Roy Cokayne
CONFIDENCE among consulting engineers has plunged to its lowest level since the 1998/99 global financial crisis.
The results of the latest bi-annual economic and capacity survey for the six months to December by Consulting Engineers SA (Cesa) released yesterday revealed that the level of satisfaction among consulting engineering firms slumped to 46 percent in the second half of last year from 87 percent in the previous six months.
The satisfaction levels of engineering firms in the second half of last year were in stark contrast to their expectations, with 96 percent previously anticipating satisfactory business conditions during this period and an average of about 50 percent in this calendar year.
Elsie Snyman, the chief executive of construction industry market intelligence firm Industry Insight, which conducted the survey for Cesa, said the level of satisfaction among engineering firms was now “very low” and almost on a par to the 1998/99 global financial crisis and Asian crisis.
Snyman said this was “quite concerning”, adding that the impact of this on the construction industry was also “a worrying factor”.
She said the satisfaction levels among engineering firms had remained positive at a time when it had been negative among contractors since 2008/09.
“This was quite a debate in terms of the disconnect between what was happening in planning because it was not filtering through to construction. Now we are starting to see engineers becoming fairly depressed,” she said.
Snyman said the sentiment of engineering firms resulted from their views on a number of issues, such as earnings, order books, profitability, labour costs, tendering competition, discounting, capacity utilisation and payment and fees outstanding.
Capacity utilisation
Wally Mayne, the acting chief executive of Cesa, said that there was a notable shift in the opinions expressed by larger firms in the survey.
Mayne said larger firms in the survey in June last year were unanimous in their views that the outlook for business conditions was satisfactory over the next 12 months but this changed to just 22 percent for the next 12 months.
Snyman said that capacity utilisation in larger firms had dropped to 76 percent, which had resulted in many of these firms seeking work outside South Africa.
However, Snyman said that payment had become an issue and 24 percent of the earnings of engineering firms had been outstanding for more than 90 days, one of the highest levels ever experienced by the industry, compared with 17.4 percent in the previous survey.
The survey results revealed that profitability moderated to 12.2 percent in the second half of last year from 13.7 percent in the previous survey.