Things have not been going as well as they are now in the German construction industry for a long time. Sales growth between 4 and 7 per cent, more than two million people making a living. Together with order books mostly full to the brim, working to capacity and customers who, therefore, have to put up with waiting times.
Big projects are booming, private investors are cautious.
The industry associations are agreed: The new year of 2018 will be at least as good as the previous year. For 2017 the Hauptverband der Bauindustrie (HDB, Central Association of the German Construction Industry) expects sales to go up by a nominal 7 per cent for big companies with at least 20 employees. The expectation of the ifo Business Survey December that 86 per cent of the building contractors will see better or unchanged business for the next six months emphasizes the positive mood. Numbers at the end of the year have apparently never been better. The 385,000 small and medium-sized companies in the Bundesvereinigung Bauwirtschaft (BVB, Federal Association of the Construction Industry) still expect almost 4 per cent growth for 2017.
The lower figure for the small companies with one or more employees focusing more on individual crafts indicates a split market. These companies mainly work in existing buildings and in single- and double-family houses. Private owners are typical for this type of business. And they tend to make modest investments. Compared to project developers anyway, where the big companies collect huge contracts for new builds.
New residential buildings are the sector exhibiting the most dynamic growth. This will not change in view of the existing demand. Particularly since according to the construction industry fewer units were finished in 2017 than the 380,000 to 400,000 deemed necessary by politicians and associations despite the construction boom.
Skilled labor is sought-after in the construction industry as well
But the shortage of skilled labor might well slow down growth. Because contractors are gradually running out of employees to deal with all their contracts. Companies plan to hire new employees, but they often struggle with a bottleneck.
The numbers of the construction industry substantiate this. About 15,000 workers retire every year, while only 10,000 to 11,000 apprentices start training. For small companies this situation is aggravated by the fact that it is more difficult for them to use foreign subcontractors in peak periods.
Large companies, however, will be on the losing side, if they do not introduce digital building and planning (Building Information Modeling, BIM) on time. “This is an enormous challenge and of central significance for productivity growth”, the HDB warns. In the cooperation with private builder-owners BIM is rather insignificant. But companies which build single- and double-family houses have a generation problem: Successors are rare, they are threatened by extinction.