ACENZ Survey Shows Not All Doom & Gloom

Amid the escalating predictions of economic gloom, a special business study of the Association of Consulting Engineers (ACENZ) member firms has shown that many areas of business remain steady.

While there is no escaping the fact that firms, particularly in certain markets, are encountering difficult times, the outlook is not entirely bleak.
An encouraging number of firms reported a full workload until mid-2009, although others had encountered some reduction in workloads, particularly for residential and commercial developments.

There was a general expectation of further decline this year, with the crunch really expected to be felt from June, but most expect relevant industry and market sectors to start to recover quickly in 2010.

The findings revealed that reduction in workload appears to vary according to the size of the firm, with small firms reporting their sharpest declines in residential construction and land development.

Lower medium firms noted most decline in land, residential and industrial developments. Upper medium firms recorded steady business with a small drop in commercial and residential activity, and a number of large firms reported reductions in local government work.

One of the major issues reported was that firms, irrespective of size, are encountering increased difficulty and delays in recovering payment for services.
Despite the uncertainty about the economy, companies remain strongly committed to retaining staff and continuing staff development.

Some of the respondents, including a number of smaller companies, are intending to recruit resources previously in short supply. Several commented on the rise in the number of returning migrants and also the fact that there are more UK engineers appearing in the marketplace.

Most firms were planning to undertake a pay review as usual in 2009. Few were planning economy driven changes to company structures although some very small firms were considering alliances or mergers.

One of the benefits of the survey is that it provides immediate facts about where the industry is in this first 2009 annual quarter. If we don’t have facts then the risk is that the void of knowledge is filled by doom merchants.
Promoting a worsening economic outlook can become a self fulfilling prophecy, and make employers and clients unduly risk averse. Studies have shown that the fear of losing their job is affecting around one third of the workforce. However, the ACENZ survey shows there continues to be an ongoing shortage of some skills and resources in the engineering sector.

The Business Survey was sent out in late January and completed in early March, prior to detail of the Government’s economic stimulus package being announced – so some companies may also now be anticipating the benefits of accelerated infrastructure projects and increased optimism for the second half of the year.

Yes, we will see some belt tightening over the coming year, including more use of reduced or flexible working hours in our member firms, and a focus on prudent management – no bad thing.

But at present, the facts suggest the industry will weather what lies ahead, albeit somewhat like surviving an economic cyclone. Lessons must be learned during the abrupt impact of this economic crunch on the construction industry so that we are well placed for a quick recovery from the recession, and ready to seize opportunities in the economic up-turn. We need to emerge from this event as a more robust, productive and cohesive industry to successfully ride the inevitable future peaks and troughs.

Kieran Shaw is chief executive of The Association of Consulting Engineers New Zealand