I think that all this talk about management of operating costs...

I think that all this talk about management of operating costs and employee salaries (something which fall under the ambit of management KPIs) risks being a distraction for something even more important, something which is totally outside of the control of management, and that is just how much future work is out there.

Not just how much work there is, and if it plateaus, but what the competitive tendering landscape is expected to for the work that is indeed available.

On that score, today's result announcement from DUR (generally considered to be a very good operator) references a reduction in that company's order book.
DUR's stock is down 16% at the time of writing this.

Sure, one snapshot at one point in time from one company doesn't a complete macro thematic make, but when the central case investment scenario for engineering construction companies is akin to "Thunderbirds Are Go" then, to the extent that the pipeline of work narrows and the competition for that narrowing pipeline of work rises, that will be very unhelpful for operating margins in the industry.

Not saying it is a certainty; nor even a probability, but certainly a possibility.

And after years of strong industry tailwinds, I'm not sure too many investors in this space are factoring in the prospect of those headwinds possibly turning the other way.

I think a lot of people forget just how rigid the cost structures of these business models are and therefore how acute the operating leverage is (and on the way down, too, just like on the way up).

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