Market Is on an Uncertain Path Geopolitical Tensions and Economic Nationalism Are Now Posing a Threat to the Slowly Recovering Global Design Market
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Overview p. 48 // International Market Analysis p. 48 // Past Decade’s International Design Revenue p. 48 // International Region Analysis p. 49 // Domestic Staff Hiring p. 49 // International Staff Hiring p. 49 // Profit-Loss p. 49 // 2018 Revenue Totals p. 49 // How Design Firms Shared the 2018 Market p. 50 // Top 10 by Market p. 51 // Top 10 by Region p. 52 Petroleum Market Begins Rebound p. 52 // Backlog p. 52 // DRA Global’s Platinum Idea p. 53 // Surbana Jurong’s Smart Cities Plans p. 54 // How To Read the Tables p. 54 // Top 225 International Design Firms List p. 55 // Top 225 Index p. 60 Top 150 Global Design Firms List p. 61 // Top 150 Index p. 64 NUMBER 29 NUMBER DEEP WATER COWI A/S is completing a feasibility study for a 5-kilometer-long floating bridge across Norway’s 600-meter-deep Bjørnafjorden. PHOTO COURTESY OF COWI A/S OF COWI PHOTO COURTESY The Top 225 International Design Firms Market Is on an Uncertain Path Geopolitical tensions and economic nationalism are now posing a threat to the slowly recovering global design market. By Gary J. Tulacz and Peter Reina enr.com July 22/29, 2019 ENR 47 0729_TIDF_T225_Intro_4.indd 47 7/23/19 4:37 PM THE TOP 225 INTERNATIONAL DESIGN FIRMS 23.6% Transportation International Market Analysis $16,950.0 22.1% Petroleum $15,897.8 18.3% Buildings $13,121.1 10.7% 4.1% 4.7% Power 2.6% Hazardous Water $7,661.9 Manufacturing Waste $3,359.9 $1,868.1 $2,941.4 4.2% 5.9% 3.1% Other Industrial $3,052.5 $4,224.5 Sewer/Waste $2,213.8 0.8% Telecom $585.1 (Measured $ millions) SOURCE: ENR. Comparing the Past Decade’s International $52.45 $57.67 $65.30 $71.49* $71.35* $70.57* $65.19* $63.87* $64.30* $71.62* 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Design Revenue (in $ billions) SOURCE: ENR *The 2012-2018 figures are revenue for the Top 200 Design Firms. The expanded 2018 Top 225 list firms had a combined revenue of $71.88 billion. While the market for large international design fi rms There were some shifts on the list this year, mostly is generally positive, there is a growing concern that from acquisitions. The biggest change, however, won’t geopolitical tensions and increasing economic nation- be shown until next year. On April 29, 2019, Australia’s alism are making clients nervous, leading to sagging WorleyParsons, which will be known simply as Wor- confi dence that conditions will continue to thrive. Fur- ley pending shareholder approval of the name change companies worry that clients are becoming more ag- in October, fi nalized its $3.2-billion acquisition of gressive in their demands in what is perceived as a buy- “Geopolitical Jacobs’ Energy, Chemicals and Resources division. ers’ market. instability and Another fi rm that has been active on the acquisition The uncertainty in the market can be seen in the high levels of trail is Australia’s DRA Global Ltd., one of the largest debt—public, results of ENR’s Top 225 International Design Firms corporate and engineering fi rms in the metals and mining markets. survey. The leading 225 companies generated $71.88 household— In 2018, DRA acquired Australian engineering fi rms billion in design revenue in 2018 from projects outside are weighing Minnovo in Perth and G&S Engineering Services in home countries, up 11.3% from $64.59 billion in 2017. on the design Queensland. And earlier this year, DRA added 300 However, this rise in revenue is misleading, since industry as a more people with the acquisition of South Africa- whole, and this this year Wood Group from the U.K. is participating is adding more based engineering and project management firm in the survey for the fi rst time and is ranked No. 1 urgency to SENET. “By enhancing our offering within the re- on the list with $5.99 billion in international design clients wanting gion, DRA is able to provide clients with an integrated revenue. Ignoring Wood’s revenue this year and its surety of design and construction project execution capability,” U.S. subsidiary’s revenue from last year, design rev- outcomes.” says Christo Visser, senior vice president at DRA. enue for the Top 225 showed a 2.8% increase in 2018 Catherine Singapore-based Surbana Jurong also made some from 2017. Tobiasinsky, moves, acquiring B+H Architects, one of the largest Chief Client On the Top 225 International Design Firms list, architectural fi rms in Canada, and SAA Architects Pte Services Offi cer, fi rms are ranked based on design revenue from projects GHD Ltd., one of the largest architectural fi rms in Singa- outside of their home countries, measuring their pres- pore. With these moves, “Surbana Jurong cemented ence in international commerce. The ENR Top 150 itself as one of the largest architectural solutions pro- Global Design Firms list measures total worldwide viders in the world,” says Wong Heang Fine, CEO. design revenue, regardless of the project location. Canada’s Stantec continued to acquire major design 48 Ⅲ ENR Ⅲ July 22/29, 2019 enr.com 0729_TIDF_Overview.indd 48 7/23/19 6:33 PM GHD is doing front-end design on a Teesside, England, plant that will convert #21 nonrecyclable plastics into synthetic OVERVIEW crude and other petrochemicals. International Region26.4 Analysis% Europe $19,000.7 18.5% 22.2% United States Asia and Number of Firms $13,277.9 Australia Reporting Profit-Loss $15,922.2 14.1% 150 Domestic Profits Middle East 137 Domestic Loss $10,107.4 5.0% International Profit 47 1.7% Latin 30 International Loss North Africa America 8.3% $3,626.0 $1,221.8 Canada $ 0.2% 3.6% 5,963.0 Volume (in $ billions) Caribbean South/Central $155.83 Islands Africa Domestic Revenue $145.1 $2,611.8 0.0% International Revenue Arctic and $83.95 Antarctic $71.88 Total Revenue $0.4 Increase Professional 103 Professional 94 (Measured in Domestic 25 International 23 Decrease firms reporting) SOURCE: ENR Staff Hiring 65 Staff Hiring 54 Stayed the same firms around the globe. “We successfully expanded our may take a major hit. “Our business is growing against presence in the United Kingdom and Australia with a background of subdued spending and growth world- the acquisition and integration of U.K.-based Peter 211 wide,” says Catherine Tobiasinsky, chief client services of the Top 225 Brett Associates, which added 700 team members to officer for Australia’s GHD. “Geopolitical instability sent in surveys the region, and Australia-based Wood & Grieve, which and high levels of debt—public, corporate and house- last year. brought 600 regional team members. Both acquisitions hold—are weighing on the design industry as a whole, enhance existing operations and service capabilities,” and this is adding more urgency to clients wanting says Gord Johnston, Stantec’s CEO. 63.0% surety of outcomes and digital transformation.” increased Many executives at top design firms echo Tobiasin- Trouble Ahead? international sky’s concerns. “We are carefully watching the U.S.- The market for large design firms is steady. Oil prices revenue in China conflict that may cause the decrease of overseas have slowly risen and are now at the point where major 2018. business opportunity,” says Park Seung Woo, CEO of projects are beginning to shake loose. And commodity South Korea’s Dohwa Engineering Co. Ltd. “Increas- minerals and metals prices have rebounded, generating ing political volatility globally, the dramatic escalation plans for new work. This has boosted the economies 36.5% and apparent standoff in the U.S.-China trade war, as of nations with natural resources, allowing for in- had lower well as growing economic protectionism, have the po- creased opportunities for the industry. international tential to significantly impact prospects in the interna- However, there are storm clouds on the horizon. revenue in tional design market,” says Greg Lowe, group CEO Starting with Britain’s 2016 vote to leave the European 2018. of New Zealand’s Beca Group Ltd. Union, economic nationalism has been on the rise. Public budgetary constraints have hit many devel- This is most evident in tariffs being imposed on foreign oping countries in the past few years. However, in- goods, led by the U.S. and the Trump administration. creasing urbanization and the emergence of a thriving Further, tensions in the Middle East have been ramp- middle class in Asia and Latin America demand new ing up, especially in the wake of the seizure of a British- infrastructure and better utilities. This has led to a flagged oil tanker by the Iranian navy in the Strait of growing market for privately financed infrastructure. Hormuz on July 18. “Lately we’re seeing an increasing interest from This has led to fears that the shaky global market institutional investors in infrastructure projects in all enr.com July 22/29, 2019 ENR 49 0729_TIDF_Overview.indd 49 7/23/19 6:33 PM THE TOP 225 INTERNATIONAL DESIGN FIRMS sectors such as water utilities, transport and social in- chosen to reduce their footprint in the GCC due to frastructure, and renewable energy,” says Allen Li, increased risk and reduced opportunities. president of China’s JSTI Group. He says that priva- tized infrastructure is growing because it provides Holding Their Own stable long-term cash fl ows with reasonable returns. European design fi rms remain confi dent despite in- Another fi rm that is witnessing this trend is Dohwa creasing global instability. Mike Haigh, chair of Mott Engineering Co. Ltd. Dohwa has expanded beyond “Currently, we MacDonald Group, reports overall growth of around existing civil engineering consulting services into EPC are fi nding 6%, with peaks of fi ve times that amount in certain good and P3 projects in Laos, Vietnam, Indonesia and regions, such as Australia/New Zealand.