Small and medium engineering firms enjoy strong growth

The mining and construction boom continues to underpin healthy growth for Australia’s engineering firms, and has led to the establishment of more than 5000 new small and medium firms in the last five years.

The mining and construction boom continues to underpin healthy growth for Australia’s engineering firms, and has led to the establishment of more than 5000 new small and medium firms in the last five years.

The Association of Consulting Engineers Australia expects revenue for the sector to increase 9% to $19.6 billion in 2007-08, but has warned growth will moderate over the next three years, with revenue tipped to increase 8% in 2008-09, by 4% in 2009-10 and by just 2% in 2010-11.

ACEA chief executive Megan Motto says rising construction costs and falling commodity prices will eventually bring the mining boom to an end, but that won’t end the golden period for consulting engineers.

The continuing strength of economic growth in Asia and a looming boom in infrastructure spending on water, power, and transport facilities should bolster consulting revenues over the longer term. “They’ll actually do well for the next 10 to 15 years,” Motto says.

The ACEA annual review also highlighted the sharp increase in new engineering firms in the last five years, with the total number of consulting engineering firms increasing from 11,000 in 2001-02 to 16,600 in 2006-07. More than 90% of these firms are small firms, employing less than 20 staff.

Motto says the rise in small and medium firms can be attributed to growth in construction spending and a trend towards specialisation. “In general in infrastructure, you are finding that a lot of the very big firms have set themselves up as one-stop shops,” Motto says. “But they still will require some very specialist niche skills and that’s where the SME operators come in.”

But Motto says the skills crisis facing the engineering sector globally is hurting small firms. “Our research reveals two-thirds of firms have to delay projects or put them off altogether because they do not have the staff,” Motto says. “Small firms have got to be very smart and very innovative in order to keep hold of their staff.”

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