Slight Gains Projected for AEC Industry in 2012

• Slow growth ahead: With chances of a double-dip recession waning slightly, industry analysts project small gains in 2012 construction spending compared to the declines experienced in 2011. McGraw-Hill Construction forecasts construction starts to rise 0.5% in 2012 following a 4% dip in 2011. As of December 2011, Reed Construction Data forecasted a 4.4% rise in construction spending in 2012 after a 2.6% decline in 2011. Associated Builders and Contractors (ABC) projects nonresidential construction spending will grow 2.4% in 2012, reversing a 2.4% fall in 2011.

• Private markets improving: Private-sector markets will fare considerably better than public-sector markets in 2012 as credit concerns ease and the economy improves. ABC projects a 6.9% bump in private nonresidential construction in 2012 following a slight 0.7% rise in 2011. McGraw-Hill Construction forecasts single-family housing unit starts, while still at low levels, will increase 7% in 2012 with multi-family units increasing by 17%. Best private-sector prospects are for power and health care projects.

• Public markets will struggle: “Unfortunately, the impact of tight state and local government budgets will continue in 2012,” says ABC Chief Economist Anirban Basu. ABC forecasts public nonresidential construction will fall 2% in 2012. McGraw-Hill Construction forecasts public works construction starts will dip 5% in 2012 (after a 16% fall in 2011) due to spending cuts and the absence of a multiyear federal transportation bill for highway and bridge construction. Public education markets will also be hit hard by government austerity plans.

•International outlook mixed: IHS Global Insight projects global construction spending to grow 4.9% in 2012. Bright spots: Panama (with 13% growth projected), Japan, New Zealand, China, and Saudi Arabia. Weak spots: Canada and Euro zone countries implementing austerity measures, such as Spain, Portugal, Greece, Ireland, and Italy.

Making Up in 2011, Expected to Surge in 2012

• Domestic M&A deals grow: Morrissey Goodale tracked 171 domestic M&A deals (i.e., transactions involving a U.S. based selling firm) in 2011, a 12.5% increase over 2010 and the highest number since 2008. The bump reflects continued confidence on the part of institutional investors and savvy buyers who see industry fundamentals stabilizing and encouraging long-term trends. Inter-state deal activity has still not recovered to normal pre-recession levels, however, and is a continued cause of concern.

• International transactions set record: Morrissey Goodale tracked 157 international M&A deals (i.e., transactions involving a non U.S. based selling firm) in 2011, a robust 54% increase over 2010 and an all-time high. The record levels were driven primarily by energy, mining, and natural resources and environmental end-markets in Canada, the United Kingdom, and Australia. In 2011, there were more transactions involving U.S. firms expanding internationally than in each of the four previous years.

• Forecast for growth: Given the continuing needs of baby-boomer owners to free up their investments in their firms and the outlook for a continuing ultra-competitive environment for smaller firms, Morrissey Goodale forecasts the pace of domestic M&A activity in the AEC industry to continue to rebound, yielding between 190 and 210 deals in 2012—an increase of between 11% and 23% over 2011. International M&A activity is projected to increase to between 180 and 200 deals in 2012, representing an increase between 14% and 28% over 2011. Expect greater deal flow in Asia and a relative decline in the Eurozone. For more, read Morrissey Goodale’s special report, AEC M&A Activity: 2011 Review and 2012 Outlook: click here >

Architecture’s Next “Lost Generation”

• Generation gap: The economic downturn of the early 1990s forced many young architects out of the profession, and this “lost generation” eventually led to a dearth of talented professionals who could fill mid-career positions and be groomed as future firm leaders. The architecture industry’s current contraction, however, is far worse than that of the early 1990s, and the “lost generation” it spawns will present a much greater challenge to architecture firms for decades to come.

• The hard numbers: The economic recession that began in 2008 hit architecture firms particularly hard. According to the U.S. Bureau of Labor Statistics, architecture firm employment plummeted by 31.5% between July 2008 and November 2011, more than double the 14.6% contraction between July 1990 and January 1993. The National Council of Architectural Registration Boards (NCARB) reports the number of registered architects has fallen from a peak of 112,650 in 2007 to 104,301 in 2011.

• Bleak prospects for graduates: A January 2012 study by the Georgetown University Center on Education and the Workforce found the unemployment rate for recent graduates with architecture degrees (13.9%) is the highest of any major. Graduates unable to find internships and positions—and facing an increasingly lengthy and costly licensure process—may be driven to alternate professions and never come back.

• Lost generation’s legacy: The chronic problem of filling mid-career positions in architecture firms will only worsen. While some architects who can’t find employment may never come back, others who have been unemployed for prolonged periods of time will be behind the curve in leadership and project experience when they do rejoin the workforce. When 401(k) accounts rebound, baby boomer principals finally financially able to retire will find fewer mid-level architects prepared to fill their shoes.

Five Apps for Increasing Productivity

These five smart phone and computer tablet apps can help AEC firm leaders, particularly road warriors and project managers, improve productivity.

• Dropbox: Download Dropbox on your computer and mobile device, and never again will you have to e-mail files to yourself before hitting the road. Any file, photograph, or video you save to your Dropbox account is automatically saved to all your computers and mobile devices, so it’s instantly available. Available for iPhone, iPad, Android, and Blackberry.
http://www.dropbox.com/anywhere

• Evernote: Use Evernote to instantly capture your ideas no matter where inspiration strikes. Create written notes and to-do lists, record voice memos, and take photographs, which are completely searchable and synchronized with your computer. Available for iPhone, iPad, Android, BlackBerry, Palm, Windows Phone. http://www.evernote.com/about/download

• Expensify: Expensify automates the expense report process and syncs with credit cards and bank accounts to track purchases as they happen. Expensify can help with the management of paper receipts by snapping a photograph of the receipt and automatically recording the key information of the transaction. Available for iPhone, iPad, Android, Palm, and BlackBerry.
https://www.expensify.com/mobile

• GoodReader: Working with PDF files on the road is made much easier with GoodReader. The app’s advanced reading capabilities can handle lengthy manuals and robust renderings, and its annotating capabilities allow you to mark-up PDFs and other documents, including making freehand drawings. Available for iPhone and iPad.
http://itunes.apple.com/us/app/goodreader-for-iphone/id306277111?mt=8

• Keynote: One of the iPad’s most valuable business applications is for delivering presentations to clients. Keynote is a powerful app for creating professional presentations, complete with animation, photographs, and videos. For presentations to a large audience, Keynote allows you to connect to a projector or HDTV. Available for iPhone and iPad.
http://itunes.apple.com/us/app/keynote/id361285480?mt=8