Is that a light at tunnels end?
- Kristina Brenneman
- Portland Tribune - News
Professional services from advertising to architecture get busier, putting a bright spot in Oregon's economic picture
All sectors of professional services Ñ Oregon's third-largest industry Ñ appear to be slowly emerging from a two-year economic dry spell that resulted in dozens of layoffs.
And the pace of job growth in Oregon is finally beginning to show improvement, with the state moving from dead last nationwide in 2001 to 17th in 2002.
'Professional services is likely to be a strong sector over time, that's true,' said John Mitchell, a principal at M & H Economic Consultants. 'Advertising, marketing and law, those things are going to grow, but they are not immune to what's going on in the economy.
'The drop in mergers and acquisitions, IPOs and start-ups has influenced the nature of the cycle.'
While some firms continue to struggle, a half-dozen architectural and construction firms have nabbed prominent publicly funded projects recently. Aging buildings and a growing population are driving multimillion-dollar bond measures for school districts, colleges and health care organizations to renovate existing facilities or build anew.
The University of California at Davis alone has hired four local firms for projects: Zimmer Gunsul Frasca Partnership, SRG Partnership, Walsh & Forester Construction and Walker Macy. Zimmer Gunsul Frasca was just selected to design the university's $78 million Robert Mondavi Institute for Wine and Food Science.
Two architecture firms that drastically pared down staff last year, Thompson Vaivoda and Boora Architects, recently won several plum out-of-state projects.
Boora, which cut its 100-person staff to 60 in 2002, was commissioned last month to design three university projects, including a $60 million school of music at Michigan State University in East Lansing. Mahlum Architects and Barrentine.Bates.Lee have shared the renovation or design of at least a dozen schools around the region.
'We'd never done work on the other side of the Mississippi until a couple of years ago,' said Boora principal Stan Boles. 'If it (business) starts to kick in, we'll add staff.'
Law and accounting firms are prospering, too, including Bullivant Houser & Bailey and Cosgrave Vergeer & Kester, which added four lawyers to bring its size to 29 and expects to hire another four lawyers by May.
To make room, the 69-year-old firm moves March 1 from the Bank of America Center to Fox Tower.
'We're in a moderate growth mode,' said Thom Brown, managing partner at Cosgrave. The firm is expanding its litigation practice, business transaction and transportation-related work, particularly railroad clients Burlington Northern Santa Fe and Union Pacific.
At the same time, however, its insurance defense work is hurting, Brown said.
Local advertising agencies are tentatively hopeful of a rebound after seeing newspaper revenue grow 4 percent in the fourth quarter of 2002 and national advertising increase by 5 percent. Clients continue to watch their budget and spend conservatively.
'It's extremely slow,' said John Russell, president of the Leopold Ketel ad agency, which recently hired three new people. He doesn't think that any company would devote money to advertising 'until this issue of the Iraqi war is over. I would be surprised if anything changed to the better in the next six to nine months.'
Local firms go national
Architects and construction firms here say they no longer can survive on Oregon projects alone.
Robert Thompson, a principal at Thompson Vaivoda whose firm is bouncing back from layoffs last year with projects for Procter & Gamble in Cincinnati and the Muhammad Ali Museum in Louisville, Ky., said most firms are still 'hunkering down, trying to weather the storm right now.'
'There are fewer projects to go around out there, and the competitive level is up high,' Thompson said. 'The market for us in Portland is rather slow. We find more work out of town than in town.'
At least one local contractor Ñ Walsh & Forester Construction Ñ has offices in California and Seattle and expects out-of-state business to generate more revenue than its Portland office. The $167 million a year company has shifted eight Portland staff members to its Seattle and Sacramento, Calif., offices and also is looking at projects in Las Vegas, said Vice President Randy Boehm.
Baugh Skanska Construction, which markets itself in health care and education, has its biggest backlog ever, with a $40 million renovation of Salem Hospital and construction at Hockinson High School in Brush Prairie, Wash. Mahlum Architects and Barrentine.Bates.Lee recently designed renovations for more than a dozen schools.
'Are we ramping up right now? Yes,' said Jim Charpentier, vice president of development at Baugh. Although 2002 saw a decrease in volume because of the economy Ñ from $800 million to $600 million in construction Ñ he expects to see a 10 percent to 15 percent bump in revenue over the next two years.
Law firms stock up
Baugh is not the only company expecting a boost.
Foster Pepper & Shefelman PLC added five lawyers when it merged with Tooze Duden, Creamer, Frank & Hutchinson to become Foster Pepper Tooze LLP.
Schwabe Williamson & Wyatt hired five patent lawyers, and Bullivant Houser Bailey reaped revenue and visibility from the state's most expensive pension fraud cases, Capital Consultants LLC. The firm saw a 20 percent boost in revenue in the past year and increased its staff by 14.
Law firms that specialized in the slumping high-tech industry had some layoffs but were not as hard hit as firms in Seattle and San Francisco.
'The tech community is refocusing after the Internet focus toward strong technology innovation,' said Don Krahmer, a lawyer at Schwabe Williamson & Wyatt. 'This has been a slower year than we've seen.'
Accounting gets busy
Although the Portland accounting office of Arthur Andersen collapsed and shut down in the Enron Corp. financial scandal, the fallout Ñ more detailed audits, tax laws and financial reporting requirements Ñ is benefiting the accounting profession.
'You've taken out a major competitor and shifted people around,' said Mitchell, of M & H Economic Consultants. 'That's increased business just as reporting demands have gone up.'