Engineering Services in the US Industry Market Research Report from IBISWorld has Been Updated
Larger industry operators will experience improved profit margins as they provide more multi-disciplined services. For these reasons, industry research firm IBISWorld has updated a report on the Engineering Services industry in its growing industry report collection.
Los Angeles, CA (PRWEB) December 30, 2012
If it works, thank an engineer; if it breaks, blame an engineer. Unfortunately, there is little any engineer could have done to stop the recent breakdown in demand for the Engineering Services industry. According to IBISWorld industry analyst Austen Sherman, “Industry revenue started to decline 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 delayed projects, leading to a decline in engineering firms’ backlogs. The shortage of liquidity in global financial markets also cut into demand for engineering services. These declines have caused revenue to fall at an average annual rate of about 1.0% to total $183.1 billion during the five years to 2012. However, the construction market has begun to show signs of improvement; as a result, industry revenue is expected to increase 1.7% in 2012.
The Engineering Services industry is fragmented, with a large number of small-scale establishments, which often provide services to regional markets or specialized niches. “About two-thirds of firms are nonemployer establishments, which were hit particularly hard by the reduction in demand following the recession,” says Sherman. As a result, many of these small firms were forced to leave the industry in 2009 and 2010. Firms have begun to reenter as business conditions have improved the past two years. Consequently, the number of enterprises has decreased only slightly at an annualized rate of 0.2% to 140,836 in the five years to 2012. Similarly, many firms with employees reduced wages, head counts and the number of branch offices in order to maintain profit margins, which shrank for many operators as a result of poor demand.
The Engineering Services industry is characterized by many small establishments that typically confine operations to a regional market or to specialized niche activities. The industry displays a low concentration of ownership, with the four largest companies contributing only 16.5% of industry revenue in 2012. Despite the low level of concentration in the industry, a significant proportion of revenue is derived from medium and large firms. Consequently, the 50 largest enterprises generate nearly 40.0% of revenue in an industry with more than 140,000 firms. About 74.4% of industry operators employ fewer than ten persons and 59.9% employ fewer than five, when only accounting for firms that maintain a taxable payroll. In addition, the industry has a large number of self-employed professionals that do not have a payroll. These nonemploying establishments represent about 65.6% of industry firms, or 93,700, in 2012. In spite of this majority, sole proprietors only generate about 2.9% of industry revenue.
In the five years to 2017, the industry is anticipated to grow as the economy recovers, the value of construction rises, and demand from key downstream markets revives. Revenue is forecast to increase at an average rate of 2.9% per year to total $211.2 billion in 2017. Profitability is forecast to improve slightly, particularly among large operators that provide high-margin services like construction management. Industry profit margins should also benefit from the rising use of computer-aided design systems that provide cost-effective project assessment. This technology will increasingly be used at the construction site through the use of tablet devices, improving communication and reducing costs associated on-site errors.
For more information, visit IBISWorld´s Engineering Services in the US industry report page.
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IBISWorld industry Report Key Topics
Industry establishments are engaged in applying physical laws and principles of engineering in the design, development and use of machines, materials, instruments, structures, processes and systems. These services may involve: the provision of advice; preparation of feasibility studies; preparation of plans and designs; provision of technical services during the construction or installation phase; inspection and evaluation of engineering projects; and 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.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/12/prweb10279536.htm