Economic Uncertainty Draws Attention to Marketing Strategies
Mixed reviews of U.S. construction employment near the end of 2011 are not likely to garner much economic optimism for the near future, at least not for some sectors of the construction community.
In December, the Associated General Contractors of America released its analysis of federal employment data showing that construction employment declined in 146 out of 337 metropolitan areas between October 2010 and October 2011, increased in 140 metro areas, and stayed level in 51 others. A little brighter November report had overall construction unemployment dropping to 13.1% from the 18.8% logged a year earlier.
AGC cites declining federal investment in infrastructure projects as part of the reason for the lagging job figures and contends that construction employment could benefit from increased funding for transportation projects and other pro-growth measures designed to spur private sector demand. Ken Simonson, AGC’s chief economist, notes, “If it were not for a slight increase in private sector demand, construction employment would be down in even more communities.”
Indeed, private residential construction has recently fared a little better financially than other building sectors. In its monthly housing markets index released late last year, the National Association of Home Builders noted that the number of improving housing markets continued to expand for a fourth consecutive month, rising from 30 metropolitan areas in November to 41 metro areas in December.
In its December economic forecast, the Institute for Supply Management indicated that capital expenditures, a major driver in the U.S. economy, will show only a modest increase in the manufacturing sector, while investment in the nonmanufacturing sector, including construction, will remain somewhat flat.
An economic outlook survey conducted by the American Institute of Certified Public Accountants (AICPA) in the fourth quarter of last year pointed to some improvement in economic optimism, but broad pessimism about the rate of recovery still lingers. On a regional basis, the survey findings show a brighter view of business prospects this year than during the last quarter of 2011, with one exception—the Northeast; the Midwest has the sunniest outlook.
“We saw improvements in every category of the index, including sentiment about prospects for the U.S. economy,” says Carol Scott, AICPA vice president for business, industry, and government. “However, serious concerns about the business climate remain, reflected by continued reticence for new investment and hiring.”
Finally, McGraw-Hill Construction’s Dodge 2012 Construction Outlook reports that new construction starts are expected to reach $412 billion in 2012, barely higher from the 2011 total. The forecast is for total construction to continue along at 2011 levels, rather than noticeably boosting a long-awaited recovery.
Amid these fluctuating economic forecasts, the more pertinent challenge ahead for construction organizations is how to market services in an uncertain economy.
Hinge Marketing, which specializes in marketing and branding for professional services worldwide, suggests that architectural, engineering, and construction organizations should “try to think of today’s downturn as an opportunity to test your self-discipline and refocus on marketing fundamentals. That way, your firm is likely to come out of the downturn stronger and better positioned than ever.”
The key to marketing during a recession is to focus first on existing clients, Hinge points out. “It’s far cheaper and easier to get more work from businesses that already trust you than to build new relationships from scratch,” the company notes. “Talk to your clients and honestly assess their needs. Your best clients want to work with you and are likely to appreciate your pro-activism.”
When seeking new clients, the Reston, Virginia-based firm advises businesses to identify and target the types of organizations that best suit “your skills and fee levels. You are more likely to close this type of business than if you cast your net too wide and sacrifice positioning for short-term business.”
Planning for a longer sales cycle is also wise, Hinge adds, primarily because most businesses move at a slower pace in making decisions during economic downturns. Construction organizations need to stay ahead of potential client decisions by slowing down their own spending allocations accordingly.
Finally, although it may be tempting for struggling businesses to lower their fees for services, Hinge says to avoid that mindset if at all possible. Pricing is a positioning tool, the company explains, and potential clients could equate low prices with lower quality. “Instead, focus on attracting the kinds of clients that appreciate—and are willing to pay for—your expertise,” Hinge emphasizes. “If you have to make compromises to stay competitive, try to adjust your offerings or reduce your scope of work before cutting your fees.”
An economic slowdown also provides the opportunity for construction organizations to re-evaluate their marketing and sales efforts. In addition to honing their online presence through Web sites and blogs, businesses should consider fine-tuning their localized marketing approaches by contributing articles for publication, volunteering for public speaking engagements, and mentoring at all levels of education and business practice.
Rebranding or building a reputation in new fields is a viable way to gain market share, too. [ return to top ]
Happenings on the Hill
After a five-year
battle, NSPE helped overturn an onerous tax-withholding mandate that would have
placed significant financial and administrative burdens on engineering firms
and other businesses that contract with the government. H.R. 674, which was
signed into law on November 21, 2011, repeals a requirement that federal,
state, and certain local governments withhold as tax 3% of all payments made to
government contractors. The tax would have taken effect on January 1, 2013.
The tax would have
provided an interest-free loan to the government while causing cash flow
problems for engineering firms and other businesses, costing them the vital
funds they needed to conduct day-to-day business. Rather than pay taxes at the
end of the year, the government would have withheld 3% of contract fees up
front, forcing firms to attempt to recoup their expenses at the end of the
withholding requirement’s passage in 2006, NSPE has been working with the
Government Withholding Relief Coalition and the U.S. Chamber of Commerce to
repeal the mandate. NSPE also sent a letter to House Ways and Means Committee
Chairman Dave Camp (R-MI-4) in support of the repeal. In addition to NSPE’s advocacy of H.R. 674, NSPE members
responded to an NSPE
Center alert asking them
to contact their senators in support of the bill, helping to build a critical
mass of opinion that ensured the bill passed.
NSPE signed on to a
joint letter with the American Institute of Architects, American Council of
Engineering Companies, Associated General Contractors of America, American
Subcontractors Association, and other industry organizations asking Congress
and the president to enact legislation that would help create jobs in the
design and construction industry. The industry accounts for 5.7% of the gross domestic
product and employs more than seven million Americans who design, construct,
and maintain the infrastructure on which the U.S. economy depends. Reviving
demand for construction, particularly in the private sector, is essential to
sustaining broader economic growth.
NSPE sent a letter
with members of the High-Performance Building Congressional Caucus Coalition to
targeted Senate appropriations leaders urging them to support FY12 funding for
the Department of Energy’s Office of Energy Efficiency and Renewable Energy as
well as the U.S. Energy Information Administration through the Energy and Water
Development and Related Agencies Appropriations Act (H.R. 2354). Both EERE and
EIA support and promote high-performance building.
NSPE is a member of the HPBCCC, a coalition of more
than 100 associations and corporations that seeks to heighten awareness and
inform policymakers about high-performance building issues, including new
building technologies, enhanced U.S.
economic competitiveness, and increased energy efficiency. The coalition provides
guidance and support to the congressional High-Performance Buildings Caucus.
The George B. Hightower, P.E., Fellowship is awarded annually to a
current student or a diplomate of an ABET-accredited graduate engineering
program. NSPE’s Professional Engineers in Construction established the
fellowship in recognition of the contributions that Hightower made to the
construction engineering profession. Hightower’s dedication to professionalism,
ethics, and construction engineering resulted in him serving as a founding
member and the first national chairman of PEC.
The new contract, EJCDC® E-562, Agreement Between Engineer and Engineer’s
Subcontractor, is intended to be used by engineering firms to subcontract a broad
spectrum of general services, such as laboratory work, data management, site
support, drafting/CAD technical services, incidental fabrication and
construction, cost reviews, and record keeping. Engineers may also use EJCDC®
E-562 as a stand-alone contract for retaining assistance with such tasks in
situations where the scope of work is not associated with a specific prime
agreement. The new E-562 document complements the existing EJCDC subagreements
that engineers should continue to use to delegate professional services:
EJCDC® E-570 (Agreement Between Engineer and Consultant for Professional
Services), and its companion subagreements E-560 (Engineer–Land Surveyor),
E-564 (Engineer–Geotechnical Engineer), and E-568 (Engineer–Architect).
EJCDC E-562 addresses the key issues in subcontracting, including payment,
insurance, schedule, warranty, safety, flow-down of prime agreement terms, and
termination. Although suitable for incidental construction (for example,
construction of access stairs and ramps in connection with providing a job
trailer for the engineer’s staff at the site), EJCDC recommends that standard
construction or design-build contract documents be used for more substantial
construction projects. See EJCDC’s Construction Series and Design-Build Series
Take the 2012 Milton F. Lunch Ethics Contest Challenge
All current NSPE individual members are invited to
participate in the Milton F. Lunch Ethics Contest through their state societies
and local chapters (including student chapters). Here’s your opportunity to
match your wits with experienced PEs and engineering students throughout the
This year, contestants are encouraged to analyze the facts of a real situation
involving the ethical obligation of an engineer who works for a company that is
experiencing financial problems.
Contestants must develop discussion and conclusions about
the ethics of the engineer in the case using the format of the NSPE Board of
Ethical Review. Entries must be 750 words or less and must be received at
NSPE headquarters by Friday, April 13, 2012.
The winning entry will receive a certificate, recognition in PE magazine,
and an award of $1,000 ($500 to the state society or local chapter and $500
divided among the authors) provided by NSPE and the NSPE Educational
Foundation. Special recognition may also be offered to the authors of superior
essays written by current student members.
Judges will decide the winner based on quality of the entry in form and
presentation; demonstration of understanding of the implications concerning
ethical or unethical behavior; and comprehensive analysis of the case and
arguments supporting your conclusions.
Please visit the "Ethics" section
of the NSPE Web site for additional information or to download a contest
flyer in PDF format.
The contest is named for NSPE’s former general counsel,
who played a key role in the founding of the NSPE Board of Ethical Review. [ return to top ]
NSPE Continuing Education on Sale!
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February 23, 12:30–1:30 p.m. (E.S.T.)
Engineering Ethics: A Conversation About Conflicts of Interest Issues Join NSPE Deputy Executive Director and General Counsel Arthur
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March 14, 12:30–1:30 p.m. (E.S.T.)
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April 18, 12:30–1:30 p.m. (E.S.T.)
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firm’s noncompliance with engineering licensure laws, obtaining
professional references, and an employee’s awareness of his employer’s
financial improprieties. Polling questions and a Q&A will allow
opportunities for audience interaction. 1 PDH
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