European Construction Industry Experts Anticipate Increased Levels of Consolidation, Reports Timetric

10 Aug 2012 • by Natalie Aster

Of all the respondents across the European construction industry, 41% expect ‘no change’ in their revenue growth in 2012. The European construction industry has experienced a decline in growth for three years due to the recession in 2009 and the European debt crisis. According to Euro Construct, European construction output will decrease by 0.3% in 2012, in comparison to a contraction of 0.6% in 2011. Difficulty in obtaining finance, the downgrade of several European economies by credit rating agencies, austerity measures, and low government spending are critical factors affecting the growth of the industry.

Executives from the European construction industry anticipate increased levels of consolidation over the next 12 months, with 52% of respondents anticipating either a ‘significant increase’ or an ‘increase’ in M&A activity during 2012.

Both buyer and supplier respondents identified China, Russia and Brazil as important emerging markets for the growth of the European construction industry. China emerged as the most promising emerging market for the European construction industry, as expressed by the highest number, 39%, of respondents. China has started to invest significantly in projects such as water conservation projects, power-generation stations and substations, high-speed railways, roads and other infrastructure.

‘Market uncertainty’, ‘responding to pricing pressure’, ‘reducing demand for products and services’, ‘rising competition’ and ‘cost containments’ are some of the immediate business concerns for the European construction industry. ‘Market uncertainty’ emerged as a leading challenge for the European construction industry for 2012–2013, as expressed by the largest share, 67%, of industry respondents, while the second-largest share, 50%, of respondents identified ‘responding to pricing pressure’ as important.

The new report "European Construction Industry Outlook Survey 2012–2013: Industry Dynamics, Market Trends and Opportunities, Buyer Spend and Procurement Strategies in the Construction Industry" by Timetric states that the average size of the annual procurement budget for European construction industry buyer respondents is projected to be US$56.9 million in 2012. The survey reveals that the procurement budgets of buyer respondents are expected to increase by an average of 1.5% over the next 12 months. In total, 53% of respondents expect ‘no change’ in their procurement expenditure in 2012, while 31% expect an increase. This rising procurement budget could be due to the buyers’ increasing capacity, new project undertakings, distribution network enhancements, R&D investment, and partnerships with other companies to achieve operational synergies.

Report Details:

European Construction Industry Outlook Survey 2012–2013: Industry Dynamics, Market Trends and Opportunities, Buyer Spend and Procurement Strategies in the Construction Industry
Published: July, 2012
Pages: 93
Price: US$ 995,00

Survey respondents from construction contractor and developer companies plan to increase their investments in ‘interior outfitting’, ‘interior decorative finishing’, ‘research and development’ ‘building materials’ and ‘structural and architectural components’ for 2012. A total of 25% of construction buyer companies plan to invest in ‘interior outfitting’ product solutions, and these companies are making plans to expand their product offerings.

‘Quality’, ‘level of service’, ‘price’ and ‘supplier's reputation for reliability’ are considered important factors for supplier selection by buyers, while ‘supplier’s CSR reputation’, ‘proximity of supplier operations’ and ‘supplier’s environmental record’ are considered important by fewer respondents.

More information can be found in the report “European Construction Industry Outlook Survey 2012–2013: Industry Dynamics, Market Trends and Opportunities, Buyer Spend and Procurement Strategies in the Construction Industry” by Timetric.

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