Ellerbe Becket President Sees Need for U.S. Architects to Become Bigger

John Labosky, the 39-year-old president and chief executive officer of Ellerbe Becket, one of the three largest U.S. design firms, believes that the only way American architects can cope with the competitive penetration of the national market by large and powerful foreign outfits is to be become both bigger and more business-like.

“U.S. architectural practice, like the American economy at large, has become vulnerable to offshore challenges,” he said. “The only way to hold one’s own in this tough scenario is to run a large, lean, yet responsive operation that can function across the country and around the world.”

To expand its reach to cover the western United States, Minneapolis/St. Paul, Minn.-based Ellerbe Associates Inc. last August acquired Welton Becket Associates, one of Los Angeles’ biggest and oldest architectural and engineering practices.

Adding Welton Becket’s 145 staff members increased Ellerbe’s total complement to 800. Adding Becket’s $300 million in annual project value to Ellerbe’s $700 million bumps Ellerbe Becket’s billings to $1 billion a year.

Successful Competition

Labosky, a pleasant, plump-faced man with a toothbrush mustache and easy manner, believes that three main strategies are mandated if U.S. firms are to compete successfully in the architectural major leagues.

“The three key words for survival in the last decades of this century are: management, automation, merger,” he said. “Architects, like lawyers and accountants, have to burn these buzz words into their brains.”

Management means the introduction of computerized programs that monitor the man-hours a project may take if it is to turn a profit. Too many architects, in Labosky’s view, have either had little or no background in cost-effective management, or too little interest.

“The aura of the unwordly artist stills hangs about in most designers’ offices,” he said.

Automation means not only the introduction of computer-aided design systems, but a national electronic linkage of the group’s offices and information, and the mobility of its top talent.

Complete Service Packages

“If the L.A. office, for example, has more expertise in shopping malls, we can pull in that talent for a project that may be happening in the Twin Cities office’s jurisdiction,” Labosky explained.

Mergers allow large groups of architects and engineers to offer a complete service package to national or multinational clients, including everything except financing.

“We can’t compete with Japanese contractors, who can offer 4% to 5% loans,” Labosky said. “At the same time, both Ellerbe and Welton Becket have divested themselves of all involvement in the equity end of developments they design--as Becket did in Colorado Place (in Santa Monica), where its offices are located. Owning real estate is a distraction from our main purpose.”

Reasons for Choice

Labosky said the idea of buying out Welton Becket Associates was his own.

“I knew we needed a strong West Coast component,” he explained. “I looked around California and chose Becket for its strong share of the commercial end of the market.

“Ellerbe has been active in institutional work, such as the Mayo Clinic in Rochester (N.Y.), or the St. Paul (Minn.) Winter Carnival Ice Palace. Together, the two merged organizations now cover the whole spectrum of design and construction.”

The Ellerbe-Becket merger was a stock-for-stock exchange. A five-member board runs the new firm. One hundred employees own stock, which they must sell back to the practice if they leave its employ. The head of the Los Angeles office is Alan Rosen, director of Welton Becket Associates’ Los Angeles office since 1945. Lou Naidorf remains the Los Angeles office’s senior designer.

Landmark Designer

Welton Becket Associates designed several major Los Angeles landmarks in its 54-year history, including the Pan-Pacific Auditorium on Beverly Boulevard, the Capitol Records building in Hollywood, and the downtown Music Center.

In recent years, the firm had

come to specialize in high-rise office and hotel designs, such as the Hyatt Regency Reunion in Dallas, and the Great Wall Sheraton Hotel in Beijing, China.

Labosky describes the newly merged group’s aim as an attempt to “grow larger by growing smaller.” Local offices retain their autonomy and the corporate superstructure is kept to a minimum. Control is exercised by a frequent series of assessments of each office, each project and each member of the staff.

Performance Rewarded

“We use a system of constant feedback,” Labosky said. “Employees are set goals, and are awarded compensation for performance, which can double a person’s annual take-home pay. On the other hand, by keeping fixed salaries low, we can ride out the lean periods without having to lay off staff or cut our operation to the bone.”

As for the quality of the architecture, Labosky declared that Ellerbe Becket would not strive for a distinctive design “signature.”

“We want to maintain a general level of design excellence compatible with the needs of the client and our own profitability,” he said. “I must emphasize that while profit is not our main goal, it is a primary requirement.”