The oil-and-gas revolution in the U.S. has led to an increase in industrial and manufacturing projects as more corporate clients see low energy prices as a spur to expansion in this country. "We are seeing increased activity in manufacturing, industrial and oil-and-gas work," says Jim Moos, Leidos Engineering Solutions group president. He says manufacturing activity in consumer-product and food-and-beverage projects is particularly high, and industrial work continues to increase in the chemicals market.

"Our clients are demanding much more flexible solutions as the fracking boom continues to keep feedstock pricing low," says Bill Wasilewski, executive vice president, CDI Corp. "We've seen double-digit revenue growth as clients look for ways to boost production from existing facilities."

International firms also are moving to the U.S. to establish manufacturing and industrial facilities to take advantage of low energy prices. "We've also seen an influx of European firms establishing facilities in the U.S., leveraging our abundant feedstock supplies and superior distribution infrastructure," says Wasilewski. He says this influx is reshaping the entire industrial-process market and creating unprecedented mid-stream design demand. "This also flows over into the chemicals markets as owners seek to create value-added products for use in domestic U.S. production as well as for export. Engineering creativity and flexibility is at a premium in this environment," says Wasilewski.

Plugging In

One of the more uncertain major markets is power. Capacity demand has not expanded as fast as many expected. Also, federal environmental regulations are putting pressure on coal-fired plants. "The U.S. power demand is still close to pre-2008 levels. Until the U.S. economy gets into full gear, engineering-services companies will continue to focus on well-targeted power-generation engineering opportunities," says Keith Roe, chairman of Burns & Roe Group.

"Power providers are having to react and respond to a number of threats [that] are causing a number of structural changes," says Graves. He says these threats range from physical and cyber attacks to preparation for weather events to economic threats caused by large energy consumers leaving the system. "That certainly creates a market opportunity for us as we help our utility and energy clients work through these challenges."

Nuclear power showed signs of a major expansion five years ago. But the market now is in flux due to the growing availability and low cost of local natural-gas supplies as well as concerns stemming from the Fukushima nuclear-plant meltdown.

The soft market for nuclear power and the increasing emphasis on cheap, gas-fired plants has some firms in that sector refocusing their strategy. For example, approximately 40% of Altran North America's revenue traditionally came from the nuclear-powerplant sector, says Thomas Foley, CEO. "We have had to aggressively compete to increase market share within nuclear and also quickly adjust to increase efforts in the oil-and-gas and power-delivery sectors, which we believe will be the primary growth areas over the next decade."

However, many firms in that market predict nuclear power will continue to be a factor in the U.S. "We do a lot of planning and consulting for existing nuclear plants," says Oskvig of Black & Veatch Energy. He says there are a lot of plans on the boards for new plants, but utilities are waiting to see how the new nuclear plants currently under construction work out before committing to any more new plants.

But Oskvig says he is confident in the future of U.S. nuclear power. "Keep in mind, nuclear plants provide about 20% of the total U.S. generating capacity. To maintain that ratio as demand continues to rise, another 15 to 20 new plants will have to come on line in the next 20 years."

Project delivery changes also are affecting the power market. "During the past 10 years, the power-generation project-delivery approach gradually shifted to turnkey [engineer-procure-construct]. Now, almost all new generation projects are executed on an EPC basis," says Roe. "In the past, owners hired Burns and Roe as their detailed design engineer. We are now aligning ourselves with selected EPC contractors."

Transmission and distribution (T&D) continues to be a hot market. "There is a lot of capital spending on T&D and utility infrastructure," says Vincze of TRC. He says the Federal Energy Regulatory Commission is opening up numerous corridors for T&D.

"We are seeing the advent of microgrids, which might draw capacity during parts of the day but then be positioned to feed excess capacity back into the grid at other times," says Oskvig. He notes that this is a throwback to when the power industry consisted of a loose and disorganized collection of microgrids, before the power industry evolved into a centralized T&D system managed by large utilities. "The problem is that traditional utilities do not have a business model to manage a smart grid. That is what we and many other firms like ours are working on," he says.

Oskvig also notes that the current regulatory environment is not prepared to deal with a smart grid. "There are several thousand utilities in 50 states, each with their own regulatory regime. There are also federal, state and local cooperatives. Their response to the new smart gird will be shaped by the complexity of the regulatory environment," he observes.