Tuesday, February 17, 2009

State of the Firm (2008)

. Tuesday, February 17, 2009

The President of Forest Animals A/E gives an annual State of the Firm address to discuss the financial performance of the previous year and to talk about our goals and projections for the coming year. Normally, it starts off with some hoopla with music and fun, but this year was different. With the state of the economy and layoffs only a few short months ago, fun and games weren't appropriate.

The presentation always starts off with a movie of highlights from the past year's projects. I'm always on the lookout for one of my projects. Our president then got into the numbers. We discuss our gross and net revenues, the percentage which goes to consultants, percentage spent on marketing, the number of proposals sent out vs the numer of interview vs the number of wins, etc. In most aspects, 2008 was actually a record year for us as we grossed over $60 million, just slightly more than last year. We would have broken the record by a much greater margin if we didn't have that drammatic slow down during the last quarter.

Looking into the future was a big topic of discussion. Typically, we average about a $100 million backlog of work. For 2009, it has reduced down to about $35 million. These are jobs with a signed contract that we still have the green light to work on. We do have about another $70 million worth of work that we have been awarded but have been told not to work on yet until the Owner (typically state or local government) know what their funding situation will be. A county government isn't going to build a new elementary school while facing a budget shortfall and is contemplating laying off teachers. Our president feels that the stimulus package should help move more of the "B" column back over to the "A" column. A doomsday scenario would be to actually "lose" jobs out of the "A" column. "Stop working on that new jail job. We don't have the funds to pay you any more."

The President gave us a pep talk/quick in pants to try and boost our morale. The slowdown in work has affected some more than others. I'm sure those that are light on work (certainly not me) are worried that they'll be next to be laid off. Our president told everyone that we should not slow down to drag these projects on so we can look busy. We need to continue to work efficiently so we remain profitable. If people are going to slack off in that manner then they can leave and work some place else. It was a little bit of tough love that makes good business sense.

We looked at patterns from past recessions and learned that most recession last about 18 - 24 months. It looks like this one will last 24 - 30 months. The layoffs we made were to position ourselves for this current economic climate. We needed to trim down so we could be leaner and meaner. Some of the belt tightening that had already been announced was salary freezes and suspending thr company match for the 401k. Additionally, they announced a much less extravagent company picnic and Christmas party, tighter restrictions on company credit cards, and spending less money sponsoring scholarships and conferences.

In conjunction with the stimulus package, we're looking into some new marketplaces for our A/E services. One new market will be federal/military work. Norfolk (navy) is just down the road, and there are plenty of military bases in VA and NC. Forest Animals A/E used to do federal and military work in the past but got away from it for some reason. We're actively looking for a "rain maker" to help us develop relationships and win projects in that market place. We're also looking into partnering with performance energy contractors to conduct energy audits of existing buildings. Renovating/modernizing government buildings and making them energy efficient was one thing consistantly mentioned in his stimulus package. I think we will be well positioned to take part in that.

The meeting wrapped up confirming our committment to green design. Our firm is the leader in green design in this part of the country and is one of the leaders in green design in the entire country. Sustainable design is the future and we've been doing it for years. I left the meeting feeling more optimistic about 2009 and even more so for 2010.


Ray said...

Sounds like my work world.

I live in Oneida (small world) and work at a large environmental engineering firm in Syracuse. Had some layoffs in December to position ourselves for the economy. Even received the same "don't hoard work or work slow" speech.

I used to work for a company called Conti Federal Services located in NJ. At the time they did a lot of environmental projects. They had a lot of contracts with USACE and AFCEE. With the war a lot of the federal funding was shifted more toward infrastructure work and so did Conti's work. I left due to increased travel requests. They may be well positioned for some of the stimulus projects. They are heavy on the construction management side and generally need A/E teaming partners.