Civil Engineering Salary Cuts and Layoffs Continue

June 2, 2010 at 8:23 am 15 comments


By Carol A. Metzner
President, The Metzner Group, LLC and
Managing Partner, A/E/P Central, LLC home of CivilEngineeringCentral.com

Last year an executive at a national civil engineering firm was overheard saying that staff who held the company “hostage” by demanding high salaries and outrageous benefits were now getting a cold reality. They would either accept pay and benefit cuts or would be welcome to leave. After all, they could be replaced by other talented civil engineers who would be happy to have a job. This executive thought the company had been strong armed into high salaries and comprehensive benefits in a demanding marketplace. Additionally, he decided that many employees showed no loyalty to the company during good times. Staff threatened to leave for opportunities and remained when they received counteroffers. Now, he felt that “what goes around, comes around.” Engineering businesses are known as professional services firms. They are only as good as the talent they have on their teams…and the amount of projects in the marketplace.

Salaries respond to market conditions. Clients are driving the lack of return to normal as the supply of work remains low. When engineering consultants are busy, clients are willing to pay higher fees to secure the firm they want planning, designing and constructing their projects. Likewise, when firms are looking for projects to keep their staff employed, salaries are lower as are winning bids.

Salaries are also reflected by the great purge of 55 – 65 year old staff. As politically incorrect as this is to discuss, this economy has allowed firms to let go of senior civil engineers who are technologically deficient in deference to hiring younger professionals who are more marketable. These younger staff  are LEED accredited, BIM proficient, command lower salaries which means lower bill out rates and potentially more winning bids.  It is more economical to have a senior civil engineer oversee as a QA/QC manager, while junior and mid level engineers produce the work. The job market is now flooded not only with 2009 and 2010 graduates, but also with 35-45 year experienced engineers. Although I understand the thought process behind keeping salaries low in a competitive market for project wins, my previous blog comments in “Never Underestimate the Gray Haired Engineer” holds true. (A future BLOG will discuss the ramifications of removing senior engineers to save dollars).

Firms need to remain competitive to win work. While most will agree that civil engineering salaries had finally reached the level of their high tech counterparts, the economy could not sustain them. Infrastructure needs, natural and man made disasters will force work to our marketplace. But, the economy and clients (both governmental and private) will dictate industry salaries.

Thoughts?

Bookmark and Share


civil engineering jobs :: civil engineering resumes :: civil engineering blog :: civil engineering discussion

Advertisements

Entry filed under: Civil Engineering, civil engineering blog, Civil Engineering Companies, Civil Engineering Jobs, Employee Retention. Tags: , .

Stalking the Recruiter The Ramifications of Ousting the Senior Engineer

15 Comments Add your own

  • 1. TX Senior Transportation Engineer  |  February 16, 2011 at 7:03 pm

    I have been in this line of work for 35 years in USA after getting my MS in Civil Engineering. I have started as draftsman and then to design and then to project engineer and senior Engineer level. I have both worked for private sector and public sector equally and also worked from Land development, municipal work, transit and transportation infrastructure work. Its very important to mentor the younger engineers by the seniors. Over the years I have learned a lot from my seniors and I have helped lot of younger engineers. I am proficient in most of the computer skills which helps me. I may not know the latest software in traffic or other fields but my knowledge is more helpful in overseeing the work for QA/QC and many times I pick up the basic things a CAD savvy engineer will not realize. Small mistakes in submittals affects the reputation of the firm in the eyes of the client and for the next project your firm will not be at the top of their list. Value of senior engineers could not be under estimated. I am on both side as a client and as a consultant which helps me that what most of the clients expect from their consultants. At present I am in search for new position as the company I worked have less work for my skill sets. I am 63 and yes it will be tough but I am sure their are companies who can use my experience in project management and QA/QC. Let us all hope we can keep balance of both young and seniors.

    Reply
  • 2. TX Engineer  |  November 1, 2010 at 11:58 am

    Amazing! A few years back, Civil Engineers are in big shortage and now there is a surplus? How could it happen so quick? Civil Engineer who only specializes in Land Development, Transportation, etc. are struggling to survive when projects in those areas quickly evaporated. Many projects are putting on the shelves because there is no funding. In the meanwhile, the political candidates burn miilions of dollars trying to win their race and promising jobs, building better school system, and improving infrastructures. States and Fed couldn’t keep track of their dollars spent in their account. How sad! And here we are, civil engineers, sitting quietly to see what will happen next: more furlough, more layoff? Employers nowaday require their engineering staff to have multiple skills, and work on multiple projects in order to survive. Nothing will last forever, just wait until our old infrastructures are crumpling down and ask why where all the engineers go? Selling hot dogs and beer at the sport stadium that he designed and built to supplement his low paying job? Yeah, go ahead and cut more jobs and pay.

    Reply
    • 3. Structural Engineer  |  December 19, 2011 at 4:07 pm

      I blame the colleges and partially ASCE for this surplus. I really don’t understand why nobody gets this but me. (oh here I go…I’m on my soapbox now) Lets take the medical profession for example….do you really think that highly skilled doctors and surgeons get paid extremely well because they went to schools and colleges and told young people to become doctors when they get out of college. Hell no!!!!! The medical profession got it right and we are struggling to understand why we are not as valuable as professionals such as doctors. Well girls and boys….We screwed ourselves. There are too many of us and that is the bottom line, PERIOD!!. We need to make it harder to get a degree, and we need to make it harder to become a PE and we need to make it illegal to outsource work to other companies for engineerng production done on projects here in the states. This will be the only way to truley advance our profession, period. I am ready to get paid better. Too much liability, and too little pay. I am ready to jump ship if are leaders (ASCE) don’t pull their head out of their “you-know-whats” and try and solve this problem, rather than advertising out profession to everybody coming out of school with a high school diploma. Done!!!!

      Reply
  • 4. Todd D. Wood  |  October 31, 2010 at 7:42 am

    Here…here!

    Reply
  • 5. Angry Engineer  |  August 6, 2010 at 2:47 pm

    I don’t think it’s a matter of supplying too many engineers, it’s simply a matter of screwed up priorities by the end users. I’ve been to literally dozens of community meetings where I watched citizens complain about a proposed $50 sewer bill because its a “tax”. Nevermind the fact that they pay $150 a month for cigarettes and cable TV though.

    No sir, what this county needs is a good cholera epidemic or two to put things back into perspective for the average person. It’s pretty easy to live without TV, but dang hard to survive with shelter, electricity, and clean water.

    I guarantee you if an asteroid hit the earth tomorrow and raised all kinds of society killing issues, nobody will be looking to the lawyers for answers.

    Engineering is a “cheapened” resource because we as American engineers have let it become so! You don’t see German engineers selling hot dogs at ball games to survive. And why is that? Because the Germans don’t screw over their own citizens to make a quick buck in the stock market by exporting their manufacturing to the third world. Here, it’s a given.

    All the engineering profession is seeing at this point is the fruits of 40 years of cheapening and exporting our manufacturing base. Great for Wall Street, terrible for the country.

    You have the greedy corporate owners, Wall Street and the dirty politicians to thank!

    Think about that the next time you vote in that incumbent.

    Reply
  • 6. Ernesto M  |  July 23, 2010 at 4:29 am

    Ms Metzner hit the nail right on the head (excuse the construction pun). The economic reality has now shifted. Ultimately, civil engineering is a professional service, and one that is very sensitive to the economic conditions. The fact of the matter is that the future holds reduction in the amount of money that will be available for engineering projects. The “Boom” years that brought the increase in the civil engineering labor demand were funded in some way by some type of deficit. Weather it was some local government issuing a bond or a private consumer financing a project, the fact of the matter is that the days of loose credit are gone, at least for the mid term future. Ultimately, the business is about numbers, and i’m not talking loads . , If the demand for the work is not going to be there , the next decade or so will show a consolidation in the labor force, either in reducing salaries or reducing the size of the labor force, or a combination of both. The industry needs to essentially remove the excess capacity in the system in order for labor prices to reach an equilibrium.We will also see reduction in the number of firms out there . Many firms will just plain vanish because the amount of work just wont be there . The problem is that at the same time as the country moves into a period of deficit reductions and repayments, there will also be a reduction in the amount of work available, since financing for major projects will not be there. Ultimately, the civil engineering industry went for quite a ride with the increasing deficits, the housing boom, and the cheap easy money. Now its time to pay the piper. The industry must now fact the reality that it can supply too much compared to what is demanded of it. Just Econ 101.

    Reply
  • 7. Tom Hartmann  |  June 30, 2010 at 2:09 am

    I think everyone is offering great insight, both in the blog and comments, about how the engineering market responds to change in supply and demand for services. I will use a nautical theme to hopefully make a point worth considering.

    Yes, there are stormy economic seas forcing lots of ballast (e.g. experienced staff, admin help, company vehicles) off, trimming sails (salaries, hours and benefits)… Yet the outcome will need for new ships, not repairs. Great ships are now being wrecked. The exodus of experience will require re-construction from the aftermath; smaller, quicker (i.e. more productive) fleets run with less. Small firms usually have greater productivity than large firms since there is less overhead (ballast) and the captain knows how to sail his small ship and often outmaneuver the big ships. Yet a good business person respects the knowledge and keeps its core, whether it is young or old experience. The essence of business is understanding these four: the ship, the sea, the sailors and the freight to port.

    My point, although through too long an introduction, is that it is time to build “new ships of engineering commerce”, focusing on productivity rather than just experience. In my small structural engineering firm, I was able to improve productivity measurably >25% using Toyota production systems, but that does not matter when your client base declines 60% within less than a year. That ship is still on the rocks. Yet, I continue to gather boards to build, at first a raft and then…

    The overheard executive discussion that started all this is perhaps a made up story to make a point and get a response. Sail on!

    Reply
    • 8. Todd D. Wood  |  October 31, 2010 at 7:35 am

      I think this is oversimplified a bit.

      There is a place in our industry for small and large firms. Large firms may have larger overhead but have administration entities that take care of many non-engineering tasks (annaul health Insurance renewals, marketing, accounting, etc.) so the engineers and managers can focus on the projects.

      To think that our industry will be made of all small firms (ships) in the future is unrealistic.

      Reply
  • 9. Mike Prett  |  June 8, 2010 at 12:23 pm

    The deeper I get into this business (I’m about 14 years in and in my late thirties) the more I see how invaluable the senior staff is for mentoring, senior oversight, project and program management and client contact/marketing.
    I agree that you need tech savvy youth to keep production moving and certain “buzz” type certifications such as LEED and PMP are important in today’s marketplace, but not at the expense of a companies senior staff. (Since I’m smack in the middle I feel like my opinion is pretty un-biased, although I realize no opinion is completely un-biased)
    I feel like we are losing site of the fact that civil engineering used to be an apprenticeship-based career and is experienced based after completing the minimum competency requirements of ones bachelors and PE.
    Typically one starts in design, learns the ropes, gets some certifications, moves into managing small projects has some successes and some failures and so-on. Eventually when you start managing large jobs and programs, some of the fancy computer models you used to say model a water system, do a structural analysis, or run some earthwork aren’t the tools you need as a senior employee. At that point the focus is different. One should be using accounting software, analyzing schedules and building complex PMIS systems. One at that point is focusing on developing staff, keeping clients happy, understanding higher level market trends, management techniques and business development strategies, while still keeping a pretty good understanding of what your more technically based and entry level employees are doing.
    I feel pretty strongly there are no short cuts. Hand a $300M CIP project or program to someone with three years of experience to run and I’m guessing it’s headed for catastrophic failure. I don’t really feel that the adage “young and tech savvy” replaces “old and worn out” in our business applies as much in our career as many others. (e.g. high-tech or pharmaceutical sales for instance). All levels in our business can add value if properly utilized. My $0.02.

    Reply
  • 10. David Hyder  |  June 8, 2010 at 7:49 am

    Well duh. Sorry, there shouldn’t be any surprise that employees try to better their position in the seven good years nor that companies seek to better their position in the seven lean years.

    Older employees bring the advantage (we hope) of fewer mistakes and therefore more efffective work while younger employees bring the advantage of lower salaries making mistakes less costly.

    Reply
  • 11. Rick Farquar  |  June 2, 2010 at 12:58 pm

    Carol,
    This won’t win me votes but I think that the whole market shifted when the market collapsed.
    Consultants live by the multiplier and the clients that they once served are demanding thin margins. The municipal clients are struggling with no money for capital improvements and the industrial clients have resisted much needed work because no one was pushing them to comply.
    Consultants who managed their business like they did during the good times are suffering.
    There have been too many mergers that added size but little else. There are far too many people in consulting who are not consultants and are not able to produce additional work.
    The clients that I work with are looking at strategic hires and people who can and have developed profitable markets.
    They are eliminating senior managers who carry a title and a high salary for the younger professional who is more involved in expanding the capabilities of the firm.
    I have recruited for a long time. It is a different game.
    There will be many leaving consulting. These are different times.
    We will be lean and forward thinking. I look forward to it.

    Reply
  • 12. William Merunka  |  June 2, 2010 at 9:57 am

    Carol, in your article you state “When engineering consultants are busy, clients are willing to pay higher fees to secure the firm they want planning, designing and constructing their projects.” If this is true, which I believe it is, wouldn’t it be smarter for companies to keep around the older guys and rely on more hand calculations and design? With all the new computer programs that come out, it is much faster to plug in numbers or criteria and spit out results in a matter of minutes as opposed to what may have taken hours in the past. While this gets the job done, clients will not pay the same amount for what used to take say 2 weeks to design, that can not be done in 1 week or less.

    Additionally, as a consumer, I would be more likely to use a company that I know can do design by hand, and understands the full concept, as opposed to someone who is just going to plug numbers into a computer system. As engineers, we need to stick together and maintain the integrity of the field. If we allow the customers to dictate what our services are worth, then we will always be struggling financially. If you are good at what you do, and you can show that you know your stuff, people will pay the extra for your expertise.

    Reply
    • 13. aepcentral  |  June 2, 2010 at 12:58 pm

      William…I agree. The industry is on a slippery slope. Firms are also letting go of staff that can provide mentoring to younger professionals.

      Reply
  • 14. Taylor Anderson  |  June 2, 2010 at 9:32 am

    I’m a little leery that such a specific insight from an executive could be “overheard” to the detail described in the first paragraph. Either the conversation has been embellished or the person is an exceedingly poor executive to the extent that they not only allowed such a conversation to be overheard but also have no clue about running a company.

    For arguments sake, I’ll take the “overheard” conversation at face value as there are likely some executives/owners that think this way. Chances are, they’re a poorly run company. If the only reason your employees are staying with you is for the money, you’re a doomed organization. If you’re constantly matching or beating offers from other companies, you’re underpaying your employees anyway and you’re not evaluating your talent well enough. You don’t buy loyalty – you inspire it. Sure, you can buy loyalty in the short term but that won’t last long.

    If you’re now focused on “sticking it” to your employees, you should be fired. Any executive with this mentality is easily replaced and should be immediately.

    Reply
    • 15. aepcentral  |  June 2, 2010 at 1:05 pm

      Hi Taylor…don’t be too leery. That conversation, and others like it are held in “confidential” management meetings in several firms around the country. Amazing isn’t it? In one of our discussions on the Civil Engineering Central Group on Linkedin, we saw a similar type of comment from the President of a West Palm Beach FL firm who wrote to a recruiter who had successfully placed several key money making civil engineering employees with him. He wrote: Sorry. Now that we are back in the driver’s seat, we are offering our recruiters a deal. We’ll pay 10% after the candidate you recommend successfully completes one year of service. This is the type of loyalty that will crush a firm when the market rebounds!

      Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed


Enter your email address to follow this blog and receive notifications of new posts by email.

Archives

Feeds


%d bloggers like this: