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For Architects, the Job Axe Starts to Fall

November 17, 2008

By Matthew Lynch

In late September, José Torres, an architectural designer, was laid off from the Miami firm where he had worked for two years. Because of the global economic crisis, he says, “there were no more projects coming to the table.” His severance package included two weeks’ pay and a letter of reference that attributed his lay off to “the dire financial environment that has overtaken the country.” Now, he’s struggling to find a new job, he says, as candidates with similar credentials flood the market.

Nationwide, unemployment is on the rise. According to the "Employment Situation: October 2008" report released on November 7 by the U.S. Department of Labor, 1.2 million jobs have been eliminated this year, more than half of them in the past three months. In October, the unemployment rate climbed to 6.5 percent, a 14-year high; the construction industry alone lost 49,000 jobs. “Since peaking in September 2006, construction employment has fallen by 663,000, largely in residential components,” the report says. 

For the architecture profession, layoffs are not yet widespread. In fact, 5,700 more people were employed in the architectural sector in September 2008 (218,900) than in September 2007 (213,200), according to the report. That said, September employment was down 3,000 from this past June, and many expect the job situation will become increasingly grim. Comparisons often are made to the recession of the early 1990s, when firms clamored for work and slashed their headcount. The Chicago office of Skidmore, Owings & Merrill (SOM), for instance, purged 27 percent of its staff in the early 1990s, including 150 employees at once in an incident now referred to as the Halloween Massacre, cites the Chicago Sun-Times.

In a ZweigWhite survey of U.S. architecture, engineering, planning, and environmental consulting firms, 71 percent of respondents said they would consider cutting staff during a recession to reduce expenses. For some, layoffs are a last resort. “We will do whatever we can to hold the studio together, including increasing our own personal debt,” says Billie Tsien, founding partner of Tod Williams Billie Tsien Architects. But certainly, as financing vanishes and projects skid to a halt, firms of all sizes are being forced to trim payroll now.

Looney Ricks Kiss Architects, which has offices across the U.S., implemented two rounds of layoffs this year, reducing its workforce by 28 percent in response to withdrawn client contracts. Callison let go of employees in its Seattle office, which CEO Bill Karst, FAIA, attributes to “clients putting work on hold.” And as a consequence of dried-up projected revenues, non-paying clients, and retracted lines of credit, the Tulsa-based BSW International laid off most of its 270 staff before the firm ultimately collapsed in August. The job axe is falling at smaller firms, as well: In Connecticut, Milton Gregory Grew, AIA, says his small firm has seen a 40 percent drop in revenue, forcing him to lay off one employee and reduce hours for others. Other firms contacted for this story, including SOM, Perkins Eastman, Kohn Pedersen Fox, and FXFowle, declined to comment.

It’s certainly no time to be hunting for employment. In recent weeks, a decline in job listings and a spike in job seekers have characterized the classified section of Archinect, the popular Web site. In 2007, it posted between 15 to 20 job announcements a day; this year, it’s posting two to 10 a day, says site founder Paul Petrunia.  Billy Clark, director of Jack Kelly & Partners, a headhunting firm for the architecture and design industry, says he’s seen a drop in the need for junior- and intermediate-level candidates. Instead, he says, firms are “hiring one to two senior-level ‘catch all’ employees who can wear multiple hats and fulfill various needs.” He warns that employees “not contributing to the core business will be eliminated, and those less talented or with poor performance records will be phased out, as well.”

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While Kermit Baker, the AIA’s chief economist, is wary of predicting a surge in layoffs, he says current market conditions are unstable. The Architectural Billings Index (ABI) has dipped below 50 for eight straight months (a score below 50 indicates a decrease in billings); in September, it dropped to 41.4, one of the lowest scores in the ABI’s 13-year history. “Many architects are reporting that clients are delaying or canceling projects as a result of problems with project financing,” Baker says. If billings are any indication of where layoffs are most likely to occur, firms that specialize in the residential sector—whose monthly score has fallen below 41 since February—might be looking to slim down.

The institutional sector typically fares best during rough economic periods. Until October’s ABI score of 46, its score had registered above 50 for 43 straight months. Einhorn Yaffee Prescott  Architecture and Engineering, based in Boston, says it has increased its staff this year, thanks to an intensified focus on institutional projects, along with sustainability. It’s not the only one: Phil Harrison, CEO of healthcare giant Perkins+Will, says his firm has upped its staff by 22 percent due to new commissions and recent acquisitions of SMWM and The Environments Group. “We are cautiously optimistic in the current environment,” Harrison says, “though obviously anxious like everyone else.” 

Editor's Note: We had difficulty finding sources who would go on record for this story. If you have been laid off, or you work at a firm where people have been laid off, please leave a comment below, or e-mail our news editor at ar_news_editor@mcgraw-hill.com.

Read more economic coverage in our special section, Recession Reports.

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