2023 Recession in the Structural Engineering Field

[oengineer]

Their are talks of an upcoming recession this year.

I wanted to ask fellow structural engineers on this forum thoughts on how a 2023 recession may effect our industry? Either for buildings, bridges, energy, infrastructure, etc. projects.

Wondering if the the industry will be possibly effected like the 2008 or COVID recession this year?

Any thoughts?

 

[phamENG]

If you work in the commercial and industrial sectors, you can probably expect things to slow. Residential is likely to slow some, but I doubt it'll be much - people still have money, and quite a few people have been sitting on some to renovate and remodel but haven't wanted to pay the high prices. Slowing in the commercial construction sector will oversupply the labor pool and a reduction in demand on building supplies may bring material costs down a bit. I bet quite a few high end residential and some multifamily projects will kick off as a result.

If you work in building design, the AIA Billings Index is a good backward looking metric to see trends, particularly the design contracts portion. While a lot of big projects will have a team prior to concept, small to medium projects may get an architectural design contract first and consultants after architectural preliminaries/concept designs are confirmed. Exactly how that index differentiates (or doesn't), I'm not sure. So it may give a short term forward look.

Of course, local economic factors can help or hurt you. I live in an area dominated by the DoD and federal government. So as a region we do pretty well in terms of economic downturns (unless folks in Washington get stupid...again...the military tends to get their paycheck on time whether there's a recession or not). So we have a constant influx of cash, and constant demand for housing with such a transient population. If you live in an oil town when oil goes off a cliff, good luck.

 

[oengineer]

It's sad to think that things are going to get tough again, especially with the way companies are currently having a challenge finding engineers to fill positions.

Even energy companies are looking to fill positions at this time.

@ phamENG - do you think that how much the coming recession will effect certain engineers will vary based on their experience & license status? Any thoughts on how engineers can prepare for the possible upcoming recession?

 

[phamENG]

I think the coming recession will hurt businesses that haven't prepared for it. If your management has been coasting on nice profits for the last few years, paying themselves big bonuses and doing nothing for a rainy day fund, you could have issues. If they've been managing things well and keeping up with good and resilient clients, you'll probably make it through.

I'm no economist and I'm certainly no fortune teller, but I doubt this 'recession' will be anywhere near what 2008 was. It'll hurt. Especially people nearing retirement or working in sectors that have little intrinsic value (capital costs are going up, so business loans for crazy ideas aren't going to happen which will reduce employment at places like Twitter and Meta/Facebook). But the world will continue to turn and people will keep spending money on things they need. The trick is finding a company that is dynamic either dynamic enough to pivot into work that will be present in the recession or is already in that work and has the staying power to hold it. We'll lose companies - that's a good thing, society-wise - but I doubt we'll see the mass layoffs in our sector that happened in '08.

Best bet is to make yourself as valuable as possible. Be sure you are completely projects on time and in budget. Go out of your way to learn new things that can benefit the team. If there is anyone newer than you, take on a role as a teacher/mentor if you have the skills and experience to do so. You don't have to be a 25 year engineer to help guide the new guy - just being less new means you know more and have something to pass along. Working yourself into the fabric of the organization such that they know the organization will be weaker for you not being there will help ensure you'll have a place through thick and thin - provided the organization survives the thin.

 

[geotechguy1]

Not a structural engineer by the tier one consulting firm I work for has a massive structural group. Globally we have a backlog of ~18 months of work.

It seems like the industry simultaneously expects a recession but to still have difficulty filling roles and still experience wage / cost pressure. I know plenty of people in my field (geotechnical) that are itching for the chance to go on sabbatical, go on OE / take six months off etc.

I lived / worked through the sort of 2013-present consulting industry slowdown / collapse in Alberta, Canada (in the Geotech space about 50-60% of roles disappeared permanently and in the short term some companies made up to 90% of engineering staff redundant) so, pretty chill about it overall. I'm expecting some kind of wage freeze or rollback followed by panic raise-giving in 12 months when turnover surges massively.

 

[oengineer]

I would think that the Infrastructure Bill would help the Civil Engineering Industry during any coming tough economic times. Also, with companies looking at renewable energy, I would think that would help structural engineers with industrial experience too.

I have been noticing baby boomers retiring lately. Does anyone think this will help mid level to beginning engineers with more opportunities?

 

[Aesur]

I would think that the Infrastructure Bill would help the Civil Engineering Industry during any coming tough economic times.

Didn't we have this discussion back at the end of 2021? Eng-tips Post - Government spending doesn't work like they make it sound; "Infrastructure" is too board and when is the last time the government named a bill with what it really is? Don't count on an infrastructure bill to actually boost our industry in any meaningful way, the government sees us as highly compensated (far from the truth, but we aren't bad off) and care little about us or our industry - same can be said for any group that doesn't actively lobby (donate to politicians) the government. Politicians will most likely phrase bills in a way that gets them money for their pet projects, with minimal going to what the name implies.

I believe we are looking at a recession, however as phamENG said, it's possible to position yourself to be able to weather the storm from a personal and business perspective. We will need cheaper housing at some point, so expect cheaper housing to be built, most likely in the form or low income apartments. While the fees for such projects suck, the work will be there. Military contracts weather well during downturns as does local and state government spending on projects such as schools. The more diverse you can make your company in regards to location and services offered the better you will be. I personally believe we will see an event much worse than 08, but cannot say for certain as my time machine is still in the schematic phase.

 

[phamENG]

The infrastructure bill may help some...like AECOM...but if you're not directly involved in designing and building bridges, roadways, etc....infrastructure won't help that much (sure, there is support infrastructure that requires buildings, but those are usually very utilitarian and can be handled in house by the big boys that do the big transportation structures anyway).

It may also help some if your firm does a lot of state contract work...with more federal dollars for that work, they may invest local taxes in other projects. But that's going to vary based on location, local budgets, local politics, etc. Really hard to predict that sort of impact, and probably too small to measure in a meaningful way after the fact.

Aesur - I think the world is in for something much worse than '08, but I don't think it'll hit us as hard, or at least not as fast. We have some fundamental shifts coming as the baby boomers retire and globalization unravels on us (or because of us - the discussions on that are pretty interesting)...whether we're worse off, better off, or just 'different off' remains to be seen. Here in the states, I could see a 2 steps forward 3 steps back pattern emerging over the next 30 to 40 years. But my time machine plans are also a bit behind schedule...

 

[canwesteng]

Not seeing any indication of a slowdown in mining/heavy industrial. Seems unlikely a big recession impacting engineers is coming, since as interest rates have sky rocketed projects haven't slowed down. Possibly an outsized crash in areas that rely on cheap credit (tech and residential) but seems like that will be balanced by the workforce shortfall that will keep people employed and the economy chugging. A recession is just inflation adjusted GDP shrinking for two (iirc) quarters in a row, but the economy not keeping up with inflation is hardly apocalyptic.

 

[Just Some Nerd]

Bit of an odd situation down here in Aus... I talk to developers and some of them are having trouble selling new builds while others are still going full steam ahead in terms of future projects, talk to some builders and they're more worried about higher costs eating up all their margins and making building unviable, talk to engineers or companies like mine and it's apparent that there's a lot of people paying more for engineers and more work than ever. If there's not a big crash in the resi market down here which may be driven by global markets more than anything locally, I doubt I'll see much of an impact if any. One thing that may happen and is specific to my part of the country is smaller builders (those working on standalone houses rather than apartments) may find themselves exiting the market due to increased legislative requirements - a good thing for getting rid of shitty builders, but maybe not so great for those engineers whose livelihoods depend on those projects.

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Why yes, I do in fact have no idea what I'm talking about

 

[StrucPatholgst]

I thought 2023 was going to start slow, but I have a pretty good backlog right now. I do small jobs, and most of my clients are repeat customers.

 

[dauwerda]

I have close ties to three businesses in the utility and industrial realms (US). All three have huge backlogs (6 months to a year +) of work and still can't find people to fill roles. I'm having a hard time envisioning a recession in our field right now.

 

[JLSE]

Im not convinced a recession is coming... and I urge people not to be convinced ahead of time. If they convince us a recession is coming, it will come.