Engineering services industry

The engineering services industry bounced back in 2004 after sluggish growth in the preceding couple of years. The rebound can be attributed to renewed strength in the domestic market resulting from increased capital investment, and diminishing economic uncertainties.

Engineering firms recorded operating revenues of $12.1 billion in 2004. This corresponds to year-over-year growth of 10.0% compared to only 1.6% the previous year. The upturn in the industry boosted profit margins to 11.6%, compared with 10.0% in 2003. The growth was broad based across the spectrum of engineering services and was observed in most provinces.

Alberta, Quebec, and Ontario showed growth rates slightly above the national average. One of the factors that helped Ontario bounce back was the revitalization of investment in automotive plants. British Columbia grew at one-third of the national rate. Newfoundland and Labrador along with Yukon showed a decline, whereas all other provinces and territories recorded small to moderate increases.

Engineering service firms operating in Ontario had a market share of 34%, followed by those in Alberta (24%), Quebec (22%) and British Columbia (13%). All other provinces and territories accounted for the remaining 7%.

In terms of engineering revenues by type of project, the largest category was petroleum and petrochemicals (17%), followed by buildings and structures (16%), transportation (10%), and municipal utilities (8%). Engineering services accounted for 81% of industry operating revenues, with the remainder mostly generated in related fields such as construction services, project management, and environmental consulting services.

More than half of industry revenues were earned from business sector contracts and less than one-third was generated from the public sector. While household and individuals spending accounted for only 2.0% of the industry, foreign clients were the source of 15.0% of the operating revenues.

Continued growth of foreign fee income outpaced the growth in the domestic market and improved the export intensity of the industry from 13.2% in 2003 to 15.0% in 2004. The geographic distribution of foreign revenues of Canadian engineering firms in recent years reveals a shift from Asia towards Africa. More than one-quarter of foreign revenues in 2004 came from Africa, while the United States remained the largest market absorbing 44% of total exports.

Market share of the 20 largest firms amounted to one-third of industry revenues, comparable with 2003. On the other hand, smaller firms also play an important role in the industry. Two-fifths of the revenues were generated by firms with less than fifty employees.

Salaries, wages and benefits were the largest single expense item, accounting for almost half of operating expenses. This ratio has been consistent in recent years. Salaries and wages exclude the remuneration of owners of unincorporated businesses as well as the dividends of the working owners.

Of the 78,000 people employed by firms in the engineering industry in 2004, three out of four belonged to the professional category including engineers, technicians and technologists, and other professionals. The level of employment increased marginally in 2004. It should be noted that non-salaried business-owners are not included in employment numbers. There was a subtle shift from part-time to full-time employment. Approximately 90% of those employed in the industry were full time.

The engineering services industry contributed nearly $7 billion to gross domestic product, accounting for 0.5% of the Canadian economy in 2004. This industry is comprised of establishments primarily engaged in applying principles of engineering in the design, development and utilization of machines, materials, instruments, structures, processes and systems. In 2004, the number of engineering establishments increased by 4.0% to 20,700

Available on CANSIM: table 360-0005.

Definitions, data sources and methods: survey number 2439.

Results from the 2004 Annual Survey of Engineering Services are now available.

Detailed tables at the provincial level for a range of industry characteristics are included in the data release package which is available upon request. To order a copy contact Mario Balerna (613-951-2018; fax: 613-951-6696; Mario.Balerna@statcan.gc.ca), Service Industries Division.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Kyoomars Haghandish (613-951-6304; fax: 613-951-6696; kyoomars.haghandish@statcan.gc.ca), Service Industries Division.