Julie Brinkerhoff-Jacobs knew the recession was going to be bad.
Her landscape-architecture company, Lifescapes International, usually felt the pain early when the economy was on the verge of a downturn, as clients fearing a recession cut back on spending or canceled work completely. And clients were suddenly clutching their cash in the summer of 2008. Lifescapes did a lot of work for Las Vegas casinos, and virtually all of that business shut down, like somebody turning off a faucet. A few Las Vegas clients had hired Lifescapes to do work on their casinos in Macao, the Asian gambling mecca, and those projects got put on hold, too. Almost overnight, Lifescapes’ revenue dropped by 50 percent, a brutal blow for the 50-person boutique firm.
As the stock-market crashed, the banking crisis erupted and the recession intensified, Lifescapes laid off more than half its staff. With a business dependent on casinos, upscale malls, and other types of high-end real estate, the company’s future seemed tied to a property bust that could drag on for years
But three years later, Lifescapes is thriving, mostly thanks to new business in China and a ready embrace of the global economy. Lifescapes hired back some of its laid-off workers and brought on new ones with skills—such as fluency in Mandarin Chinese—it wouldn’t have thought to look for just a few years ago. The firm is now more profitable than it’s ever been, with a staff that’s roughly the same size it was before the recession. “We’ve been very fortunate,” says Brinkerhoff-Jacobs, president of the family-run business, which is based near Los Angeles. “But if not for China, I’d be singing a different song.”
If more small businesses were able to follow Lifescapes overseas, the U.S. economy might not be in such a rut. Globalization has been a boon for big companies, allowing them to save money by shifting production to low-cost countries, while also tapping new markets for their goods. That’s one reason corporate profits are strong, even with a wobbly U.S. economy. But many Americans feel the benefits of globalization have evaded them, as jobs migrate overseas and the U.S. economy stagnates. Those frustrations are fueling a surge of protectionist sentiment, as Congress considers sanctions meant to force down China’s large trade surplus with the United States. Republican presidential candidate Mitt Romney has even said that imposing trade sanctions on China would be a “day one” priority if he were elected president in 2012.
Instead of sanctions, many business owners would rather gain entree to the booming economy in China. If they could, it might add an important new dimension to the American economy. Consulting firm McKinsey, for example, argues in a recent study that “finding ways for U.S. workers to win ‘share’ in the global economy” is one of four key priorities for boosting job creation in the United States. The trick for many small-business owners, however, is finding their way overseas when money is scarce and they’ve had little exposure to foreign cultures or business styles.
Lifescapes got its break thanks to the prominence of its work on the Las Vegas strip, where it has designed the lush landscaping for more than a dozen casinos and other commercial properties, including the Bellagio, the Encore, the MGM Grand, and the Mirage. In 2007, a prominent Chinese developer, Song Weiping, stayed at the MGM Grand during a trip to Las Vegas. He was impressed with the Italianate gardens at the resort, and sent one of his aides to meet with Lifescapes. That blossomed into a timely chunk of business in 2009—when the recession in the United States was at its low point and Lifescapes had little new work in the pipeline.
Song was building an upscale residential complex in Beijing called Majestic Mansion, with a Tuscan theme that called for the same kind of flowing plants, fountains, and earthy stonework he had seen at the MGM Grand. So he hired Lifescapes to design the garden and the grounds. That went well, so Song used Lifescapes on other Chinese projects. As the U.S. firm built its reputation in China, that led to business with other developers, too. Before Majestic Mansion, the firm’s only presence in Asia was in Macao, which accounted for about 30 percent of its revenue. Today, Brinkerhoff-Jacobs tracks the firm’s China business with pins stuck into a map on a wall in her office. The current portfolio includes about 30 projects in 17 Chinese cities—and the company turns down some business. About 70 percent of revenue now comes from China.
As business started to boom in 2009, Lifescapes started to hire again and expand in new directions. By chance, Lifescapes had one landscape architect who was from Taiwan and was fluent in Chinese. He became the manager responsible for all the firm’s Asia projects. But the firm needed more Chinese speakers, and it decided to hire in the United States rather than taking on the added complexity of opening foreign branches in China. At first, the prospect of finding good landscape architects who also happened to speak Mandarin seemed unlikely. But there turned out to be plenty of people with that combination of skills. Of the firm’s 50 current employees, eight are now fluent in Chinese.
Slimming down and beefing up again allowed Lifescapes to build a much more productive staff—a powerful workplace trend that rewards employees with the right skills, but punishes others. The firm hired back some of its own laid-off workers, for example, but took a pass on those whose skills weren’t up to date. Virtually all of the company’s new hires know how to use the latest design software, and most are familiar with social-media tools like Facebook and Twitter. When Brinkerhoff-Jacobs needed a new executive assistant, the winning applicant brought a complete portfolio of her work—even though nobody asked her to—and sent personal thank-you notes to everybody she interviewed with, helping her beat out eight others for the job. “Those personal things showed grace and personal involvement,” says Brinkerhoff-Jacobs. “For our company, that’s huge. That’s our culture.”
A more productive staff has helped Lifescapes double its profits, with the same number of workers it had before. “When you’re not making a lot of money, you get real focused,” says Brinkerhoff-Jacobs. “You really pay attention to the skill sets you need.” Many corporate leaders have learned the same lesson, which helps explain why corporate profits are strong but hiring is weak: Companies have learned to use technology to get the most out of their workers, while keeping payrolls as lean as possible.
Many other smaller firms are trying to break into overseas markets, though few are as successful as Lifescapes has been. Rafael Pastor, CEO of Vistage International, a membership group for the leaders of small- and medium-sized companies, says 58 percent of Vistage firms do business in foreign countries, with 25 percent operating in China. But many American businesses are still left out of the global economy, even though policymakers and economists would love to see more foreign business for U.S. firms. Pastor recommends that small firms supplying goods or services to client companies that do business overseas follow in their customers’ footsteps, and become suppliers to their foreign divisions as well, or ask them for help breaking into foreign markets. Companies can also tailor a portion of their websites to foreign markets—as Lifescapes has done, with a version of its site that’s in Chinese. The U.S. consulates in foreign cities often have ties to local businesses and can help with introductions. And plain old networking works in foreign economies, just as it does here.
Lifescapes, meanwhile, recently hired several new workers—but not to work on China projects. Brinkerhoff-Jacobs says business is finally picking up again here in the States, and she’s eager to diversify by boosting the share of revenue that comes from domestic work. New projects in California, Florida, Idaho, and Utah should help with that, and if Lifescapes is once again getting the news early, then the firm’s uptick in business might signal a broader U.S. recovery ahead. Businesses on both sides of the Pacific would welcome that.
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Corrected on 10/19/11: Rafael Pastor's name was misspelled in a prior version of this story.