Longtime engineering firm closes

John E. Harms Jr. and Associates, a Pasadena engineering firm that developed marquee projects in the county for more than half a century, filed for bankruptcy last week after abruptly dismissing its 40 remaining workers.

Dianne Netherland, the company's chief financial officer, said most of the employees worked in the firm's Pasadena office at 90 Ritchie Highway. About 10 workers reported to the company's Frederick and Easton offices.

Harms filed for Chapter 7 liquidation bankruptcy after exhausting alternatives including trying to find a buyer, searching for other sources of cash and "tightening up controls internally," Netherland said.

The company was forced into bankruptcy after demand for projects slowed dramatically and struggling clients fell behind on payments, she said.

The closing of the prominent engineering firm is a drastic leading indicator of how the recession is manifesting itself locally and the impact it has had on parts of the economy, such as the construction industry. As the recession worsened, Harms cut its work force in half, from 80 employees two years ago to about 40, Netherland said.

As with "many businesses around here, times are tough," Netherland said. "We are greatly affected by recession, but this is a different recession."

The closing of Harms marks the end of an era for a company that grew to become one of the most prolific engineering firms in the county. Founded by John E. Harms Jr. in 1955, the company coordinated and managed the massive Arundel Mills project in Hanover for the county.

It had provided engineering services for the National Business Park in western Anne Arundel since 1984, as well as site design, survey and construction services for the planned Piney Orchard development in Odenton. The Capital newspaper building in Annapolis also was one of its projects.

Jim Vidmar, an Annapolis bankruptcy attorney who is handling the case, said the company filed for Chapter 7 liquidation after it made its last payroll on July 1 and "told everyone it was the end."

"You don't do this unless it's a pretty bad situation, especially with a company this old and this established," Vidmar said.

He said BB&T had a lien on the company's assets, which were worth about $300,000 and mostly composed of accounts receivable - money that the company is owed.

"In all likelihood, BB&T will set about to correct this and recoup its debt," Vidmar said.

Harms' current financial state stands in stark contrast to more prosperous years of growth. The company started in Glen Burnie before moving to Pasadena in 1962. Harms expanded with a Frederick office in 1996, followed by an office in Easton in 2005.

The closing of Harms is a reflection of a "shake-up" in the industry during the recession, said Dennis Murphy, president of the Anne Arundel Commercial and Industrial Association.

"There's only so much work to go around," he said.

Engineering firms traditionally get involved in new projects, which have dwindled as lending has tightened, he said.

"They are ground-up, if you will," Murphy said. "They are the ones who do initial site work studies."

But the only projects in the pipeline now are "built to suit," meaning they already have a committed tenant, he said.