Canadian Occupational Projection System (COPS)

Industrial Summary

Architectural, Engineering, Design and Scientific R&D Services

NAICS 5413; 5414; 5417

This industry comprises establishments that provide highly specialized business services in three different segments. Architectural, engineering and related services are by far the largest segment, accounting for 77% of production and 72% of employment in 2016. In comparison, specialized design services (which include interior, industrial and graphic design) accounted for only 5% of production but 18% of employment, versus 18% and 10% respectively for scientific research and development services. The industry employed 396,100 workers in 2016, mostly concentrated in Ontario (38%), Quebec (22%), Alberta (16%) and British Columbia (15%). The workforce is mainly composed of men (67%) and characterized by a high level of education and a significant proportion of self-employed (26%). Key occupations (4-digit NOC) include:

  • Graphic designers and illustrators (5241)
  • Civil engineers (2131)
  • Other professional engineers, n.e.c (2148)
  • Interior designers and interior decorators (5242)
  • Drafting technologists and technicians (2253)
  • Architects (2151)
  • Mechanical engineers (2132)
  • Electrical and electronics engineers (2133)
  • Civil engineering technologists and technicians (2231)
  • Engineering managers (0211)
  • Construction inspectors (2264)
  • Geoscientists and oceanographers (2113)
  • Land survey technologists and technicians (2254)
  • Architecture and science managers (0212)
  • Chemical technologists and technicians (2211)
  • Petroleum engineers (2145)
  • Biologists and related scientists (2121)
  • Theatre, exhibit and other creative designers (5243)
  • Mechanical eng. technologists and technicians (2232)
  • Architectural technologists and technicians (2251)
  • Electrical and electronics engineering technologists and technicians (2241)
  • Industrial engineering and manufacturing technologists and technicians (2233)
  • Chemists (2112)
  • Non-destructive testers and inspection technicians (2261)
  • Land surveyors (2154)
  • Biological technologists and technicians (2221)
  • Geological and mineral technologists and technicians (2212)
  • Industrial designers (2252)
  • Chemical engineers (2134)
  • Geological engineers (2144)
  • Industrial and manufacturing engineers (2141)
  • Physicists and astronomers (2111)
  • Landscape architects (2152)

The industry strongly relies on the performance of the domestic economy and is largely driven by business investment and government expenditures, as well as R&D spending. More precisely, the architectural and engineering segment and the design segment are heavily tied to residential and non-residential investment and the resulting impact on construction activity. Demand for engineering services also relies on business investment into machinery and equipment (M&E). In comparison, the R&D segment is closely tied to R&D spending from the private and public sectors for the development of new innovative products and technologies. Spending on R&D activities is generally driven by profitability in the private sector and by government expenditures in the public sector. After being negatively affected by the deterioration of the economic conditions during the recession of 2008-2009, output in the industry quickly recovered and reached an historical peak in 2012. However, production fell back in the subsequent four years, returning to the level observed during the recession. This situation primarily reflects the fact that non-residential investment and construction activity were severely affected by major investment cutbacks in mining, oil and gas engineering structures due to the declining trend in metal and energy prices. Indeed, demand for engineering services started to ease in 2012 when metal prices began to weaken, and then fell markedly after crude oil prices plummeted in the second half of 2014. Negative growth in R&D spending and M&E investment over the past decade is an additional factor that contributed to restrain demand for R&D and engineering services. On average, real GDP in the industry increased by 0.7% annually during the period 2007-2016, with most of the growth occuring prior to 2013. In comparison, employment increased almost continuously over the past ten years, with growth averaging 2.8% annually, largely exceeding output growth. Despite significant declines in non-residential invesment in recent years, growth in residential investment remained solid, supporting labour demand for architects, engineers and designers. Declining productivity reflects the fact that lower oil prices severely affected activity in the industry, lowering revenues and profitability, forcing many firms to reduce their capital expenditures, including investment in new technologies.

Over the projection period, output growth in the industry is expected to accelerate markedly relative to the period 2007-2016, primarily driven by faster growth in non-residential investment and renewed growth in business investment related to machinery and equipment. More specifically, with the gradual recovery anticipated in metal and crude oil prices and positive announcements concerning pipeline projects, investment in mining, oil and gas engineering structures are expected to pick up progressively, contributing to renewed growth in resources-related construction projects. The faster pace of growth projected in the construction of commercial, industrial and institutional buildings, along with major investments in public infrastructure from the federal government, are also expected to contribute to stronger growth in non-residential investment (see the construction industry for more details), increasing demand for architectural, engineering and design services. Furthermore, after holding back on investment in machinery and equipment (M&E) for years, Canadian businesses are expected to replace or upgrade their existing capital stock in response to the development of new productivity-enhancing technologies, the gradual recovery in resources-related investment, the upturn in manufacturing activity, and the anticipated slowdown in labour force growth (labour supply). Those factors are projected to result in a substantial rebound in M&E investment in Canada, boosting demand for engineering services. On the other hand, rising mortgage rates, stricter mortgage rules, inflated house prices, high consumer debt and slower household formation are expected to lower new housing investment as soon as 2018, restraining growth in residential investment and demand for architectural services. Population aging is expected, however, to lead to a shift in the composition of housing starts toward multiple-dwellings (apartments and condominiums), which require more engineering work than single-family units. There is also some potential to increase exports of engineering and architectural services as demand for Canadian expertise is growing rapidly. While the relatively low value of the Canadian dollar is expected to improve price-competitiveness, particularly with the United States, the mutual recognition of professional qualifications under the Comprehensive Economic and Trade Agreement (CETA) is expected to enable the industry to bid on service contracts within the European market. Finally, renewed growth in corporate profits is expected to result in renewed growth in R&D spending. On average, the industry’s real GDP is projected to increase by 2.4% annually over the period 2017-2026, a notable acceleration relative to the previous ten years. In contrast, employment growth is expected to slow significantly, averaging 1.3% per year due to a major turnaround in productivity. This situation reflects the need to improve productivity in response to growing difficulties in recruiting highly qualified workers and the need to improve cost-competitiveness in response to more open competition on the global market, particularly with the implementation of CETA. While engineering and construction firms have been slow to adopt new technologies, an increasing number of companies are using building information modeling (BIM) systems to automate much of the work of design and engineering. The most cutting-edge firms are using 3D printing to produce components for modular construction and drones to inspect sites and monitor progress.

Real GDP and Employment Growth Rates in Architectural, Engineering, Design and Scientific R&D Services

Figure showing the annual growth of real GDP and employment over the periods 2007-2016 and 2017-2026 for the industry of Architectural, Engineering, Design and Scientific R&D Services. The data is shown on the table following this figure

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

Text Version of Figure Real GDP and Employment Growth Rates in Architectural, Engineering, Design and Scientific R&D Services, 2007-2016 and 2017-2026, in Percent
  Real GDP Employment
2007-2016 0.7 2.8
2017-2026 2.4 1.3

Source: Statistics Canada (historical) and ESDC 2017 COPS industrial scenario (projections).

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