Archive for September, 2011

Is the Outlook Dimming for Obama’s Job Plan?

Friday, September 30th, 2011

Outlook Dimming for Jobs Plan? 

President Obama was in California early this week, speaking about his jobs plan at a Silicon Valley session sponsored by career-based social networking site LinkedIn. He then moved on to fundraisers in Los Angeles and San Diego.

One of the reasons we decided to revise The 2011-2012 AEC Market Guide to California before we even released it was because of the effect the Obama plan would have on California and the AEC Industry. Next year will have a very different look for both if Obama is successful in passing this plan or substantial parts of it.

Yet, with each Obama speech (and fundraiser), it appears less likely that anything meaningful will come out of his American Jobs Act (aka, The Obama Jobs Plan). This is because, in our opinion, the president is exhibiting either a stunning lack of political acumen or a shameful amount of political gamesmanship in the face of this prolonged economic crisis.

In the former case, it is delusional to believe that public opinion is a strong enough hammer to overcome the inevitable GOP opposition to the plan. Obama’s last stimulus plan received mixed reviews at best and his approval ratings have been on a steady decline. Does the Administration really think the president can rally enough support to force House Republicans to hand him a victory in this supercharged political climate?

On the other hand, if the goal is to create the campaign talking point “I tried to fix the economy but the GOP cared more about winning elections than helping Americans,” it’s a misfire because voters only remember what politicians did while in office, not what they tried to do.

Whether it’s simply naive or politically motivated, Obama’s approach doesn’t seem to be working.

This is too bad, because elements of the plan could help the U.S. and California economies, as well as the AEC industry.

Some argue that there is nothing meaningful in the $447 billion plan. Many of these critics are small-government, anti-Obama folks or political operatives with a clear agenda. Conservative economists who loathe the plan, such as former Reagan budget director David Stockman, are opposed to just about everything Obama proposes due to vast differences in economic and political philosophies. Their condemnation was predictable.

Liberal-leaning commentators, such as Paul Krugman, are more favorable to the plan, of course, with some calling for even more government investment and involvement.

Many middle-of-the-road economists and observers support at least some elements of the plan. Mark Zandi of Moodys.com, who once served as an advisor to Obama’s 2008 opponent John McCain, said:

“President Obama’s much-anticipated jobs plan is a laudable effort to support the struggling economy. The plan would go a long way toward stabilizing confidence, forestalling another recession, and jump-starting a self-sustaining economic expansion. If fully implemented, the Obama jobs plan would increase real GDP growth in 2012 by 2 percentage points, add 1.9 million jobs, and reduce the unemployment rate by a full percentage point, compared with current fiscal policy.”

As with the 2009 American Recovery and Reinvestment Act (ARRA), the Obama plan would almost certainly prop up the economy and the industry temporarily. The hope, as it was then, is that the rebound would be in full swing by the time the stimulus ran out of steam. This didn’t happen last time, but may have a better chance at this point in the recovery.

The White House says the plan, if implemented in its entirety, would do the following for California: a payroll tax cut for 710,000 firms, $3.96 billion in highway and transit modernization money, as much as $1.85 billion for local communities, $1.13 billion to community colleges and $2.81 billion for school infrastructure projects. (See the AEC Insight blog entry “Where the Work Will Be in 2012″ for more on the effects of the Obama Plan on California.)

Zandi says that government action such as the proposal by Obama is necessary to overcome the current crisis of confidence among investors and the American public. However, he is not optimistic about its chances. “Given the current political environment, it is unlikely that much of what the president has proposed will become law, but nearly all the proposals have some bipartisan support. An extension of the current payroll tax holiday for employees seems most likely to pass. The proposed expansion of the employee tax holiday and the new payroll tax holiday for employers are also possible. The president’s spending initiatives, while worthwhile, seem like longer shots,” says Zandi.

If Zandi is correct, the measures most critical to helping the design and construction industries – the billions in investments in roads, schools and other infrastructure, as well as the aid to municipalities, and the infrastructure bank designed to spur more public-private partnership projects – have little hope of passing.

Should the infrastructure elements of the plan somehow pass, one area of concern for AEC firms – beyond the opposition’s contention that it may be a long-term drag on the economy – is the potential for other important infrastructure-related legislation to get lost in the political weeds. This happened with the 2009 stimulus; government programs that support transportation, public works and other markets critical to the industry still languish without resolution as Congress passes extension after extension to keep these programs on life support. 

What will it take to pass the Obama Jobs Plan?

If the president truly believes his plan will boost the economy and he wants the bulk of it to be enacted, he must make a political sacrifice. This isn’t 2009-2010, when he was fresh off election and had the public support and political might to do what he wanted (e.g., pass ARRA and the Health Care Plan).

He will need to compromise with Republicans on the issues most distasteful to them (i.e., raising taxes, increasing debt) and make sure that they are in position to receive an appreciable amount of credit should the plan succeed. Maybe Obama’s team is working with Republicans and skeptical Democrats in the background to craft such a compromise. Otherwise, there is no way this plan could overcome the political implications of handing Obama a solid, recovering economy – temporary or otherwise – on the cusp of an election year…especially with a candidate as vulnerable as Obama appears to be.

California’s Best Markets for 2012 (Excerpt)

Monday, September 19th, 2011
Where the Work Will Be in 2012
(From the AEC Insight E-Mail Newsletter, September 13, 2011)

For most California AEC market sectors and service areas, 2012 will be vastly better than 2011. Not that the bar was set very high, but better is better.

Certain public- and private-sector client segments will recover faster than others, so it is important to know which geographic areas, industries and project types are best positioned for the strongest recovery.

We discovered several promising candidates during the course of our research for The 2011-2012 AEC Market Guide to California, including the following:

The City of Dublin.  If you work in Northern California and you’re not talking with people in the Dublin area, you’re missing an opportunity.

One of the fastest-growing cities in the region is seeking to expand its total area by annexing the neighboring 1,450-acre Doolan Canyon property for development. The city’s commercial climate also appears to be improving, with business leasing activity strong – including an announcement by business software provider Taleo that it is expanding its space and adding 200 employees.

Unemployment is very low (6.6% in June), and housing permit activity year-to-date through June 2011 is more than 100% higher than it was during the peak of the housing boom (average of June YTD permits for 2005-2007). Its strong school system is a draw for families looking for a place to settle. Recently improved business incentives are helping fill retail vacancies that began to plague the city a few years ago. Plans for a new charter high school and expansion of the city’s water infrastructure are in the works.

Even some of the city’s problems – a relatively high foreclosure rate and a potential battle with neighbor Livermore over the Doolan Canyon plan – could spell opportunity for AEC firms. 

Large Infrastructure Projects. While some states are rejecting high-speed rail – and the federal money that comes with it – California continues to move forward with its plans to build the politically charged high-speed rail line. On September 9, the California High Speed Rail Authority drew more than 800 representatives from Central Valley businesses to a forum discussing how small business can grab a piece of the $6 billion that will be spent on construction of about 120 miles of high-speed rail lines from Fresno to Bakersfield.

Even if HSR falters, other large infrastructure projects show promise. On September 12, the California Public Employees’ Retirement System (CALPERS) announced that it was investing an additional $800 million in large infrastructure projects in the state – including airports, roadways, water/wastewater systems and energy. And President Obama’s Jobs Plan, should it (or any version of it) pass, would likely result in at least a short-term boost in the state’s infrastructure funding. Obama’s initial plan calls for $3.96 billion in highway and transit modernization money for the state.

San Bernardino Schools. The Obama Jobs Plan has a lot more to offer California. The White House says that in California, under the American Jobs Act, 710,000 firms will receive a payroll tax cut, while as much as $1.85 billion could go to revitalize local communities, $1.13 billion to community colleges and $2.81 billion for school infrastructure projects.

Some would likely benefit more than others in the Obama plan, including San Bernardino schools. According to the Press-Enterprise, “San Bernardino City Unified School District would be a big winner under President Barack Obama’s job-creation plan. The district, one of 11 in California and 100 around the country singled out for direct funding, would receive more than $60 million for school construction and modernization projects if Congress approves the package as proposed.”

Obama’s proposal faces a political fight and is unlikely to pass in its current form, but the potential for significant amounts of money to pour into a single school system should have the attention of AEC firms working in the K-12 sector.

The other 10 California school systems with money earmarked in Obama’s plan, according to the Press Enterprise, are Los Angeles ($743.5 million), Fresno ($97.5m), San Diego ($91.8m), Long Beach ($75.5m), Sacramento ($46.9m), Oakland ($42.4m), Stockton ($39.0m), Santa Ana ($36.2m), Bakersfield ($34.7m) and San Francisco ($29.8m).

For much more insight into these and the other most promising markets in California, order The 2011-2012 AEC Market Guide to California on the AEC Insight Home Page.

Falling in Line with Social Media Marketing

Thursday, September 1st, 2011

The following is an excerpt from The 2011-2012 AEC Market Guide to California, found in the chapter “A Dozen Game-Changers for AEC Firms.”

California is the Motherland for social media companies. Google, Facebook, Twitter and LinkedIn are all headquartered in the state. In a survey by B-to-B listing firm NetProspex (Waltham, MA) identifying the top 25 “most social” cities in the US, 7 were in California, including 3 of the top 4 (San Francisco, San Jose and Ventura). NetProspex based its ranking on the percentage of businesspeople active on social networks.

The AEC industry, conversely, is one of the least social, according to the same survey. Not a single AEC firm is found among the top 100 social firms in the country, and no industry component – not A, not E, not C – is in the top 50 most social industries.

Is this reaffirming the stereotype that the AEC industry is slow to adopt change? Or is it a case of an industry instinctively recognizing that the potential return is insufficient to justify the investment?

The answer to both questions is “probably.”

The truth is that most AEC firms will find that there is some marketing and public relations value to being involved in social media marketing. In particular, the business-focused LinkedIn, along with the more social Twitter and Facebook, offer marketing and PR potential to AEC firms (with the latest entry, Google+, on the horizon and closing fast).

The key is to not expect too much. Social media should be one prong in a multi-pronged marketing program. Developing a social media presence is unlikely to propel an AEC firm from anonymity to superstar status overnight (although that’s pretty much what happened with building code and engineering review services firm Naffa International (Fresno, CA), which rode founder Imad Naffa’s social media strategy to a massive increase in notoriety and workload).

Further, there’s only a remote likelihood of making a direct connection on a social network that leads to new work – at least at this point in its evolution. At minimum, you can expose your firm to a larger group of potential clients – or more likely, to their marketing and PR folks – and capitalize on the built-in publicity you get, albeit fleeting, by building a list of “followers” and occasionally providing them with information about what your firm is doing.

There are additional side benefits, however. A social media marketing program often leads firms to develop content that it can use in other areas (e.g., a blog post revised into an article in an external newsletter that becomes a magazine piece). It can also re-energize a marketing program, and help a firm assess, streamline and define its marketing and PR approach.

If you’re still a novice on the social media marketing scene, here are some steps you should immediately take to improve your social media standing. (If, on the other hand, you’re making your 10th Facebook update of the day and have 2500 followers on Twitter, you can probably skip the next few paragraphs.)

1.      Please understand this – social media is not a fad.  If you think Twitter exists only so middle schoolers can talk about how much they hate homework and that LinkedIn is primarily a job board, you might as well be the guy in the 1940s who said that television would never catch on. Social media as a business tool is here and it’s only going to grow. So even if you don’t actively participate in any social network, personally or in business, you or someone in the upper echelon of your firm need to be familiar with the most popular social media programs. At minimum, as we hurtle toward 2012, social media should be part of the marketing planning conversation in every AEC firm.

2.      Protect your brand. You can acquire social media identifiers in the same way you do domain names, with one difference – with social media, it’s free. Start with Facebook and Twitter, the two most basic and popular sites. On Facebook, you (or someone who has a Facebook account) should set up a page with the firm name, then try to acquire the Facebook URL via the site http://www.facebook.com/username/. If the name is still available, you should be able to secure the URL, even if you never fully activate the page.

With Twitter, it’s even easier. When you register, you’re asked to create a unique user name. The key here, though, is the word “unique.” If the user name you want is taken, you’ll need to set up some type of variant. All Twitter user names are 15 characters or less and can only include numbers, upper- and lower-case letters and the _ sign. No spaces. Once you sign up, you have secured the URL containing your user name (mine are http://twitter.com/aecinsight and http://twitter.com/thejagg_group).

If you do nothing else, do this. It takes almost no time, it costs nothing, and you never know when you might want or need these tools. If you need help, ask the nearest person under 30 to show you how to do it… or that middle schooler complaining about homework on Twitter.

[In the next few days, I’ll post more from this section of The 2011-2012 AEC Market Guide to California, including additional recommendations for more advanced firms, as well a discussion of California AEC firms and owners engaged in social media.