Don’t believe the doomsayers
June 18, 2009
Reports of mass redundancies in the architecture sector have been wildly exaggerated.
Reports of mass redundancies in the architecture sector have been wildly exaggerated.
Historically there has always been a keen interest within the broader business community about the state of employment within architecture and interior design practices. Architecture is at the forefront of economic activity, and therefore employment habits and trends in the industry are seen as a clear indicator, even predictor, of the general health of the economy.
As a specialist recruiter in the field of architecture and interior design over the past 23 years, Bloomfield Tremayne has experienced many industry highs and lows, and in our experience the number of available positions in the industry has indeed tended to act as an indicator as to what would be seen later in the broader economy. This lead-time is generally up to six months and has only been of a shorter period when coupled with dramatic occurrences, such as September 11, 2001, or last year’s Federal Government guarantee of bank deposits, which radically altered how large-scale property development was financed (essentially, tens of billions in funds left property and mortgage trusts, flowing to the banks in the days following the bank guarantee).
While we have all enjoyed many consistent years of good times, the beginning of 2009 saw a change in the range, type and scale of projects that were being developed, with a movement away from large scale commercial and mixed use projects, towards smaller institutionally based projects, as banks removed or refused funding for commercial and retail projects greater than $50 million in value. These changes had an immediate impact on employment prospects within the industry, with many practices implementing redundancies between October 2008 and March 2009. The actual numbers retrenched however were nowhere near as high as was reported. While we started to see significantly increased work flow coming into practices in mid February 2009, articles in the media appeared with negative reports of the employment scene in architecture, several with the common theme of there being ’1000 Architects out of work in Melbourne’.
In June, we felt so strongly about the continued inaccurate reporting we took the unusual step of writing to clients as a response to these articles. The figures that were being suggested bore no resemblance to reality, and if anything were now having a negative impact. Our intention in writing was to provide a balanced and realistic observation of the marketplace rather than to denigrate the publications or individuals quoting anecdotal rather than factual experiences.
The negative impacts we saw as a result of these inaccuracies included:
* Deferral of employment opportunities as concern for the future heightened
* Deferral of employment decisions in the hope that someone better would become available
* By suggestion or intimation that Melbourne is the primary Australian city incurring major job losses, it had the potential to generally undermine confidence in our sector with several developers ‘putting the squeeze’ on practice’s fees. We believe that Melbourne is best placed (perhaps along with Brisbane) in terms of market activity across the board in Australia, and particularly when compared with the UK, Ireland, USA and New Zealand markets
* The negativity and fear being experienced by those still unemployed, who believe they have no chance of finding work therefore seeking employment alternatives outside of the profession
* Students of architecture querying whether they should look at changing studies to other areas outside of architecture as they fear limited employment opportunities in the profession over the next few years
Bloomfield Tremayne estimates that since October 2008, only 350 to 400 professionals have been made redundant due to work shortages in the Melbourne architecture environment. Importantly, however, we also believe in the order of 70 to 80 percent of these people have already returned to work since redundancies first occurred (albeit in many cases in contract based rather than permanent roles). Further, it is important to mention that Bloomfield Tremayne’s numbers are comprised of architects, graduate architects, architectural draftspersons and interior designers, not to mention administrative personnel, who all make up the fabric of architecture and interior design practices.
Another aspect that created frustrations was that while several architecture practices were (correctly) reported as having retrenched staff, this was often reported after several had already begun recruiting again. Specific examples of this are Hayball (which recruited 27 personnel this year) and Plus Architecture (which recruited 8 this year).
The response by clients to our article was overwhelming, with the vast majority commenting to us that what we had written reflected their opinions and feelings about the marketplace, or at the very least that they were pleased to hear that the situation was nowhere near as bad as had been consistently reported. One client summarised the situation by saying, ‘It means that the industry is operating at near capacity, rather than over capacity, as previously [making it difficult, rather than impossible, to find the right people]‘.
The reality was that many architecture firms fought strongly, and retained their talented staff wherever possible.
However from what we have seen, almost all of the recent increase in project flow to the institutional sectors has been as a result of the Federal Government’s stimulus package, and while this has been welcomed given the constraints of the current commercial marketplace, it has not been a magic fix across the entire profession. Work generated outside of the stimulus package has ensured practices with existing track records or contacts in these areas have primarily benefited, with less of an overflow into more broadly based practices. This has lead to a two-tiered marketplace, generally showing clear divisions between architecture practices with extensive institutional project exposure or contacts, and those without.
While there have been some indications of privately financed developments occurring in recent weeks, notably in the apartment sector, the major negative factor that seems to be impacting this market is the risk averse stance currently being held by lending institutions towards medium to large-scale property. In broader terms, this means that mixed use or commercial buildings of $100M scale and above are unlikely to move within the foreseeable future. While there are several exceptions to this, they are exceptions, rather than a market trend. Importantly, the feedback we are receiving is that developers are still keen to progress with projects, believing that end user demand is there, and this extends across residential, apartment, commercial and mixed-use sectors.
While the market is heavily reliant on government spending at the present time and into the future, we need to see consistency return from the broader commercial sectors before we can say that things have returned to a ‘normal’ marketplace. In short, an industry so reliant on high levels of government expenditure is operating in an artificial market. As a profession there may still be turbulent waters ahead as government projects phase in and out over time.
It is difficult to gain a clear prediction of international markets based on varying economist’s forecasts; some predict an ‘L’ shaped recession, others a ‘U’ and others again a ‘W’. Some are now suggesting the worst of the international financial situation is behind us. The relative strength of the banking/finance sector in Australia has been noted as one reason that Australia is performing well in comparison to other Western economies, along with a growing population and low levels of government debt; however, the latter is changing as a result of the Federal Government’s stimulus package.
While Australia has recently narrowly avoided a ‘technical’ recession, the two tiered market that we referred to earlier will still mean difficulties for practices in certain circumstances (some are feeling like it’s a recession) and based on this we anticipate some staff movement in and out of offices in the medium term. What is more important is that overall employment levels remain consistent in a broad market sense.
Globally, Australia is doing well, as judging from many of the reports we are hearing from practices in the United Kingdom, USA, Europe, New Zealand and Dubai, things are much worse for the architecture profession elsewhere, with large numbers of employers and staff alike still adversely affected in these markets.
Bruce Whetters manages the Melbourne office of Bloomfield Tremayne, a specialist architectural, interior design and drafting recruitment agency. Originating in Melbourne in 1986, the company also has offices in Sydney with affiliated branches in London, Auckland and Dublin. Bruce has more than two decades of experience in Melbourne’s A&D recruitment markets.