New York, NY (PRWEB) April 06, 2014
Firms operating in the Engineering Services industry apply physical laws and principles of engineering to design and develop structures, machines, materials, instruments and other processes and systems. Services also include providing advice, preparing feasibility studies, preparing plans and designs and providing technical services during construction or development.
Industry revenue fell in 2009 and 2010 due to subdued construction levels and anemic private demand. According to IBISWorld Industry Analyst Jeremy Edwards, “Engineering firms experienced a decline in demand as downstream construction markets came to a halt during the recession.” While long-term contracts allowed many engineering firms to maintain revenue growth as the recession began, many companies postponed or cancelled upcoming projects. The shortage of liquidity in global financial markets also cut into demand for engineering services and caused businesses to leave the industry.
Nonetheless, the industry has been on the path to recovery since 2011. Rebounding corporate profitability, low interest rates and recovering business sentiment based on higher consumer spending caused businesses to begin reinvesting in new facilities. This was partially driven by high demand from oil and gas mining industries that increased exploration and drilling activities following a spike in prices caused by a stronger need for oil and shortages in the Middle East and North Africa. Commercial markets have also grown as firms expand operations and require new office and retail spaces. Industry revenue is projected to grow at an average annual rate of 1.1% to $207.1 billion over the five years to 2014. Revenue is expected to increase a robust 3.8% in 2014, but will be mitigated by continuing budget sequestration and austerity measures by the federal government.
In the five years to 2019, the industry is anticipated to grow as the economy continues to strengthen, the value of construction rises and demand from key downstream markets revives. “Growth is expected to be strongest in 2016, while emphasis on green building is expected to increase with growing corporate profit,” says Edwards. Industry profitability is also forecast to improve, especially among large operators that provide high-margin services, such as construction management. Profit margins should also benefit from the rising use of computer-aided design systems that provide cost-effective project assessment.
The Engineering Services industry is characterized by many small companies that typically confine operations to a regional market or to specialized niche activities. The industry displays a low concentration of ownership. Despite the low concentration, a significant proportion of revenue is derived from mid-size and large firms. Consequently, the 50 largest enterprises generate nearly 40.0% of revenue in an industry with more than 140,000 firms. Over the five years through 2014, industry concentration has increased slightly. As US construction markets plunged, many firms were forced out of the industry. Larger firms such as URS and Fluor Corporation were able to take advantage of their relatively greater access to credit and purchase smaller companies requiring assistance.
For more information, visit IBISWorld’s Engineering Services in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in the Engineering Services industry apply the physical laws and principles of engineering in designing, developing and using machines, materials, instruments, structures, processes and systems. These services may involve providing advice, preparing feasibility studies, preparing plans and designs, providing technical services during the construction or installation phase, inspecting and evaluating engineering projects and providing other related services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.