U.S. heritage compliance industry flat since 1990

A new analysis of data for the United States heritage compliance industry presented at the Society for American Archaeology annual meeting in April 2014 shows that the industry grew at a mean annual rate of 1.6 percent since 1990. Despite decades of nominal growth, real growth has remained relatively flat for the last 25 years (Figure 1). Real growth is non-inflationary growth. The U.S. heritage compliance industry is currently estimated to be just over $928 million in size and expected to reach $1 billion in 2015.

Nominal and Real Growth

Figure 1: While nominal growth has been increasing, real growth has been flat since 1990.

During the 1970s and particularly during the 1980s, real industry growth hovered around 15 percent annually with the exception of 1979 and 1980 which had low, but still positive, growth (Figure 2). There have been only four years since 1971 with real negative growth: 1995, 1996, 1997, and 2009. An abrupt, but currently unknown, change took place in 1990 and marked the end of two decades of aggressive industry growth. Since this time, growth has remained in the low single digits.

Real Industry Growth

Figure 2. Since 1990, mean annual real growth has been only 1.6 percent.

There are many ramifications of this new information, not least of which is the ability of the industry to attract investors as an entire generation of founding owners are divesting for retirement. New investors seeking a competitive return on their investment are likely to be reluctant to take equity stakes in firms in an industry without significant growth.

This new analysis was presented in a paper by Dr. Christopher D. Dore, a heritage business consultant and Adjunct Professor in the School of Anthropology at the University of Arizona, entitled “The Two Greatest Business Challenges Heritage Consulting Firms must Solve for Future Success.” Dr. Dore’s paper was in a symposium entitled “40 Years of CRM (1974-2014):  Accomplishments, Challenges, and Opportunities”. Dr. Dore stated that “while I’ve been tracking industry metrics for nearly a decade, this new analysis caught me by surprise.” He continued “we have known that some individual firms have been struggling to add value over this period as heritage services have been increasingly commoditized. To see this expressed at the scale of the entire industry, though, was unexpected.”

 

Merger and consolidation of heritage compliance firms continues

Pie Slice

Working for a Bigger Slice of the Pie

Consolidation of heritage compliance firms in the United States continues as more and more owner/operators seek retirement and firms struggle to gain market share. Today, the largest heritage-only firms only hold approximately 1-1.5 percent of market share of the compliance sector, now at $928 million annually and forecast to grow to $1.25 billion by 2020. Yesterday, Heritage Business Journal (HBJ) received this press release from ASM Affiliates and Rechtman Consulting announcing a new merger. Company news can be submitted to HBJ from the “Submit Press Release” page.

HILO, HAWAII – DECEMBER 3, 2013 – Rechtman Consulting has been acquired by ASM Affiliates (ASM). Going forward the company will operate as ASM Hawaii.  Bob Rechtman will be leading ASM Hawaii as Managing Director for its Hawaii and Pacific operations. The transaction involved the assets of Rechtman Consulting including its existing contracts and proposals. All the current employees have joined ASM Hawaii. Henberger served as the exclusive advisor to ASM. Financial terms were not disclosed.

“Rechtman Consulting’s reputation, its book of business and Bob Rechtman’s desire to join a larger entity, thereby allowing him to focus on his work and his clients, attracted us to this opportunity,” says ASM’s COO Bill Graham, who spearheaded the initiative. “To better serve our existing clients we had been looking for a while to expand our geographic footprint to Hawaii and the Pacific. The addition of Bob Rechtman and his team will allow us to accelerate our ability to meet the needs of our clients,” added John Cook, CEO of ASM.

“I am excited about the opportunities this acquisition provides to me and my employees,” says Bob Rechtman, Managing Director ASM Hawaii. “The cultural resource management industry today requires marketing and financial resources that, as a small operator, Rechtman Consulting was no longer able to afford on its own. I believe that ASM’s values and mine are closely aligned. Together we will be able to better serve our existing clients and expand into new markets that we were previously not able to enter.”

New journal accepts heritage business articles

Advances in Archaeological Practice:  A Journal of the Society for American Archaeology

Advances in Archaeological Practice: A Journal of the Society for American Archaeology

Many of you who read Heritage Business Journal (HBJ) know that this blog has taken a bit of a hiatus. This is due to my appointment as Editor of the Society for American Archaeology’s new journal entitled Advances in Archaeological Practice:  A Journal of the Society for American Archaeology. This volunteer position is quite time consuming and has superseded, at least for a while, other professional activities to which I volunteer my time, such as coordinating HBJ. That said, Heritage Business Journal is always looking for new contributors from around the world and I’ll always find the time to see that the work of HBJ contributors, current or new, gets published.

Please note, though, that Advances in Archaeological Practice is one of the few places where you can publish peer-reviewed work on the business of heritage. Not only am I encouraging you to read this new journal, I’m encouraging you to contribute manuscripts on business topics! At least through 2016, when my term ends, you know that the journal has an editor that is passionate about heritage business topics. The first two issues (August and November 2013) are free and can be read here. Beginning in 2014, the journal will be for paid subscribers or included as a part of membership in the Society for American Archaeology.

If you are interested in contributing a business article to this exciting new journal, please refer to the Instructions for Authors. If you have questions or want to discuss an idea, please feel free to contact me at editor@dore.us.

Anthropology & archaeology the worst college degrees in the U.S.?

October 30, 2012 5 comments

English: A vector image of a mortar board hat.A new, 11 October 2012, blog post by Jenna Goudreau of Forbes staff using data from the Center on Education and the Workforce at Georgetown University reports that anthropology and archaeology top the list of the worse college majors in economic terms.

Topping the list at No. 1, anthropology and archeology represent the worst choice of college major in economic terms. Recent college graduates of the major, those ages 22 to 26, can expect an unemployment rate of 10.5%, well above the national average. When they do land a job, the median salary is just $28,000, compared to a mechanical engineer’s initial earnings of $58,000.

Historic Preservation Tax Credits

October 19, 2012 Leave a comment
Tax

Tax credits for historic preservation (Photo credit: 401(K) 2012)

The basic benefits of Historic Preservation Tax Credits in the United States are widely publicized – encouraging preservation, assisting with the viability of a project, increasing the value of an under- or un-utilized building and returning it to the tax rolls, and improving neighborhoods, among others. But a recent article published by the National Trust for Historic Preservation highlights one architect, Robert Verrier, who asserts that he has saved over 150 places in the past thirty-plus years and the key to his business and his success, is historic tax credits.Verrier states that, not only is preservation one of the greenest activities as well as an activity that can embody and save the collective memory of a place or entire community, but he notes that “the recent debate over historic preservation tax incentives is …  short on common sense. The benefits of these tax credits are indisputable. By redeveloping historic buildings, tax credits save our architectural heritage and spur new private investment, create construction jobs, and set the stage for new economic activities, such as tourism.”

Historic buildings often anchor communities or serve as a gateway into them. Revitalizing these buildings can bring an area back to life. In addition to providing jobs through the revitalization and resulting use of an old building, adjacent activity also rises – often resulting in a domino effect creating even more jobs, community investment, commercial activity, or housing for example. These buildings, with strong bones and strong roots, need someone with a vision who will in turn likely need the assistance of historic preservation tax credits in order to make the vision a reality.

Slowdown coming in UK government construction and associated archaeology

Charles Mount has been following construction activity as a proxy variable for commercial archaeology work in Ireland (Mount 2012).  His data show that a slowdown in construction results in a reduction in commercial archaeology, a well known trend around the world. Applying this concept to the UK we can look at the construction industry as a proxy for possible commercial archaeology activitiy. In this case, the The Markit/CIPS Purchasing Managers’ Index (PMI) is used. The results show that while construction was very strong at the beginning of the year, especially March, the index has been falling in the last couple of months. It is currently flirting with contraction, a reading of under 50, and it is unlikely that commercial archaeology, as a whole sector, will have seen lots of growth in the last few months.

Taking a longer view of the sector shows some clouds on the horizon. The UK government is now providing pipeline views of new construction projects anticipated over the next couple of years. These are big projects, £10 million plus, but these projects indicate a drop in government construction projects over the next few years. Government construction projects make up 40 percent of the construction sector.

Count of Entries Sum of 2011/12 (£m) Sum of 2012/13 (£m) Sum of 2013/14 (£m) Sum of 2014/15 (£m)
Flood 38 £224 m £289 m £273 m £251 m
Health 158 £590 m £1,066 m £983 m £807 m
Housing & Regeneration 47 £1,789 m £1,100 m £1,281 m £1,552 m
Justice 14 £203 m £254 m £280 m £78 m
Transport 68 £3,596 m £3,411 m £3,622 m £4,001 m
Waste 35 £594 m £1,090 m £1,407 m £803 m
Education £2,504 m £1,640 m £486 m
MOD 90 £396 m £732 m £627 m £592 m
Police Authorities 132 £216 m £14 m £15 m £03 m
Home Office 6 £13 m
Nuclear Decommissioning 24 £313 m £275 m £360 m £449 m
Research 10 £13 m £23 m £14 m £11 m
Further Education 1 £17 m £153 m £59 m £01 m
Culture, Media and Sport 4 £1,098 m £467 m £425 m £117 m
FCO Embassies £42 m £64 m £69 m £65 m
Coal Authority 2 £06 m £07 m £08 m £08 m
Grand Total 629 £11,614 m £10,586 m £9,908 m £8,738 m

This could pickup as more projects are proposed and more money is allotted to large government construction projects. However, there needs to be a 25 percent increase in money allotted for proposed projects by 2014/15 to keep the supply constant. It looks as though construction will not see large growth in the next few months and there are head winds for the future. This means that commercial archaeology is probably in a similar setting. Do not expect a large contraction, but there is unlikely to be a large pickup either.

As should always be noted, a large catastrophic event make all projects redundant.

Mount, C. 2012. Indicators suggest that archaeological activity in Ireland continued to decline in the third quarter of 2012. The Charles Mount Blog, 4 October 2012. http://charles-mount.ie/wp/?p=960

Preservation, sustainability, and economics stand hand in hand

September 17, 2012 Leave a comment

Numerous studies and even more websites have been produced linking the economic benefits of preservation, but the connection of sustainability in this grouping should not be ignored. Historic preservation is an inherently green activity, and is slowly but surely gaining recognition in today’s sustainability-conscious world. Coherently summed up by the Illinois Historic Preservation Agency, “both preservation and green design share a concern about resource conservation and the goal of making a better future. Preservationists begin by identifying places that have enduring value and deserve to be part of the future. Green design begins as a response to the future challenges of resource depletion, population growth and climate change.” Further summed up in the article, are many of the green benefits of historic preservation, including the fact that many preservationist have knowledge of the fact that many historic buildings were constructed with features considered green today, such as the use of local materials compatible with climactic conditions and operable, well-placed windows for fresh air and daylight – some even featuring systems to collect and utilize rainwater. Not only are many historic buildings green, but their placement and the planning of historically developed areas also exhibit green qualities including compact arrangement, pedestrian friendliness and both mixed-use and mixed-income blended into one area creating an accessible and walkable community. Utilizing this existing infrastructure is not only environmentally-conscious, but is an economic win for any community

A study in West Virginia demonstrates the strong, positive economic impacts produced by historic preservation, which also result in additional positive impacts such as the revitalization of small town business centers – an undeniably green benefit. Wanting to not only test this theory, but gain from its benefits, numerous programs across the United States have been put into place such as the Green Pilot Project in West Union Iowa. The project focussed primarily on creating a green, sustainable community infrastructure – doing so in the greenest way possible: by rehabilitating the existing town center, utilizing and highlighting what they already had. Project planners realized that utilizing the existing downtown building stock would not only help to preserve cultural, architectural and historical assets, but would strengthen the smart planning and growth concepts already a part of their built environment by providing valuable retail space on the street level (keeping spending local and producing jobs) and by reclaiming the much-needed residential space already in place on many of these building’s upper levels. Some of this work was made possible by a further economic benefit provided by historic preservation: the use of historic tax credits.

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