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As we enter the 2nd half of 2011, we thought it was a good time to check in with 6 CEOs of leading architecture, engineering and environmental consulting firms across the country. We were curious to see how their organizations were faring so far in 2011, where they see opportunities for growth, what challenges lie on the horizon, and if their leadership styles have changed throughout this recession.  

 

Howard Birdsall, Chairman, President & CEO, Birdsall Services Group, Sea Girt, NJ

birdsallHow has Birdsall’s performance fared so far this year?

Our profits are up 10% from last year; however, sales are basically the same. Some of our services such as site civil, geotechnical, and traditional MEP are experiencing lower profits and sales. Services to public clients in the municipal, transportation, structural, water resources and environmental areas are relatively flat. Services in our marine and energy disciplines are growing both in profits and sales. So it’s very much a mixed bag depending on each service or market.

In what market or service areas are you seeing promising opportunities for growth?

We see opportunity in the energy market, both in renewable energy and sustainability. The other area is in marine engineering, but that’s very much a niche market. Another area is project management and design build, but to really do this effectively the risk factor goes up significantly, but so do the profits. In the long-run, we believe the health care services market will be growing due to demographics, but ObamaCare has slowed down hospital work this year. Long-term care and “out of hospital care” facilities should continue to grow. Work in the urban areas and cities will continue to grow as work in the suburbs and rural areas decline. However, our major cities are suffering from capital constraints and political challenges.

What business and/or industry challenges most concern you?

Raising prices and billing rates continues to be an issue as customers know it’s a buyer’s market. Without more job creation nationally, the “new normal” will continue for at least another 3-5 more years. For our industry that will mean lower growth and young engineers and other professionals will always gravitate to where there are better opportunities. Finding qualified people for the few areas where there are growth opportunities will continue to be a problem even with high employment. The other concern with an extended period of little or no growth will be finding employees who have enough wealth and are interested in acquiring significant ownership in the companies where they work in order for ownership transition to effectively take place.

You’ve acquired a number of firms over your career. How do you measure if a deal was successful?

First, the deal must turn out to be accretive to your net income and ultimately to your net worth. Second, the number of key people from the target who remain (the more the better) for a period of time post-acquisition, say three to five years, is critical. Third, both firms should meld together so that the culture of the new entity moves in a positive direction rather than upsetting the apple cart.

Have you had to change your style of leadership over the last few years due to the economy?

Not my style, but communication on many levels, both internal and external, has become more important for me. I’ve tried to spend more time being a good listener rather than a good speaker.

What’s on your summer reading list?

The Endgame, and Impact 2020 for business, Ted Bell books, and The Final Storm for leisure.

 

Kurt Fraese, CEO, GeoEngineers, Inc., Seattle, WA

fraeseHow has GeoEngineers performance fared so far this year?

We are having a very good year relative to budget and an extraordinarily good year compared to last year; generating more revenue and higher returns with fewer staff. We attribute these excellent results to the slightly better economy, focusing on our fundamentals and simplicity in our operations, keeping expenditures in check, and deploying four top managing principals back into client development and project management roles.

Since your firm serves a range of public and private sector clients, are you seeing signs of an uptick in economic activity?

We’ve seen some improvement in economic activity, particularly in the Puget Sound, Intermountain and Gulf South regions.

In what market or service areas are you seeing promising opportunities for growth?

Our energy and water/natural resources markets represent the most promising growth opportunities. Environmental, ecological, micro-tunneling, and applied technology services show promise for further growth.

What business and/or industry challenges most concern you?

The unsettled nature of the economy continues to affect confidence in the marketplace. There also is continued downward pressure on rates, more onerous contract conditions, and fierce competition. This has the potential to adversely affect our multipliers and loss prevention as well as recruiting and retention of key staff.

Have you had to change your style of leadership over the last few years due to the economy?

Yes. I have shifted my focus from strategic growth that emphasized picking the “right” markets and services to “be in” to strategic readiness with emphasis on being able to take advantage of opportunities that align with our strengths and passions. It’s a more natural path. I also have made sure to communicate with the entire firm at least once a week through an email called “Friday Focus”. The communication is an open letter to all staff and can include important market, service, training, management and philosophical news, encouragement and guidance on almost any topic.

What’s on your summer reading list?

The Big Short by Michael Lewis. It’s the true story of the early stages of the financial collapse and those who saw it coming well in advance and profited. This story is much scarier than any true crime account I’ve ever read, only it involves financial weaponry with most Americans as the victims!

 

Rich Bub, President & CEO, GRAEF, Milwaukee, WI

bubHow has GRAEF’s performance fared so far this year?

We saw an upturn in business during the 4th quarter of 2010. Our industrial client base started to generate work once again, our transportation market remained steady, and we continued to work on healthcare projects. As we’ve come into 2011, the industrial base has continued to improve, the transportation market remains good, higher education work is still there and commercial work related to healthcare is promising.

Since your firm works across a range of technical design disciplines and public and private sector clients, are you seeing signs of an uptick in economic activity?

There have been signs — especially from the industrial segment. The housing market continues to struggle. New jobs, always an indicator, seem to be on again, off again, with no serious traction at the present time. Given the results of budget issues at state levels, we’re watching closely for their effects at the local level.

In what market or service areas are you seeing promising opportunities for growth?

The water and energy markets. We happen to be located in an area of more abundant water supply than elsewhere in the country, so market increases here will be from companies moving into or expanding in the area who are high water users. Energy and energy management related business will be expanding regardless of where you live in the U.S. There is still a pent up market demand due to the needs of aging infrastructure. Once the challenge is met on how best to fund this type of initiative, the upgrading of the nations’ infrastructure will be a very robust market.

What business and/or industry challenges most concern you?

As a profession, our services have become more and more viewed as a commodity. The value of our expertise is never fully tapped when you have to provide the lowest cost proposal. We routinely review who we are competing with for projects and determine whether we want to provide a proposal. When all the talents of our profession are used, the best designs and results are apparent.

Have you had to change your style of leadership over the last few years due to the economy?

I believe my style of leadership has not really changed. What has occurred is I am more in need of back-up to push forward with an initiative due to the pressures on spending the capital of the firm wisely. We continue to invest in people, technology and upgrades, but they are reviewed more closely than in the past.

What are your plans this summer for rest and relaxation?

I’m a sports nut and a die-hard Milwaukee Brewers fan, so I’ll be attending a number of Brewer games throughout the summer. I also really like to golf, though my handicap is not really where I’d like it, and I’m losing distance every year. But it is relaxing, it gets me out with friends, colleagues and clients, and the laughs and fun are worth more than the score!

 

Ralph Hargrove, President, Hargrove Engineers + Constructors, Mobile, AL

hargroveHow has Hargrove Engineers + Constructors performance fared so far this year?

Due to our diversity in the industries we serve, and the proactive steps and investments we’ve taken to enhance our market share, we have seen an increase in business opportunities presented to us. In short, we feel we are in a good position.

Since your firm serves a range of industrial and energy clients, are you seeing signs of an uptick in economic activity?

So far, yes, and specifically in the specialty chemicals segment.

In what market or service areas are you seeing promising opportunities for growth?

Most recently, services relating to enhancing and increasing the reliability (life cycle) of our client’s existing assets.

What business and/or industry challenges most concern you?

For all the industries we serve, meeting our clients resource needs based on their expected start-up dates can always be a challenge. Having and utilizing quality planning tools and technology is critical for us.

Have you had to change your style of leadership over the last few years due to the economy?

No, not in the true sense. We have increased our training efforts to raise the bar on our technical capabilities and leadership skills of our teammates. We have made a conscious effort to distribute and disseminate the leadership throughout the company.

What are your plans this summer for rest and relaxation?

Spending as much time as possible on the Alabama Gulf Coast, enjoying all that it has to offer – boating, fishing, kayaking, swimming and scuba diving. The Gulf is back, and I’m taking advantage of being fortunate enough to live here and enjoy it!

 

Mike Matthews, President & CEO, H&A Architects & Engineers, Richmond, VA

matthewsHow has H&A’s performance fared so far this year?

Our revenues are up over last year but we are having difficulty obtaining our historically high margins due to increased competition in one of our core markets. We are also focusing our attention on successfully integrating firms we have recently acquired.

As H&A serves primarily a range of federal clients and projects, what design issues are critical to those agencies today?

Green design, security, dependability, constructability, life-cycle cost, and primarily, cost. Most of these aren’t new. There is certainly a bigger focus on green design and we have made changes in our business to address those client needs.

In what market or service areas are you seeing promising opportunities for growth?

We are seeing the private sector work coming back to life – particularly in the planning phases. Economists typically track new construction starts. I see our industry as a leading indicator of construction starts. My current experience and anecdotal evidence in the industry leads me to believe the commercial markets are a good place to be right now. Much of the competition is gone with only the strong surviving.

What business and/or industry challenges most concern you?

Economic growth is my biggest concern. There seems to be a lot of anti-business rhetoric coming out of Washington, with increased regulations and an appetite for burdensome reporting requirements. Unfortunately, health care reform will likely have a negative impact on our employees, our firm, and our industry. Small and medium sized businesses will certainly find themselves absorbing much of the cost for the current uninsured. We will also no longer be able to differentiate health coverage for employees at various levels in the firm. I’m afraid many could lose family coverage with no way for us to compensate them for the lost benefit.

Have you had to change your style of leadership over the last few years due to the economy?

No. But we have had to constantly communicate to our employees how we are doing. While we have seen growth over the past two years and have not had a single layoff, our employees remain nervous, having seen our industry hit hard by the recession and their friends and family members losing their jobs.

What’s on your summer reading list?

If Aristotle Ran General Motors by Tom Morris and The Breakthrough Company by Keith McFarland

 

John Thomas, CEO, SWCA Environmental Consultants, Phoenix, AZ

thomasHow has SWCA’s performance fared so far this year?

We are on-plan for the year at the mid-point, so good performance. Our 2011 plan was not aggressive, essentially a continuation of 2010 total revenues with an increase in net and earnings.

In what market or service areas are you seeing promising opportunities for growth?

The energy sector in its various forms leads the pack for us, with oil and gas being the most robust with a lot of activity in renewable and electric transmission.

What business and/or industry challenges most concern you?

Ironically, the renewables market, particularly wind. We are seeing a sorting out of the players and projects and changes in tax and other government policies, such as rolling back of tax credits for renewables in Oregon and the California RPS requirements for in-state generation, are reducing the number of projects with some booked work being cancelled.

How does your recent acquisition of Northwest Archaeological Associates benefit SWCA?

NWAA was a good acquisition for us in a number of aspects. We have a well-developed and successful Cultural Resources practice so there is immediate connection with our ongoing programs and our managers speak their language. Their geography, Washington State, is immediately adjacent to an existing SWCA presence in Oregon, and they provide us with a platform to leverage our other services in Washington. This completes our west coast coverage, which is a goal of our strategic plan. Lastly, they are a competent and well respected firm — so we acquired good reputation and client relationships.

Have you had to change your style of leadership over the last few years due to the economy?

Not so much style as what I focus on, that being: costs, which for us is largely employees, and increased competition and price pressures. We have had to become more disciplined with our staffing decisions and more effective in our business development.

What are your plans this summer for rest and relaxation?

A bicycle tour in the Colorado Rockies in June and another bike tour in the Basque Country of northern Spain in August. Maybe not restful, but certainly exciting diversions. I don’t seem to rest much!

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