Since its inception approximately half a century ago, the Japanese engineering industry (or process-plant contractors) had developed into a substantial part of the E & C industry of Japan. After a successful period for almost 30 years, however, they now face formidable difficulties in the world-wide economic depression. Unless regaining competitive advantage in the global market, the Japanese firms may not be able to survive. This paper firstly studies the global process-plant market, then analyses the competitive advantage of the engineering industry, and finally proposes measures to restructure the Japanese engineering industry.