Europe’s engineering consultancies stable

By Joe Sargent10 July 2019

Expected Profitability for 2019 compared to 2018

Expected Profitability for 2019 compared to 2018

(Green: Increase; Yellow: Stable; Red: Decrease)

The latest sector review from the European Federation of Engineering Consultancy Associations (EFCA) suggests strong markets in Europe but there are also continuous challenges.

Discussing EFCA’s latest Barometer, which shows biannual trends and expectations amongst European consulting engineers, Henrik, Garver, CEO of the Danish Association of Consulting Engineers and chair of EFCA’s Barometer task group, said, “In general, markets for consulting engineering services in Europe have increased in strength.

“While southern countries continue to face difficult market conditions, northern countries tend to have trouble generating profit.”

The image of European markets that have increased in strength is reflected in both increasing turnovers as well as rising order stocks. Although the development is not homogenously apparent in all 21 responding countries.

Greece, Turkey and Spain appear to struggle with difficult market conditions. Profitability appears to have improved or remained the same across all countries except for Denmark and Norway, which declared a reduction in profitability during 2018, compared with 2017.

Profitability is expected to increase or to stabilise for 2019, in comparison with 2018, other than in Turkey and Norway.

EFCA Main Challenges

EFCA Main Challenges faced by companies at European level

EFCA says that growth in revenue, and thus growing demand for consulting engineering services, is only partially accompanied by an increase in staff. Despite an overall upward trend, only half of the countries which have experienced or are expecting rising markets have proportionally adapted their staff.

From its report, EFCA has concluded that while markets are generally strong, the industry continues to face several challenges. Low fees indicate either a strong competition or a trend toward standardisation of services while continuous staff shortages tend to increase salary costs.

Digital transformation may be a key issue in reducing production costs, handling staff shortage and increasing productivity and profitability.

Garver said, “Another trend that we will follow closely in the future is competition from contractors. Competition from contractors has increased at a fast pace over the last couple of years and this will, if it continues, change the dynamics in the market.”

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