dried up now and I'm left with a portfolio that is rather lacking in new construction projects for years and filled with investigations and reports. It's sort of like starting over since everyone and the mother wants to see pretty pictures instead of mold infested dumps being fixed. No one cares about projects I did 8 years ago. And I find myself groveling for small TI projects and facing rejected proposals one after the other.
I went through 6 recessions since college, 6! The 2nd and 3rd just slammed me and I had to start over, the last and most recent I just bailed and retired. While most were connected to oil problems the 1980 recession killed the savings and loans where most all private work was financed, not just houses. Just starting out I was heavy into small private work and it dried up overnight. The 2001 recession was driven by 9/11 and by then I was into bigger work but too much was with foundations who got scared and went to sleep.
I guess it’s a cyclical business but I never predicted this. The problem is from where we sit you never know its coming….but the big guys know. In this last recession I got tipped off by a wealthy acquaintance that said his investment banker daughter called from Europe and said it was going to crash and for him to get rid of anything speculative, he did and I did. While some are 4-5 years apart most seem to be 10 years apart, its a matter of knowing this and preparing.
Looking back I think a lot about what I would have done different:
First is to know that these things have been happening since the 1700’s and that they come in waves and will never stop. I would watch the Booms and draw back and squirrel cash during these periods for the coming winter which always follows, instead of the instinct to expand.
Second watch your borrowing and use Booms to pay them back. Anybody can figure out how to squeak by in a recession somehow, but if you have debt that you can’t pay - bye-bye house.
Third is the hardest, stay out of private markets exclusive in your practice and strive to get into healthcare, government work & universities etc. These guys don’t know what recessions are.
Finally, just being damn good at what you do is a big insulator, remember that when unemployment hits 10% there are still 90% working. There is always work somewhere just travel to get it….if you’re good you will find it or it will find you.
Robbmc, thanks for this thread, I wish someone would have turned the light on for me when I started in 1974.
Looks like we are due for another recession any minute now... damn...
maybe we have a couple more years considering how bad the last one was... maybe not?
And by the way Robbmc - I can only relate what I've read, but Texas might as well have been Australia as far as the great recession is concerned. Most real estate investors I've spoken with who have managed to succeed with new construction, have done it in texas. The economy there is at the top of the scale. Hard to gauge the entire country by that.
Things have been looking better... now to make some decisions that won't put me out of commission for 7 years the next time the hammer drops.
What really amazes me is 1942 and 1982. Does this mean we'll have crazy volatility until 2022? :)
Real estate will always be extremely volatile because it is based on financial leverage (borrowed money). Any highly leveraged industry has that problem.
Firm I'm at now trudged through with our higher ed and healthcare projects with a few institutional clients thrown in. The bad news hit when some Ivies started sending out letters saying all capital projects were on hold - other schools followed suit in at least cutting back their building. The firm had a few people leave, and they didn't hire to fill, sort of just trickled down. Not too much debt, but hardware/software upgrades didn't happen and now we're scrambling to get back to full efficiency, cutting back on our ability to hire. We're trying to expand our portfolio to become more resilient, but it's a rough market dealing with so many potential clients that have gotten used to getting a lot of quality work for peanuts.
I've heard of firms that have been able to backpay employees for pay cuts and such, so I guess a lot of places are really recovering.
The ten year cycle is pretty frighting once you get a family. It seems like in the big markets if you can hold on through the waves of layoffs you can ride it out but once you get on the outside its really hard to get back in when the big boys are cutting loose hundreds of architects a week. We don't get paid enough to set up a safety net that would allow us to ride these things out and short of leaving the profession I've not seen a way to insulate oneself from the ax once it starts swinging. Being good helps, time with a company helps and it seems like a smaller firm with a smart business owner goes along way but knowing its coming and not seeing anyway to avoid it or prepare is nuts. It seems like now is the time to figure it out/prepare so you have a few years to focus on your position. This one was big but on average there are probably sectors/markets that did better than others. For instance I came from Oklahoma and most of the people I worked with prior to leaving seemed to do pretty well throughout, I had a few friends who stayed in the college town and their firms continued to boom.
Its obvious retail, residential (all sizes) and private commercial work is the most volatile with huge booms and busts it was alarming to see federal, state and even education start drying up at the same time. Is this typical to have all the markets pull back at once or was the size of this recession atypical. I don't know how there are still architects if this happens every ten years. We must have been brainwashed in school.
I attended grad school in Texas 2010-2012 and relocated to Dallas this year Through all that time it's pretty apparent that the recession never really got going on in Texas. Everyone is building...residential, commercial, industrial, etc.
Back to robbmc's post, we just axed an architect who had been with the company for 35+ years. Why he was let go isn't something to discuss in an open forum, but know he had it coming. Anyways, my point is he had been able to ride out every recession and advance with continuous employment because he had a high-demand niche and he knew it better than anyone. Now is definitely the time to find your niche, address your weaknesses and make yourself indispensable. How you accomplish that is entirely up to you. Once you've separated yourself from the masses you tend to stay employed.
When I was just starting out and before going into practice I worked for a contractor-developer. Inflation hit in 1973 and interest rates skyrocketed to 14% brought on by the doubling of the cost of oil in just a few months (how do you prepare for that). These interest rates cut construction to its knees and my smart-rich boss exploited the problem. We were a metal building dealer and the manufacture was slammed with cancellations and had yards filled with canceled buildings ready to ship. They sent out a bulletin offering these packages for pennies on the dollar. My boss grabbed three and talked them into payments at a low interest rate, nothing down and we went to work erecting them. By the time the buildings were ready to occupy the recession ended and interest rates dropped back down to 5%, my boss sold all three and made a killing.
It was during this time that he did lay-off many and I too had a young family and was scared to death of being axed. One day while driving to lunch with my boss I took a big swallow and asked “Do you think I’ll get laid-off?”….he turned and smiled and said “If it comes to that you and I are going to be the last guys out the door”. I just melted into the seat but got thinking after that there were two things to prevent a lay-off 1) Be the owner and 2) make yourself indispensable. The whole concept of being laid-off was brand new to me then and it scared the hell out of me. It wasn’t long after that I chose the former and set out on my own. The recessions kept coming but the two times I got burned I was at least the last guy out the door.
I would add to my list #5 – Learn to be a survivor. My boss was and I was too. I think it was instinctive for both of us but it can be learned. You have the skills already as architects, you run into code-walls and get stopped in your tracks all the time….the whole process of what we do is to navigate around walls and that is survival.
Because of my obsession with work I wasn’t a very good father but the one thing that did get through was their observing me and how I survived. All three have found ways of being indispensable. My youngest son is in IT-Marketing and when he got into an opportunity he didn’t just sit in his cubical doing his assigned job, in his 20’s he studied the company and how things worked and found ways on his own to make things better and more profitable. He at the same time studied his boss and learned her job and then started doing her work for her, offering innovative ways to make her shine. It got so bad that all she did was travel knowing he’d cover all the details. Hell she forgot how to work and started asking him what to do. The rises and bonuses were staggering as a result. She lately left the company to start her own and just begged him come along, which he did. Nobody is going to lay this guy off! If you are an employee with no prospect of being an owner its #4 Be Indispensable and #5 Be a Survivor.
Sorry to be so long but this subject strikes a chord in me.
interest rates skyrocketed to 14% brought on by the doubling of the cost of oil in just a few months
Interest rates and oil prices are not connected. Monetary policy is the reason for that (and all other) recessions.
Not just monetary policy, Miles, though that's a huge contributor. It's monetary policy combined with things like maturity transformation in credit markets and moral hazard due to political risk socialization.
I've shied away from the owner position for just the reason you mentioned Carrera, from what I've seen up close and personal it takes over your life being the owner of a small firm. There was a post that popped up recently that really helped clarify this in my mind that what I've seen isn't abnormal but pretty much required if you want to start your own firm. It seems like the cons outweigh the pros once you throw a family in the mix.
Miles, slight correction of the facts, the rise in oil prices in 1973 along with high government spending due to Vietnam, created stagflation which lead to inflation which in turn lead the Fed to raise interest rates to counter the inflation. This recession was called “The Oil Crisis”. The next recession in 1980 and was a continuation of this inflation and was called the “double-dip”. The next recession was in the early 1980’s and was again brought about by rising oil prices caused by the Iranian Revolution. This recession was titled “The Energy Crisis”. The 1990 recession was a result too of another oil price shock but was combined with huge debt brought on by Ronald Reagan that eventually weakened the economy. The continued Boom during this period brought on the 2001 recession called the “Dot-Com Bubble” and 9/11 and you are right on this one oil was not a factor. We all know about the 2007 recession and again no oil was involved. That’s 6 that I was involved with and 4 were triggered by oil.
Robbmc, if one seeks control over their uninterrupted employment it involves personal sacrifices either way. You don’t get indispensable by going home at 5 o’clock. I think changing morays and feminism are pressure-factors today. Its one thing to spend time with your kids but its another with spouses expecting you to be home for dinner and to vacuum/wash the dishes every night. Even in 1973 my wife (stay-at-home-mom) wanted both…she wasn’t a spender but always needed more money but at the same time wanted me home. My father-in-law came to my rescue and sat her down and told her to leave me alone so I could do what was necessary to provide for the family. With most women working today it seems like an impossible combination. But also today with a good laptop you can do your chores, get the kids to bed, read them a story and still have time to create spreadsheets for the boss. Out of abject fear of loosing financial continuity I went too far and never had much of a relationship with my kids. But take solace in the fact that after they grew up and got families of their own we became best of friends….they have told me that they understand the sacrifices I made and forgive me for my absence….it did turn out okay in the end. Don’t be afraid to push yourself for the good of your family. A great pastor/friend of mine once told me that anything you do, any decision you make, if founded in love is the right thing to do.
It's ALL fiscal policy. Credit markets, war, money supply, debt, etc.
I personally haven't been all the affected by the recession cycle, the worst it got was in the early 90's when my dad was on the chopping block as an engineer at a coal mining company. We moved, and he's been spared the endless rounds of layoffs since. I've been out of high school for 13 years now, going into the military, getting out, and only finishing school this year, so I missed the last couple. The recession hit the NW where I went to school pretty hard, which put a stop to the majority of student internships. Regardless I'm just hoping to get on board somewhere right now and get to work. I really appreciate hearing the great testimony of the effects of the economy has on the architecture industry from you all, it's a real eye opener. I guess I could say I'm relieved that I've been pretty adaptable in the past, but there's not much solace knowing If a cull comes I might have to go back to working as a roughneck or cleaning rooms. It was a heck of an investment in time and money, but like everything else these days, nothing is guaranteed.
Matthew, you haven't been affected by the recession cycle because you where never in the cycle to begin with. I hope that you can make a go of it, but I think you need a couple years in the pool to really get your feet wet.
The problem I ran into is that there are ladders to nowhere now. If you don't have a built portfolio of a lot of recent work, no one wants to give you a chance on playing with there thousand and thousands of dollars. Also, sole proprietors and small architectural companies have cut their rates to try to get anything they can get work wise. On top of that you have Revit which reduces staff load, and the colleges just kept expanding their architecture colleges and printing diplomas during the recession. So, there is a huge force of qualified and not so qualified individuals wanting to "design structures".
In all honest, I don't even see small firms lasting the next recession. I believe that within 20 years or so only the very large multi-office firms will be left. This is especially true if we do see another global recession. I left architecture after 8 years of working in the professional world for the sole fear that I would work my ass off hoping I was going somewhere only to smacked in the face with another recession. I really couldn't see myself back at home with mommy and daddy at 35-40 years of age.
I'd like to believe that with a strong will and perseverance you can achieve anything, but architecture is more about who you know, not what you know. And luck, luck and money never hurt. If you're just a joe schmo, good frickin LUCK!
I read an article that suggested that the oil companies being blamed for recessions is pretty typical, but incorrect. It specifically looked at the Great Inflation of the '70's and suggested that expected inflation actually caused inflation. The article blamed the labor unions in the US for the excessive cost inflation. Unions as it were would fight for excessive cost increases as it was and anticipating the inflation that would result would negotiate even higher increases and incentives. I was just a babe, but I heard stories about how the Unions basically destroyed the breweries in Milwaukee. Schlitz, Blatz and Pabst all went bankrupt. Guys working on the line, 3 or 4 at a time, drinking beer all day and "inspecting" the bottles, making killer pay with defined benefit plans and all the insurance you could want sound almost as silly as sub prime loans, stated income loans, etc.
Although the cost of gas will always be a major influence in the price of anything that is transported, the article maybe explains why the inflation was so out of control at that time.
Wurdan freo, I can’t get the link because my browser is older than I am. Man, I’m in the Rust-Belt and I could go in all day about unions… and they certainly have been a factor but Forbes has a traditional agenda and probably used this issue to re-explain the situation. Unions have been an incessant problem throughout in the last 50 years. My father was union and it provided a great living for our family. The founding ideas of unions was essensal during the industrial revolution but reached too far during this period and lives on today. Unions were a constant problem that may have contributed to the mess but didn’t trigger the mess.
Mississippi River pilots who are members of the Crescent City Pilots Association union make $400,000 a year with their most recent raise. (not a typo). You can only imagine their other benefits.
I was in this recession cycle - I worked at SOM and got laid off in November 11/08' as our Managing partner said during the meeting afterwards "we kept out best people" IOW I was not up to snuff and got culled in the first layoff - it took 12 months before I got another architecture job as a temp - I worked contract 1099 for 5 years at various small struggling offices until at long last, I got my present position as a Revit Specialist at a Major Structural engineers office.
You don't want to end up like I did, spend years getting dragged under the bus, lose your entire life savings - No that is not being responsible
instead you need to be the best and brightest - no points for second best - Now I am working to be very proficient at Revit, Dynamo, and architecture - to prepare for a possible collapse of the tech boom here in the Bay area around 2016 - 2018 -
"Well I told you once and I told you twiceBut ya never listen to my adviceYou don't try very hard to please meWith what you know it should be easyWell this could be the last timeThis could be the last time"
Recessions triggered by oil seem to have passed so looking there will not help…predicting recessions is impossible. Just like in 2007, we will continue to get and endless supply of “hopetimism” from our politicians and mainstream media and they will fill our heads with visions of rainbows, unicorns and economic prosperity for as far as the eye can see…then the next recession will strike and most Americans will be completely blindside by it….again.
There is always prosperity somewhere but the overall economy remains weak and it’s centered on the middle class. Personal consumption is more than 2/3 of the economy and is fueled by the middle class. Growth prior to this last recession was driven by the expansion of personal credit which in turn pushed retail and housing to all time highs. That credit has dried up keeping housing from recovering and there is talk of a “Retail Apocalypse” looming.
Having a weak economy means that almost anything can trigger the next recession. Figuring out when it will hit is impossible as stated - so just acknowledge the fact that it will be coming as Xenakis has and just put a date on it, as he has, and use that time to prepare yourself professionally, as again, he is. Look at what happened to him – He wasn’t indispensable and got slammed at the gate then spent 6 years struggling and lost his life savings. Speaking of kids and family, is dragging them through that sort of thing sacrifice? Wouldn’t it be better if you sacrificed a little in the next 5 years to avoid a “Family Apocalypse” when it hits?
As George Carlin said, "It's called the American Dream, because you have to be asleep to believe it."
Xenakis, I know the head of a German firm who had to lay off staff. It tore him apart and almost put him in the hospital. You worked for a jerk at SOM. In fact, it doesn't say much for SOM to have an ass like that on the staff. What he was really saying, most probably, was "We kept all our 'diversity' employees so we can maybe beg and get some government jobs".
We did have government work - I worked on the U.S. Embassy in Bejing for exa. - a lot of California University projects. That being said all of the projects architects I worked for were great - decisions on who gets laid off - could be one of those 360 reviews - basically, I just didnt have the votes ya know. after that I worked my way up to a similar situation - and the office I work for now also has 360 reviews - basically if you can't get 2/3 majority, you get the grey folder. SOM is well I was to busy too really pay attention to the politics - when you get lost in your work, you become invisible and they're just gonna delete you - I listen to a lot of Brian Tracy to stay on track - he believes you can prevent being laid off by being the first one in, work hard right through lunch and be the last one out, work weekends, and learn the latest - he's right -
be the best and the brightest or end up the brokest
"the first one in, work hard right through lunch and be the last one out, work weekends, and learn the latest "
sometimes they just pick the cheapest and none of that means shit.
If you prove to your employer through hard work and good work that they would be worse off without you and prove that you are a respected individual with work that no one else can produce on their own, then how cheap others sell themselves for doesn't matter.
sounds nice, doesn't it? I m sure everyone has a story and has seen what they've seen.
its useful, though, in all your running to be early and stay late and never eat, to remember that your being a respected individual isn't always what someone wants when they have to put people on the chopping block.
Recovering nicely in the UK too. The construction industry is going from strength to strength and my firm is actually recording some of its best ever figures.
B & S Steel Supply
Multi-family housing. It fell through the floor during the recession and has bubbled back up again already.
housing started to peter out toward the end of 2007 or so... we were still putting together proposals, but it wasn't at the breakneck speed it once was. multi-family is going strong now - but it's all in the urban core.
I made it by not being in the profession for 98% of my income during the recession but I kept a toehold on it so i could climb back in and all of a sudden opportunity came and it was short lived but then another and another. Things are still unstable in Chicago but firms are looking for production staff. Temping is big here and teams are employed on a per project basis. Temping has some advantages as you get overtime, but you are expendable, unless you are landing projects.
Our firm is doing lots of domestic retail rehabilitation, we like everyone else is trying to set up a healthcare studio and corresponding portfolio and client list. We also have a lot of big retail and hospitality work overseas in the developing world.
Overall, I think things are getting better, we are looking for experienced folks in healthcare and IT and have had problems finding the right candidate. Some firms are taking too long to run their job search as if the recession was till a huge problem and they leave folks hanging and then call to offer to only find the person took a position a few weeks ago with someone else.
Firm hopping for people with elite skill sets and connections is also starting up again.
I think it still is hard for people with little experience or a huge gap in experience, having the few freelance projects that got done during the recession helped close the gap for me.
Some firms are holding off adding folks to see what the election and government shut down will look like this fall.