Prosperity Fuels Expansion
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The worldwide market for construction design services has been buffeted over the past eight years by financial crises, terrorism, wars, SARS flu scares and regional recessions. Yet the market continues to show a broad-based resilience. While many international players in the market have been through the tumult and are proceeding cautiously, the worldwide demand for high-end architectural and engineering services shows no sign of abating.
For ENR’s Top 200 International Design Firms, revenue from projects outside of the firms’ home countries rose to $24.15 billion in 2004, up 15.1% from $20.99 billion in 2003. It also marks a 28.0% rise in international revenue from 2002’s figure of $18.86 billion.
The prosperity knew no boundaries as all regions covered in the survey enjoyed significant increases in activity. While the biggest regional gainer by percentage was Canada, up 27.2% to $1.55 billion in design work in 2004, several other regions were close. Asia, the second largest destination for international designers, rose 25.3% last year, to $6.07 billion, while the Middle East, fueled by reconstruction funds and pent up demand for petroleum and infrastructure work, rose 21.2%, to $24.3 billion. The Top 200 better than doubled their international revenue in Africa since 2002, rising 24.4% last year, to $2.52 billion.
In the Western Hemisphere, Latin America has shown signs of life, growing by 11.7%, to $1.38 billion, as several of the region’s largest economies slowly are getting back on track. And the U.S. mark, which has seen a steady resurgence since its construction recession of 2001-02, grew at a 10.7% rate for international designers, to $2.76 billion. But Europe grew at a slower pace as many of the continent’s largest markets struggled with construction recessions. Overall, that market rose 5.5%, to $7.44 billion.
Many large design firms are expanding their markets or array of services to help penetrate the growing international market. Global business "can’t help but grow," says Terry Hill, chairman of Arup Group Ltd. With a growing emphasis on whole-life costing, Arup increasingly is focusing on design of buildings’ electrical and mechanical systems, says Hill.
Arup isn’t alone in its quest for new markets. For example, Bureau Veritas, a Paris-based consulting and systems certification firm, recently acquired U.S.-based Berryman & Henigar and U.S. Labs. Dutch Arcadis expanded its program management base with acquisitions of U.S.-based Construction Dynamics Group in 2004 and London-based AYH plc. And the U.K.’s AMEC plc announced this month that it had acquired three engineering firms, including Metz, France-based electrical engineer PK SAS, and NNC Holdings Ltd., a major U.K. nuclear services firm.
With growing interest in hydropower, Germany’s Lahmeyer International sees growth in key markets and forecasts acceleration this year. Large water schemes are increasing as well as renewable power projects, says Managing Director Henning Nothdurft.
From The Netherlands, international business of DHV Consultants also is growing through acquisition and organic growth, says Renko Campen, president. But there remains "fierce" competition on profit margins. Whatever the global construction economy does, "for sure it’s not going down," he says.
While oil and gas engineering is "growing very fast," and transportation work is rising for Mott MacDonald Group, the firm is expanding into health care consulting, says Kevin Stovell, international managing director. "We see a linkage between...