Engineering Services on the Rebound!

Jennifer Nietz - Manager of Operations


September 2014 – For some of you out there that are frequent readers to our COACT publication, you may be familiar with how COACT really came to fruition. However, I know most of our new visitors may not be as connected to our roots and really know that COACT began in the engineering services sector. Mark Frasco and Melanie Garza, our President and Director of Operations respectively, started COACT doing business development for a top AEC firm in the Toledo area in 2003. The AEC industry still remains a “sweet spot” for the COACT model and sales process. As such, we stay very connected to the trends in this industry and what is going on in the market to help us consult and work with our clients in this sector. A new IBISWorld report was released in August for the Engineering Services sector, and the results are definitely something to get excited about.

The report states that rising capital investment will propel this industry back to growth. Over the years 2009-2014 the industry actually saw very minimal annual growth. What the report is showing is that for the years 2014-2019, there is a projected annual growth of 3.9%. You will see from the charts below that a lot of this is due to the skyrocketing value of private nonresidential construction.

Other key drivers over and above the value of private nonresidential construction include value of utilities construction, local and state government investment, demand from mining, and value of residential construction. The chart below illustrates the key segments where work will be completed.

We are pleased with the estimates for this sector. Typically, growth results in this segment signal an improving economy. We are looking forward to our conversations swinging back to investment, tightening the opportunity filter, and building funnels healthy with capital investment.

According to IBISWorld the key success factors are:

  1. Having contacts within key markets: Firms must establish networks and a reputation among the key players in each market in order to be invited to tender.
  2. Fast adjustments made to changing regulations: Firms must understand and adapt to a changing regulatory environment.
  3. Ability to compete on tender: Successful firms are capable of winning contracts through tender while ensuring adequate cash flow without compromising long term profitability.
  4. Ability to quickly adopt new technology: Technological advancements (production and construction technologies) impact the capacity of firms in this industry to efficiently compete in most markets.
  5. Access to highly skilled workforce: It is important that firms attract and retain a highly skilled workforce.
  6. Marketing of differentiated products: Firms must be able to undertake a broad range of engineering services.

Questions or comments? Please contact Jennifer Nietz at jnietz@teamCOACT.com.