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Engineering services industry, 2018

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Released: 2020-05-21

In 2018, the engineering services industry reported operating revenue of $28.0 billion—down for the fourth consecutive year—and a decrease of 15.4% since 2014. Over the same period, operating expenses also fell, decreasing 14.1% to $24.8 billion. This resulted in an operating profit margin of 11.3%, down from 12.7% in 2014.

The majority of the declines experienced over the past four years were driven by Alberta. Investments in oil and gas extraction in Alberta fell from a high of $50.1 billion in 2014 to $26.1 billion in 2017, and then to $23.7 billion in 2018. For the rest of Canada (excluding Alberta), the operating revenue for the engineering services industry grew 6.3% in 2018. One of the reasons for this increase was public investments, which rose 7.6% in 2018.

From 2014 to 2018, the Canadian share of operating revenue of Ontario companies providing engineering services increased from 22.2% to 34.1%, while the share of Alberta companies providing the same services was nearly halved, dropping from 43.2% to 22.5% over the same period.

Salaries, wages, commissions and benefits totalled $12.0 billion in 2018, accounting for 48.2% of the engineering industry's total operating expenses and continuing the upward trend observed since 2013 (when they were estimated at 40.5%). Demand for skilled labour has put upward pressure on industry wages. The cost of goods sold was the second-highest operating expense in 2018 (15.9%).

Engineering services related to the commercial, public and institutional building engineering projects continued to rise and accounted for 17.0% of total sales in 2018, compared with 11.1% in 2013. A similar pattern was observed for the transportation engineering projects, which were bolstered by federal government investments in infrastructure projects. They accounted for 14.3% of sales in 2018, up from 8.5% in 2013. However, petroleum and petrochemical plant and processing engineering projects have steadily declined since 2013, representing 9.7% of sales in 2018, down from 15.1% in 2013. Furthermore, the share related to mining and metallurgical plant and processing projects decreased to 9.0% in 2018 from 21.3% in 2013.

Clients in the business sector made up 64.7% of sales in the engineering services industry in 2018, and governments and public institutions accounted for 21.4%. Customers outside Canada accounted for 11.3% of sales in 2018, up from 9.4% in 2017, as the lower Canadian dollar fuelled foreign demand for engineering services.

In 2018, sales outside Canada were almost evenly split between the United States (47.2%) and all other countries (52.8%).

  Note to readers

Data for 2016 and 2017 have been revised.

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