Optimism that the design industry is on the up is misplaced, with designers working longer and harder for the same return, according to a Design Business Association quarterly survey.
Studios may be busier but profits are down, says the survey of performance ratios and trends, conducted by management consultant David Jebb & Associates.
More than 60 per cent of the survey’s 40 subscribing companies reported a fall in operating profit for the last quarter compared to the first quarter in 1994. Turnover remained almost unchanged, and only product design saw an up-turn in profits, for the second quarter in a row.
The increased activity may be leading to industry optimism. “With increasing workloads but reducing profitability, there is a feel good factor at work. I am very concerned over the fact that average profit performance has been weakening while studios have been busier,” says Jebb, who attributes faltering profits to “diabolically tight margins”.
Estimated fee-income per charged hour has dropped during the year. According to the survey, it took an average of about 97 minutes of chargeable time to produce Ãº100 of fee-income during the fourth quarter of 1994, compared with some 79 minutes during the first quarter.
Jebb warns: “Although consultancies continue to be optimistic, it’s still very much a buyer’s market. An efficient design buyer can get some very good design for not much money, and it will stay that way for the forseeable future.”