After several years of crisis and concern, the market for the top international design firms from around the world began to pick up in 2003. Regions where tensions had been highest, like the Middle East and Africa, finally began to relent to pent-up demand. But concerns remain about security, corruption and increasing competition, particularly from firms in host countries.

For ENR’s Top 200 International Design Firms, 2003 was a good year, with revenue from projects based outside their home countries up by 11.3%, to $21.99 billion, from $18.86 billion in 2002.

On a regional basis, Africa was the biggest gainer, rising 65% to $2.03 billion in export design volume in 2003. Europe and the Middle East also posted big gains, up 28.4% and 20.1%, respectively. Asia and Canada also showed healthy gains, up 9.7% and 8%. The construction recession in the U.S. took its toll on foreign designers in that market, falling 8.3% in 2003. And the economic turmoil in Latin America was clearly reflected in the ENR Top 200’s revenue for that region, showing a 16.5% decline from 2002 numbers.

Among markets, manufacturing was the biggest percentage gainer in 2003 for the Top 200, rising 40.3%, to $583.6 million. But it was the petroleum market, which is twelve times the size of manufacturing, that took first honors among market gainers, showing a 26.6% rise, from $5.09 billion in design revenue in 2002 to $6.44 billion in 2003. Other markets showing gains were hazardous waste (up 17.8%), industrial process (16.6%), transportation (16.5%) and general building (15.5%). The telecommunications market continued its rapid decline for design work, falling 53.2% in 2003. The power market continued to sag, falling off 24.6%. Water (down 7.6%) and sewerage and wastewater work (down 5.6%) also fell.

Business seems good or at least stable for big Eurkopean design firms. "It’s going particularly well," says David Odgers, the U.K.-based chairman of AECOM Group, Los Angeles. The group’s FaberMaunsell division handles Europe, while Maunsell covers points further east. Mott MacDonald Group also has grown "quite substantially," says Managing Director Kevin Stovell. And with London-based Arup Group’s sales reaching nearly $800 million, Chairman Terry Hill says, "We have been growing, but growth is not the target."

For some firms, there is a sense of disquiet about the markets. For the 3,900-person Dutch firm DHV Consultants, business is "more or less stable," says President Renko Campen. The firm shrank by 150 to 200 people last year, "and we anticipate remaining at that level."

While also reporting growth at Denmark’s COWI AS, CEO Klaus Ostenfeld notes continuing changes in the business. "We have been able to export out of Denmark [but] 10 years from now I don’t think that will be possible except for really unique services," he says.

Part of this disquiet is concern about growing domestic competition in target countries. "One of the most important issues...is the increased tendency to see professional consultants in countries we traditionally exported to," says Ostenfeld. India, for example, already has many talented engineers "and the Chinese are coming very fast as well," he says. "They are spending...on research at a rate which is [unrivaled] in the Western world."

Through the current transformation, international design firms are "becoming a network of locally based consultants strung together by strong company knowledge systems, cultural values and ways of doing things," Ostenfeld believes.

Similarly, there is agreement that "offshoring," the use of low-cost design centers, will increase. DHV seems typical. Its 80 staff in New Delhi are spending about 40% of their time on non-Indian projects. "We started with detailing and basic engineering. Step by step, the idea is to climb the ladder [to] a higher degree of engineering," says Campen.

Another issue that now is more prominent is the concern over corruption. This is partly the result of criminal prose-cutions of Germany’s Lahmeyer International and Canada’s Acres International concerning the Lesotho Highlands Water Project in Africa [ENR 7/19 p. 7].

Mott’s Stovell believes anti-corruption initiatives are working. "There is much less corruption in most markets," he says. Yet the problem remains. "From time to time...