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October 17, 2022

Member Firm Leaders Ponder Potential Recession Impact

Member Firm Leaders Ponder Potential Recession Impact

Following ACEC Research Institute’s presentation on their annual economic outlook, leaders of three Member Firms joined a panel moderated by Research Institute Chair John Carrato to offer firm perspectives.

Panel participants included Alyson Watson, CEO of Woodard & Curran, in Portland, ME; Keith Foxx, the principal of FOXXSTEM, Washington, D.C.; and Mitch Simpler, managing partner emeritus, of Jaros, Baum & Bolles (JB&B) in New York.

Carrato spared no time in diving into the discussions of what it is that these chief executives fear, favor, and anticipate as economic conditions for the engineering industry adapt to the impacts of inflation, worker shortages, and the impact of a recession.

He kicked off the discussion by asking a very pointed question: “If we have a recession in the U.S., do you think it would affect the engineering and design services industry and what, if anything, is your firm doing to plan for the potential of a recession?”

“My firm is all private sector, so a recession for us will have significant impacts because our clients have already started throttling back,” noted Simpler.

“Private sector firms rely on private sector developers and businesses to provide our business. But, when a recession starts to loom, they start reducing the amount of money they spend. They start slowing projects down,” he added.

Watson noted that her firm has both public and private sector clients. “In the private sector, we are seeing some budget contractions. Whether recession will be significant, some of our clients will cut back on their budgets. So, we are very actively prioritizing…which clients we want to be with, lock step, through recession and come out stronger on the other side.”

Watson elaborated that her firm is monitoring client buying patterns, the weight of operational versus capital expenditures, and adopting business models including infrastructure-as-a-service, among other strategies. With regards to the public sector, Watson alluded to prospects of Woodard & Curran and similar firms based on the windfall of funds promised by the Infrastructure Investment and Jobs Act (IIJA) being more bullish compared to private.

Keith Foxx, who called himself a “newcomer” to such a Member Firm leader panel, outlined that he has no negative opinion on the IIJA, or really any negative sentiment towards a potential recession in the next year or so.

“We just see good things for the next ten years. The huge amount of funding that we see from the IIJA will support small businesses in this industry. It seems like its trickling, but it’s coming,” Foxx said.

“Our firm is less than two years old, so we are in a unique position where we haven’t gone through a recession yet,” Foxx said. “Our client base is mostly public sector, [Department of Transportation] work, and they have not talked about a recession, not once. So, I have a very positive outlook with regard to a potential recession,” he added, joking with Simpler over the decision to be bullish or bearish coming up.

Reserved optimism about IIJA was a common theme among the panelists. Simpler, for example, said that he is concerned over the impact of IIJA funds being dispersed to public sector projects while the private sector reels from an economic downturn. However, Simpler said that IIJA would benefit the engineering and design services industry as a whole, indicating a clear hesitancy.

Foxx and Watson, both being C-suite heads at Member Firms dealing with a healthy public sector business, believe that IIJA funds would bring in new lines of business and opportunities.



All comments to blog posts will be moderated by ACEC staff.


October 17, 2022



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