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Weak business conditions continued at architecture
firms nationally. October was the fourth straight month that billings
declined at firms, even though monthly declines have remained relatively
modest over this period. Inquiries for new projects continued to show
modest gains, although apparently many of these inquiries are taking even
longer than usual to get translated into new projects.
Regionally,
the slowdown in work at firms has spread to additional areas. Firms in
the Northeast, Midwest, and West are all reporting modest declines in
billings on average. Firms in the South report continued improvement in
business conditions.
Economic conditions nationally remain soft. Of particular
concern are falling consumer confidence figures. The University of Michigan's
Consumer Sentiment index has fallen five consecutive months and now is
below levels following September 11 of last year. While a weak job market
no doubt is influencing consumer confidence, the impending threat of a
war with Iraq is also of critical concern for the consumer outlook.
The October employment report from the Labor Department
did nothing to improve the consumer outlook, as business payrolls fell
modestly and the national unemployment rate ticked up to 5.7%. The Federal
Reserve saw conditions as serious enough to act upon and cut short-term
interest rates a half point at its meeting immediately following the national
elections.
Marketing increases
in importance
With the recent slowdown in project activity, many firms are finding that
they need to escalate their marketing activities. Members of the AIA Work-on-the-Boards
panel were asked to rank the most important elements of their marketing
strategy.
Though nine potential marketing activities were
offered, three responses dominated. "Previous projects/firm reputation"
was ranked by 91% of firms as one of their three most important, while
56% ranked this element as the most important of their marketing strategy.
"Networking-business/professional contacts" was ranked as among
the top three by 67% and as the most important by 16%. "Community
contacts/word of mouth" was in the top three for 57% and the most
important for 17%.
"Superior proposals" and "superior
presentations" were ranked in the top three spots for a marketing
strategy by 26% and 22% respectively. "Firm brochures/materials"
(15%), "direct marketing" (11%), "firm Web site" (6%),
and "firm honors and awards" (2%) were less frequently cited
as key marketing elements.
Although smaller firms rely almost exclusively on
firm reputation, networking, and community contacts for marketing, larger
firms are more diversified in their strategies. Superior proposals and
client presentations were generally ranked ahead of community contacts
at larger firms, and firm brochures also rank fairly high on the list.
Copyright 2002 The American Institute of Architects.
All rights reserved.
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Reference |
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This month, Work-on-the-Boards-survey participants are saying:
If the late '90s were characterized by "irrational exuberance,"
this period can be seen as "dysfunctional despondency."
20-person firm in the South,
commercial/industrial specialization
Payment is getting delayed more each month. More clients are ignoring
their invoices completely.
3-person firm in the Northeast,
residential specialization
Our firm, which specializes in educational architecture, is still
experiencing a strong market.
13-person firm in the Midwest,
institutional specialization
There is not the quantity of jobs out there, and larger firms are
moving into our type of work to keep their doors open.
11-person firm in the West,
commercial/industrial specialization
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