Construction industry has to deliver
The decline in new housebuilding in Germany has long dominated the public perception of the construction industry. However, with the 500 billion euro infrastructure package proposed by the new coalition government, the cards are being reshuffled. The planned spending programme stands in stark contrast to the current gloom in the housing sector. It is fuelling hope for a longer-term recovery and boosts confidence, and is seen as a signal of a new beginning.
Money alone is not enough
But what might apply to the industry as a whole does not necessarily apply to every company. Small and medium-sized enterprises focused on housing construction will gain little from the renewal of bridges, roads, and railways. But they could benefit from building renovations, and the planned reforms in housing construction. In any case, the image of the struggling construction sector needs to be re-evaluated. Parts of the industry are performing better than the crisis narrative suggests. For instance, Austrian construction company Strabag, which generates half of its business in Germany, has just posted its best results to date.
But money alone is not enough to improve Germany's infrastructure. Strabag managers echo the call for more. They are urging more streamlined and faster planning, approval, and tendering procedures. This is indeed a central issue, but it is difficult to implement due to the need for cooperation among various political levels, which often pursue divergent interests.
Construction industry must expand its capacity
The construction sector itself must also deliver. It must expand its capacity to handle the new contracts. The additional 50 billion euros being spent annually from the ten-year infrastructure package will be a challenge. Increasing the number of training positions alone won’t suffice.