Surging demand for engineering design

Big get bigger, but Chinese firms lag in global market share

Top engineering design companies made rapid headway in recent years amid a sluggish world economy.

As both developed and developing countries have been forced to restructure their economies, an increasing demand for engineering design has emerged, according to a report in the Engineering News-Record as it released the list of top 200 companies in the industry last year.

The report shows that the combined revenue from the 200 companies in overseas markets hit $65.3 billion in 2011, an increase of 13.3 percent over the year previous.

Among the 200 companies, 152 are from developed countries, with 69 from the US.

All of the top 10 are from the developed world except one from Egypt.

The top 10 companies has a combined overseas revenue of $25.77 billion in 2011, accounting for 39.5 percent of the entire international market.

Included on the list are also 19 companies from the Chinese mainland, whose combined overseas revenue reached $2.28 billion in 2011, a 4.1 percent increase from the previous year.

"Despite their growth, Chinese enterprises have a long way to go compared with their competitors from the developed world," said Jin Rui, deputy research fellow at the Chinese Academy of International Trade and Economic Cooperation.

"As you can see, their total revenue accounts for 8.8 percent of that of the top 10 companies.

"Striving to become top-class international engineering designers should remain the goal of Chinese companies for a long period to come," she added.

M&As

As industrialized countries see a drastically shrinking of engineering design market following the financial crisis, companies in the industry are taking a series of measures, especially mergers and acquisitions, to improve their competitive edge.

In late 2011, Ch2M Hill, the US consulting, design and construction firm, purchased British company Halcrow Group.

Established in 1868, Halcrow Group specializes in planning, design and management services for infrastructure development in transportation, water and property.

"Such a takeover will help consolidate Ch2M Hill's leading position in water treatment and transportation," said Jin.

She also predicted that Ch2M Hill will see its share of the international market double after taking over Halcrow's business in Europe, the Middle East, the Asia-Pacific region and South America.

In June 2012, Canadian company Genivar acquired another UK company, WSP Group, which specializes in consulting in transport, infrastructure, energy and environmental protection.

Industry experts believe the acquisition will expand Genivar's service scope to meet demands of different customers.

In another deal, Royal Haskoning joined the ranks of top engineering design companies in Europe by merging with DHV Group in July 2012.

The new company Royal Haskoning DHV will have an estimated annual revenue of $936 million this year, with its network of more than 100 branches covering 35 countries.

It is reportedly planning to acquire more smaller companies.

Industries and regions

Engineering News-Record's report reveals that infrastructure is rising as the largest proportion of the international engineering design market.

Needed services range from infrastructure design, construction, operations and maintenance as well as dismantling obsolete facilities.

The report shows that the top 200 companies finished petrochemical engineering projects with a combined value of $20.13 billion in 2011, accounting for 30.8 percent of their total revenue in the year.

Transport ranked second by generating $10.65 billion for the companies, 16.3 percent of their revenue in 2011.

It was followed by housing projects that contributed 14.4 percent of combined revenue for the top 200 companies in the year.

It also reported that Asia, including Australia, was the largest market by revenue in 2011.

The $16.8 billion from the region for the top 200 companies was a 26.3 percent rise from the previous year.

Latin America and the Caribbean saw the most rapid development with companies' revenue from the region surging 37.8 percent to $5.3 billion.

The top 200 saw their business grow in all other markets except the US, where revenues fell 4.8 percent in 2011.

As both the US and Europe have weaker demand, many companies are heading for the Middle East.

Jin said Gulf states are shifting their investment to infrastructure and the United Arab Emirates continues to have big demand for modern buildings and infrastructure.

She added that UAE property owners are raising their demands for quality design and construction as the competition among service providers gets fiercer in the country.

Jin said post-war Iraq is also rising as an important market.

"It has rich natural resources and a huge demand for modern services, buildings and infrastructure."

In addition, China and India still offer a lot of opportunities despite economic slowdowns, said Jin.

"Mott MacDonald has 150 employees that are dedicated to providing high-level consultancy to Chinese property owners," she added.