What Now?

Dear Dave
I would appreciate your feedback regarding a look into the future relating to a typical civil engineering, land surveying company of 40-50 employees, which focuses on residential and some non-residential work for the private sector.

It seems that many firms like ours are moving towards a “one stop shopping” approach by merging with other companies, so a variety of services that include not only engineering and surveying, but land planning, environmental, architecture, etc. are available. Other firms accomplish something similar by routinely partnering with companies that offer additional services.

As the economy improves, will civil engineering firms such as ours look similar in the future, or will the merger/acquisition model become the norm?
ET IN

Dear ET
In today’s economy, if you had to pick the worst possible market in which to work (residential site) you’re smack dab in the middle of it! If it’s any consolation some of the “strong” markets are showing signs of weakening as well (commercial development, transportation, etc). Probably the strongest firms I see today are environmental – or A/E’s working with oil, mining and other commodity based industries.

Should your firm decide it cannot hunker down and wait for a market reversal of fortunes to occur (who knows when this will be?), your basic options are to try to broaden the list of services and capabilities to your current client base or, via a compelling enough argument, take clients away from competing firms.

Another possibility is to look to expand geographically to find what client’s there may be for your traditional services in a larger territory. Expanding geographically is not that easy as the farther you get from your home base the more unique you somehow have to be to offset the distance disadvantage in potential client’s eyes.

Finding partners to team with where your services complement each other, and can make you qualified for other types of projects in the current territory, is a valid strategy as well.

An economic downturn, if deep enough and long enough, will almost certainly reshape the number of firms and the way they operate. Weak firms will fail and stronger firms who evolve successfully will continue on. There are always a lot of mergers and acquisitions in this profession – especially in periods of either sharp slowdowns, or rapid growth. I wish you only the best.