Construction companies in Europe

According to a survey by Deloitte, European construction companies experienced a period of recovery since 2014. In 2016 the investments in the euro area increased by 3% compared to the previous year. In 2017 the European construction industry is expected to grow by 2.3%.

“All in all the construction sector has stabilized at a high level. Particularly the market performance in France, Sweden and Austria was able to compensate negative performances like in the UK.“ – Alexander Hohendanner, partner of Deloitte Austria.

Public Investments

Ireland and Sweden achieved growth rates up to 10%. These are the largest increases in investments in the European construction area. The growing investments in France and Austria contribute to a positive development. The modernization backlog, which was created during the economic crisis in Ireland, is processed now.

The planned state investments between 2016 and 2021 of 27 billion euro increased by 5.1 billion euro. This is still less than the value of investments before the sharp reverse caused by the financial crisis in 2007 – the Irish state invested 10 billion euros in 2008.

In Sweden, a stimulus package is supporting the development of residential construction buildings: There is a potential investment of 95 billion euro to build among other things 295,000 new apartments until 2030.

Investments in France and Austria are focused on the real estate sector. The “Apartment offensive” in Austria is supposed to enable by 2020 at least 30,000 additional residential buildings. In France, the sales of apartments increased by 18% in 2016.

Despite the positive development, there is still space for further investment activities. The total investments in the euro area are still not reaching the level before the financial crisis.

European Powers of Construction Report

Deloitte is taking key figures such as sales, profitability and debt situation into account to produces the annual “European Powers of Construction Report” – a ranking of the most successful European construction companies. France, with three companies in the top 5, is the leader of the ranking. It is striking that 13 companies do represent the UK in the top 50.

construction industry

Increasing Internationalization

Despite the downturn in investment in their home countries, companies from Great Britain and Spain have been successful. This shows the growing tendency to internationalize the construction industry. In 2015, 52% of the output of the 20 largest EU construction companies was provided outside of national borders. In particular companies from southern Europe are compensating for the unstable situation in their home markets. A parade example of the importance of internationalization in the construction industry is the German company HOCHTIEF, the Austrian company Strabag SE or the Swedish companies NCC and Skanska. These construction companies provide most of their services outside of national borders. 84% of Strabag’s performance was provided outside Austria in 2016.

Cross-Border Cooperation in Europe

The European construction companies are facing challenges due to bureaucratic burdens. The so-called “target country” principle applies to Europe. That means: Workers who work in Germany have to meet the conditions of the German labour law. Challenge: Research of health and safety requirements, guaranteed minimum wage, wage agreements and legal requirements are time-consuming and cost-intensive. In addition to that many details have to be taken into account at the time of tender preparation to avoid penalty payments.

In January 2017 the EU Commission presented the “European Service Card” to reduce bureaucratic hurdles. A contact person is based in the home country of the construction company. This point of contact confirms the compliance of all legal conditions in the target country. The target country should provide the evidence of noncompliance through increased controls on site. This measure should reduce the bureaucratic burdens.

It’s almost impossible for the contact person to evaluate if the European construction companies meet all legal requirements on site. This is why the planned introduction of the “European service card” is being criticized by trade unions and construction companies.

“Especially in areas as important to our safety as construction, we can not risk our high standards for more supply and competition” – statement by the chairmen of the parliamentary circle of middle-class Europe of the CDU/CSU group Piper and Ferber.

Get more information about the public investments in Germany
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Join the discussion 2 Comments

  • tuf-bar says:

    nice article very usefull thankyou

  • جورجيا says:

    We admit that construction is growing day by day all over the world. But Construction companies in Europe are faster than others. and they are growing fast because they are investing more for that. If anyone wants to start a construction business he should start with European company as an investor than he sees how he will be successful in few years or maybe only in few months…

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