Architecture and Engineering Services
Architecture, Engineering, and Construction Services
Overview
The Architecture, Engineering, and Construction (AEC) services sector provides a host of services surrounding the planning and building of commercial and residential projects that employ design and construction professionals in the planning and implementation of often multi-billion-dollar projects. With a reputation for high-quality work, the U.S. AEC sector continues to be competitive in overseas markets.
There are several AEC sub-sectors that focus on specific types of design and construction projects, including: transportation/infrastructure, health care (i.e. hospitals and medical facilities), industrial, and entertainment (i.e. convention centers, amusement parks). Many AEC firms specialize in one or more of these project areas.
Drivers of Demand for Architecture, Engineering, and Construction Services
There are four primary drivers of demand for AEC services worldwide: petroleum prices, political risk, population growth, and urbanization. Other factors that affect demand include economic growth, corporate revenues, the cost of capital, government spending, outsourcing and privatization (especially in the public utilities sector), environmental concerns (i.e., the demand for “green buildings”), and major international events (e.g., World Cup, Olympic Games, and natural disasters).
Domestic Regulatory Environment
In the United States, the architecture and engineering services industries offer certifications that are regulated at the state level, while the various certifications available for construction professionals (e.g. construction management, green building, safety certifications, etc.) are typically at regulated at the national level. For architects and professional engineers, certifications typically require at least a 4-year college degree and 3 to 4 years under the guidance of certified professionals, as well as passing an initial registration examination and continuing educational requirements.
International Environment
Similar to other professional services sectors, the barriers facing AEC service providers in foreign markets are typically regulatory in nature. In many instances, foreign countries have professional licensing/certification requirements for AEC professionals working on projects in the foreign market, which may require at least one professional (e.g. architect, professional engineer, or construction professional) to be certified in that country. In order to address this requirement, U.S. firms choose to hire/contract with a local professional, but if this is not an option, other arrangements might be made on a case-by-case basis. Reciprocity at the national level is often difficult if not impossible, particularly as U.S. architecture and engineering certification organizations operate at the state level. Other market access barriers include nationality requirements for certified AEC professionals and restrictions on movement of professional personnel under a country’s immigration laws, as well as barriers that are common to many firms operating in a foreign market, including prohibitions on commercial structure and locality requirements, banking issues, and repatriation of profits and tax treatment.
Trade in Architecture, Engineering and Construction Services
Since 2010, the United States has had a surplus for trade in AEC services. The surplus was $7.52 billion in 2019 (exports of U.S. AEC services reached $15.86 billion in 2019 and imports were $8.34 billion). Of the three subsectors, engineering services was the largest component, making up more than 70 percent (by value) of exports in 2019.
Depending on the sub-sector, the leading export markets for AEC services vary between regions. For example, in the architecture and engineering services sub-sectors, the largest regional markets are the Asia-Pacific region and Europe, while Africa and Latin America are the two largest markets for construction services.
Architectural Services
Over the last decade, the United States has enjoyed a trade surplus of between $100 to $200 million in architectural services, with over $1 billion in exports in 2019.
In 2019 almost 60 percent of U.S. architectural services were provided in the Asia-Pacific region, with more than $625 million in exports. Europe was the next largest export market, accounting for 16 percent of U.S. exports, valued at more than $170 million.
Asia-Pacific service providers represent the largest share of U.S. imports (42 percent) with European service providers a close second (35 percent of U.S. imports).
Engineering Services
Engineering services is the largest component of AEC export trade, representing more than 70 percent of all AEC exports. Exports reached over $11.6 billion in 2019, resulting in a U.S. trade surplus of more than $4 billion.
The largest markets for U.S. engineering services providers in 2019 were the United Kingdom ($1.4 billion), Canada ($871 million), France ($639 million), Korea ($602 million) and Switzerland ($589 million).
From a regional perspective, Europe and the Asia-Pacific region are our largest trading partners in engineering services, with exports to Europe valued at more than $5.3 billion, or 46 percent of total exports. The Asia-Pacific region represented 27 percent of total U.S. exports valued at more than $3 billion in 2019. Imports primarily came from Canada and Europe and are valued almost $3.5 billion in 2019. Imports from Asia-Pacific engineering service providers represented more than 40 percent of imports, with an import value of almost $3 billion in 2019.
Construction Services
The U.S. construction services sector, which includes services such as construction management, planning, and safety-related services, has seen a continued increase in exports over the last four years, to one of the sector’s highest export levels, valued at almost $3.2 billion in 2019. Over the last ten years, imports have remained steady at around $1 billion over the last decade.
On a regional basis, U.S. exports were primarily to Africa and the Latin American regions, representing almost half of total exports and valued almost $1.5 billion in 2019. European markets were the destination of more than $1 billion in exports. In contrast, imports of construction services were primarily from Canada, followed by Europe and the Asia-Pacific region.
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ITA Resources
Andrew O’Neil
Architecture, Engineering, Construction, and Design Services
Andrew.O’Neil@trade.gov
202.617.5465