Nine experts from across the profession offer advice on how to prepare your practice for Brexit
Amanda Baillieu, founder, Archiboo
However you feel about Brexit, this is the time to display that most British of behaviours: the stiff upper lip. Our image as stoic and emotionally stunted may be a cliché, but staying calm and resolute is really the only option when there’s such a lack of clarity about what Brexit means. But this is also why people are spooked, architects included.
After three or more years of being able to pick from housing to education projects, for some the tap has been temporarily turned off. The important word here is ‘temporarily’. As for the damage over the next 10-20 years – the jury is out.
For property developers, particularly in London and the South East who have been going like the clappers since 2013, it takes a decision as serious and far reaching as Brexit to make them slow down. This is not a bad thing overall, particularly if you believe, as I do, that some sectors, like high-end residential for example, were becoming unsustainable.
Any downturn immediately affects architects, but this is not 2008 so beware of becoming jittery when you hear about well-known practices making redundancies. The truth is some practices make people redundant pretty much all the time – that’s how they work – and Brexit simply gives them an excuse. Other practices will do everything they can to hang on to talented staff but we don’t read about these.
Clients are also using Brexit to try to renegotiate fees. If this is happening to you, say ‘no’. If the project is going ahead, there’s no justification for this. Equally, though, this is not the time to sit back or bury your head in the sand if some of your projects may be vulnerable.
Any practice that weathered 2008 should be taking a good look at their sectors before making a plan. Don’t be like a rabbit caught in the headlights, even if that’s how you feel deep down.
Architects are prone to sinking into gloom after reading one negative headline, but you know your clients better than anyone. Don’t take silence as a bad omen, especially as developers may have been on sunny beaches in recent weeks. And if a few jobs dry up for six months, do those things you never have time for – enter competitions, write that book, look at other sectors, flex your entrepreneurial muscles, get rid of any dead wood, think about where you want to be in five years. Chances are you’ll be in the same city as at the moment. London is not about to fall off the edge of a cliff – and neither are you.
Caroline Cole, business consultant and founder and director, Colander
I’ve asked architects how Brexit will affect them and the response has been unanimous: ‘Immediately!’ Given that Brexit hasn’t happened yet, this implies the most pressing challenge is dealing with the fear of it.
The Brexit vote created a pretty rapid cooling of some key markets. Brexiters proclaim this is temporary; in the long term, they may be right. Yes, it is likely European clients will be less inclined to work with UK firms but Brexit is unlikely to depress or enhance access to global markets as these are already accessible to UK firms; at home, the negotiated trade deals with Europe will probably ensure little changes in the procurement of public sector projects – OJEU will prevail!
However, in the short-term, the threat of Brexit is having a substantial and negative effect; projects have been put on hold and good people are reluctantly being made redundant. Unpleasant as it may be, it is perhaps fortunate that many practices have experience of the 2008 recession – from that, they know what is needed for business survival when things slow down.
Five things will be key:
- Regular financial forecasting and monitoring: cash flow will be critical and efficiency savings important.
- Decisive leadership: be business focused and capable of making swift, and sometimes difficult, decisions.
- Market diversity: have a diverse client base, by sector and by location – some markets will suffer more than others.
- Flexible services: attract and nurture clients in the short term, thereby being well placed when conditions improve.
- Targeted marketing: focus on the needs of clients and respond accordingly.
There is also a pernicious human cost to Brexit, especially in the capital where a vast number of architects are European. It is incredibly important for practices to reassure their European staff that they are valued and will be supported – now and post-Brexit.
It goes without saying that a mass exodus of the highly skilled, experienced European workforce would damage the profession – not just its skills base and creativity but also its ability to function in global markets, especially where English is not the mother tongue. Losing key people simply because they are not UK citizens, would be foolish.
Carolyn Larkin, founder, Caro Communications
Following the EU referendum, maintaining a positive perception of your business in the eyes of clients and potential clients is vital. Amid growing fears and uncertainty surrounding the property market, it is key for architecture practices to remain visible, active and at front of mind for prospective business opportunities.
It is also important to promote the breadth of your offer. In previous recessions, when commercial work in the UK dried up, many practices were propped up by public sector work or by commissions on projects in continental Europe. When new developments are few and far between, opportunities for internal architecture, retrofitting and interiors can quickly emerge.
But promoting your projects and services is not enough – offering market commentary, highlighting research or ensuring your practice is entering suitable awards are a few other ways of ensuring visibility. Issues around foreign workers, construction skills shortages and the housing crisis have all been impacted by the Brexit vote so any thought leadership you can provide will be of great value to your peers, clients and others. If you feel the government or Greater London Assembly should be doing something, say so.
We should all be calling on the government to ensure the vote for Brexit doesn’t further damage London’s role as an international hub for architecture, design and the creative industries in general, or the ability of UK firms to collaborate and do business abroad. We have seen demonstrable communications value for clients participating at international forums from MIPIM and the World Architecture Festival to the Venice Biennale and Dubai Design Week, as they raise their visibility overseas and develop new business networks.
If tough decisions need to be made and action taken, it is vital to have a robust communications strategy in place. Controlling your messaging with proactive announcements based on fact and reasoning can offset undue scrutiny or criticism, and portray you as a trusted leader.
Lindsay Urquhart, founder and chief executive, Bespoke Careers
Flexible businesses that can adapt quickly to changing conditions tend to be more successful. One option for practices seeking to become more flexible is to hire contract staff to supplement their core permanent team. Historically, it was sometimes suggested that people who chose to work in this way were less skilled or less interested in their career than those with permanent positions. My experience does not reflect this. Indeed, many of the practices we work with retain a float of 10-15 per cent contract staff to allow them to manage workload fluctuations. Those who contract do so to spend the summer with their children, write a book, travel, volunteer abroad or undertake other diverse pursuits.
Unfortunately the current situation has resulted in a slight reduction in workload for some. When this happens it’s easy for those in charge to panic. While this is to be avoided, so is burying one’s head in the sand. In reviewing business resourcing against workload it is critical that those in charge are realistic. Assess what you believe will definitely go ahead, what is very likely to and what you are less certain about. As some say: plan for the worst and hope for the best. If your analysis points to having to reduce headcount, do a through skills-based assessment. In challenging times multi-skilled people who are able to design, pitch, manage teams, liaise with clients and deliver projects are more valuable to a business than those who may be very skilled in one or two areas only. Obviously, if you do end up having to reduce headcount this must be handled as sensitively as possible.
Not all businesses are being negatively affected by Brexit. Some are flourishing and taking advantage of the fact that they can now recruit talent it has been difficult to access in recent years. The most opportunistic are looking to secure strategic hires in areas into which they have been considering expanding for some time.
Malcolm Reading, chairman, Malcolm Reading Consultants
The powerful message I learnt at business school was that you can’t control external economic and political events but you can plan. Whether you are a start-up, sole trader or big business architect, Brexit is a classic example of an uncontrollable factor you can’t define that will impact on decision-making over the coming year.
So far, the economic cataclysm prophesied by Project Fear before the referendum has not materialised – recently published results of trading figures are positive, including sizeable first-half results from housebuilder Persimmon this week. We are all reflecting on the fact that the referendum doesn’t mean the UK is not internationally minded. Besides, as a nation we have a terrific history of innovating our way through uncertainty.
The ultimate impact of Brexit is some way – possibly years – off, so fretting about what may or may not emerge is not how to run a business. If the EU was an export market for you pre-23 June (it was for us), why change strategy now? We will continue to nurture these contacts, perhaps long term, to seek out partnerships so we can continue to access this pool of clients. We have been promoting UK architects in all our international competitions and will continue to do so.
Coincidence or not, we have had several overseas enquiries from outside the EU over the summer. It’s too early to call this a trend, but we will respond by increasing our marketing drive to these alternative prospects and reviewing our services to explore complementary activity such as briefing and project governance.
The government plans to invest heavily in promoting UK expertise abroad – the creative industries will be high on this agenda. For small enterprises or start-ups, run a PEST (political, economic, social and technological) exercise; see how scenarios might affect you. Create a plan and keep it flexible. Be ambitious – change can be exhilarating as well as challenging. Test the export market. Don’t forget the EU but recognise that this may only be a short-term target. And keep entering competitions; getting on a shortlist gets you noticed.
Robert Firth, president, Royal Society of Architects in Wales
The referendum result has brought further uncertainty when most practices and sole practitioners are already surviving on tighter fees in an increasingly competitive design and construction environment. Some are affected directly by losing projects linked to Europe, others by the possible economic aftershocks. But there will always be boom and bust periods – the profession needs to ride out this rollercoaster like any other. The more robust the firm, the better.
We could learn from sports coaches. The Rio Olympics demonstrated the success of the British cycling team. Coach Dave Brailsford attributes much of this to marginal gains. Simply put – addressing every little area where improvements could be made and making each slightly better.
So don’t commission that expensive coffee table brochure that won’t be read; don’t launch into a new sector where your experience is limited. Break down your business into the smallest components and address the areas needing improvement. When combined, small changes can make a huge difference to the overall performance. Pretty soon you will have a practice that can ride the biggest roller coasters with impunity.
Willie Watt, president, Royal Incorporation of Architects in Scotland
This situation is totally different to that of 2008. This feels like it can be managed by governments and businesses; the biggest task is that they – and we – maintain confidence. And, because some Brexit challenges will be much bigger than a single business, we must act as a profession.
At professional body level, we must make sure our governments ensure continuity in investment and funding, be it public or private. Scottish agencies are doing that and perhaps Whitehall can learn from their efforts.
Funding for isolated projects in the short term may be subject to unwanted turbulence. Given that, practices must adopt sound management techniques like business planning, financial projections, managing time and cost, and diversifying clients, services, building types, sectors and geographic reach. Such steps are prudent, and provide stability, not fear or panic. Those who survived the financial crash hopefully have these in place.
There is also the question of sentiment: what do Europe and European clients and staff think about Britain now? We and our governments must maintain and nurture contacts, maintain access to projects, and secure the future for European staff. We must also make Europeans feel welcome, loved and protected.
Architects across the UK rely on European work and European staff. Europe will definitely turn its back on the UK if it’s brightest talent is shunned or ‘injured’ by an increasingly parochial UK. That must be avoided at all costs.
Adrian Dobson, RIBA executive director members, practice
The outcome of the referendum is a seismic shift in the political and economic landscape. Only Margaret Thatcher’s election in 1979 offers a modern comparator measuring anything like the same degree of magnitude on the Richter scale. In reality it’s too early to assess what the full implications will be for the architectural profession; we don’t yet know if we will have Brexit-lite or the 100 per cent proof version.
Of immediate concern is the situation for EU nationals working in UK practices. Those that have already worked in the UK for five years have permanent residency rights. The government has been ambiguous about the position for those more recently arrived, who currently have residency rights under EU law. About 3,000 EU-qualified architects have registered with the ARB in the last five years, and these architects bring skills and cultural diversity to the UK profession. Practices will be anxious to reassure these architects of the huge value they bring.
A high dependency on business and consumer investment sentiment means that short-term economic impact is a worry for architects. RIBA Business Benchmarking data shows 40 per cent of overseas earnings come from projects in the EU, and those practices active in EU countries will want to demonstrate to clients their ongoing commitment to working in EU markets. Domestically, there are already warning signs in the commercial office and retail sectors, but with the volume housebuilders having continued to moderate supply, bespoke housing and the emergent build-to-rent sector may prove to be resilient. Certainly practices should be looking at broadening their portfolios wherever possible. A more flexible government approach to deficit reduction may also finally mark a turning point for public sector investment.
Much regulation that affects the work of architecture is derived from EU directives, but with legislation on health and safety, public procurement and energy efficiency now enshrined in UK regulation, it is likely to be several years before Brexit has any significant impact in these areas. The overall message for UK architecture PLC: don’t be scared, but be prepared.
Richard Threlfall, partner and head of infrastructure building and construction, KPMG
Two months since the vote, it seems pre-Brexit fears continue to be confounded by the reality of an economy not nose-diving into recession.An increasingly prevalent view is that the UK should be not be talking itself down.
There are reasons for optimism, in particular the lower pound which is supporting the manufacturing sector and encouraging inward investment. We have seen a number of major deals close without difficulty, including the acquisition of Odeon & UCI Cinema Group by AMC Entertainment, owned by Chinese conglomerate Dalian Wanda.
But the longer-term outlook remains uncomfortable. KPMG’s own economic forecast suggests GDP growth of 0.5 per cent next year, but with more downside risk than upside potential.
And unfortunately it is services like architecture that are most exposed, because of their reliance on free movement of labour and the EU market.
Lower growth will inevitably affect the construction sector. Data going back more than 40 years shows a clear correlation between GDP growth and construction output. Indeed, construction demand historically over-reacts to negative sentiment, so the impact will be worse than for the economy as a whole.
But the main driver of that correlation is housing and commercial. Infrastructure is much more insulated. Notwithstanding its surprise review on Hinkley, the new government is generally positioning itself as very pro-infrastructure. Transport secretary Chris Grayling has already endorsed HS2, for example, and seems keen that the whole transport programme should continue, if anything more quickly. Energy policy is expected to remain stable, and utility spend seems unlikely to be affected at all.
So my advice is:
- Focus on infrastructure-related work as much as you are able and plan for a downturn in housing and commercial
- Because Brexit hasn’t actually happened yet, make your views heard on the benefit of EU labour in your practice, to help change public opinion.