Over the last four weeks, Engineered Systems has tracked the results of two Clear Seas Research surveys that examined how architecture, engineering, and construction (AEC) firms and mechanical systems companies are navigating their way through the coronavirus pandemic.
The results of the third wave of this survey are now in, and the data, collected April 16-20, paints a more optimistic outlook that its predecessors.
In the most recent survey, 30% of AEC companies announced they intend to temporarily suspend employees (with or without pay) due to the COVID-19 pandemic. This is an 8% decrease from the April 2-6 survey, and a 10% reduction from the March 24-26 results.
As time ticks on, and the COVID-19 pandemic continues to evolve, Engineered Systems remains committed to providing the most up-to-date, pertinent information possible to help facility managers and consulting/specifying engineers manage their operations during this unprecedented time. The quotes included in this article were provided by those completing the survey. We hope you find this study worthwhile.
A total of 416 AEC companies and 93 mechanical systems representatives responded to the April 16-20 survey. Cumulatively, across all three surveys, representatives from 1,068 AEC and 261 mechanical systems companies participated in the survey.
When asked to identify their biggest areas of concern, 69% of the AEC respondents identified the current state of the economy. This represents a 6% decrease from the April 2-6 survey. Sixty-three percent identified achieving business goals over the next three months as their second most pressing concern, representing a 5% decrease from the previous survey.
“We will do everything possible to maintain the economy of our country, as we are a small company but building giant dreams,” said one AEC respondent.
Seventy-four percent of mechanical systems respondents identified the current state of the economy as their chief concern, while 54% expressed concern over achieving their business goals over the next six months — a 13% decrease from the first Clear Seas survey.
“The big question is: ‘Will we be in business a year from now,” asked one mechanical systems respondent.
Active and New Business
When it comes to active business, 47% of responding AEC firms report they are completing their jobs on schedule, while 37% of projects have been delayed, and 16% of projects have been cancelled — all slight increases when compared to the first and second surveys.
Regarding planned business, approximately 45% of AEC companies reported everything was running on schedule — an 8% decrease from the first survey — 41% of projects have been delayed, and 15% of projects have been canceled.
“We closed all operations on March 1 in order to protect ourselves and our customers,” said one Arizona-based AEC respondent. “We strictly followed our state guidelines, and, despite our shutdown, other similar businesses are ignoring the rules and using both special visa workers and illegal workers. It’s a truly unfair and irresponsible system.”
For mechanical systems respondents, 50% are completing business on schedule — a 4% drop from the first survey — 33% are reporting delayed projects, and 17% have had projects canceled.
Regarding planned business, 47% of responding companies report all business is being completed on schedule — a 6% decrease from the original Clear Seas survey — 40% have experienced delays in planned work, and 13% shared that some of their planned projects have been cancelled.
Over the next three months, 47% of AEC firms stated that they intend to lay off employees or temporarily suspend employees — a 15% decrease from the results reported in the April 2-6 survey. Of that 47%, 17% intend to lay off some employees, 16% intend to suspend employees with pay, and 14% intend to suspend employees without pay.
Of the 416 responding AEC firms, 17% hope to rehire previously suspended and/or laid off employees in the next three months.
“We may allow more employees to continue working remotely from now on as the company is performing well in this new mode,” said one AEC respondent.
For mechanical systems respondents, that number increases to 46%, which is down 23% from the April 2-6 survey. In the third-wave survey, 19% intend to lay off some employees, 16% plan to temporarily suspend employees without pay, and 11% intend to suspend employees with pay.
Of the 93 mechanical systems respondents, hope to rehire previously suspended and/or laid off employees in the next three months.
Prospective Business Opportunities
Regarding the state of business operations, 65% of AEC respondents said they were experiencing declines in new business activity — a 9% increase from the first survey — while only 18% reported increases in new business activity.
“Architecture is dependent on a growing economy, and this economic downturn will need to recover before it grows,” said one AEC respondent. “Architects may need to turn to other revenue streams besides billing for projects that will be constructed.”
A total of 60% of AEC respondents have experienced a decline in new business spending an 11% increase when compared to the first survey.
In the mechanical systems industry, 76% of respondents said they are experiencing a decline in new business activities, and 77% noted a decline in business spending.
Many AEC and mechanical systems companies are interested in applying for small business stimulus loans.
A total of 32% of AEC respondents have applied and are waiting for approval; 14% have applied and are awaiting approval; and 11% said they’ve applied, been approved, and are waiting for their payment. Twenty-six percent of firms said they do not apply for the funds, and 17% said they qualify but aren’t planning on applying.
A total of 27% of mechanical systems respondents have applied and are waiting for approval; 21% have applied and are awaiting approval; and 18% said they’ve applied, been approved, and are waiting for their payment. Twenty-one percent of firms said they do not apply for the funds, and 13% said they qualify but aren’t planning on applying.
Many respondents said the government assistance program ran out of money before their application was approved.
“We have been told that there are no more funds available,” said one mechanical systems respondent. “This will have a major impact, as business has dropped off significantly. We fear laying off trained and high-quality people only to lose them to competitors. We are noticing and reading in the news that other industries and entities are receiving assistance, while the government is ignoring building trades. We are concerned at the lack of government foresight and care about the trades.”
In states where lockdown orders exist, AEC firms and mechanical systems companies must obtain “essential” status to continue working.
A total of 65% of AEC respondents said their work is classified as “essential” in their state, while 26% said they were not considered essential, and 9% were unsure.
For mechanical systems companies, 88% noted their companies have been identified as essential.
“How and why is a business essential?” asked one AEC respondent. “We provide architectural and engineering services, primarily for public works and transportation projects, and we’re not essential. “In Texas, general construction is still deemed an essential service.”
How Much Longer?
We all want to know how much longer our lives will be impacted by the COVID-19 pandemic. When asked to define the estimated time it will take for a business to get back on track, 39% of AEC respondents said three months or less, 32% said four to six months, and 14% said 10-12 months.
Mechanical systems companies held similar opinions, as 39% said three months or less, 37% said four to six months, and 9% said 10-12 months.
When asked to list the areas they are devoting greater focus to when compared to their activities of six months ago, 36% of AEC respondents said learning new skills, 35% said incorporating additional health/safety procedures into their business plans, and 33% said they are attending more webinars.
Mechanical systems respondents responded: 46% said incorporating additional health/safety procedures into their business plans, 33% plan to attend more webinars, 27% said they intend to participate in more continuing education online courses.
The April 16-20 Clear Seas Research study garnered 950 responses across numerous industries, including AEC, mechanical systems, manufacturing, packaging, food and beverage, security and critical systems, and gaming and hospitality.
Regarding demographics of the respondents, 18% reported less than $500,000 in revenue; 10%, $500,000-$1 million; 17%, $1 million to $4.9 million; 9%, $5 million to $9.9 million; 7%, $10 million to $14.9 million; 4%, $15 million to $19.9 million; 4%, $20 million to $24.9 million; 2%, $25 million to $29.9 million; 2%, $30 million to $34 million; 1%, $35 million to $39.9 million; 2%, $40 million to $44.9 million; 2%, $45 million to $49.9 million; 5%, $50 million to $99.9 million; and 17%, $100 million or more.
Further, 29% of respondents noted they employ 10 individuals or less; 14%, 10-25 employees; 9%, 26-50 employees; 10%, 51-100 employees; 10%, 101-250 employees; 6%, 251-500 employees; 4%, 501-1,000 employees; 2%, 2,501-5,000; 3%, 5,001-10,000 employees; and 9%, 10,000 or more employees.
A total of 31% of respondents are from the Midwest; 29%, the South; 21%, the West; and 19%, the Northeast.