Engineering companies hope to head off economic woes

Jeff Morrison, president and chief operating officer of the Association of Canadian Engineering Companies (ACEC) in Ottawa, didn’t waste any time this new year before firing off a letter to the Harper government in anticipation of the forthcoming federal budget due January 27.

It is widely believed that the budget will be designed to stimulate the economy, and that spending on hard infrastructure projects will be a key component. Any infrastructure spending has huge implications for engineering companies’ businesses, since they will be hired, hopefully, to design the projects such as water and sewer works, transit projects, highways, and buildings in sectors such as education and healthcare.

However, ACEC had heard that the government was concerned that the Canadian consulting engineering industry would not have enough resources and manpower to be able to handle all the new infrastructure projects that are needed.  Presumably, this belief could have deterred the government from embarking on infrastructure and instead investing finances in other areas.

In order to show that engineering companies did indeed have the wherewithal to take on more work, ACEC held an informal survey of its 500+ member firms.

The results were decisive, offering on the one hand good news. The vast majority of firms said they do indeed have the capacity.  On the other hand, the results showed not such good news, in that many firms seem to be already seeing a slowdown in their order books.  Many respondents suggested that unless new infrastructure orders are forthcoming, they may have to lay staff off.

In his open letter dated January 8 to Jim Flaherty, Canada’s Minister of Finance and John Baird, the Minister of Transport and Infrastructure, Morrison explained:

“In December 2008, ACEC canvassed our 500+ member firms inquiring as to their current capacity and projected capacity levels – the number of responses we received was unprecedented in terms of past ACEC surveys or membership questionnaires.  There was an overwhelming consensus that Canadian engineering firms have more than enough excess capacity to handle work associated with the infrastructure investment plans that are expected in the January 27 Budget.  Although it is true that the engineering industry has experienced strong growth over the past several years, the vast majority of firms have stated that with recent downturns in the resource, oil and gas, residential, manufacturing, and other sectors, they are concerned that they will see declining workloads in 2009, and that many firms will need to consider downsizing their operations unless additional work is forthcoming.” 

Firms who responded to ACEC’s survey had some other suggestions for the government. They said that governments should expedite the approvals process, select projects strategically, and make sure the work is outsourced rather than done in-house.