The Future of the Heavy Building Industry 2020

At the Rotterdam School of Management MBA students Bas van Bokhoven, Perry Kuiper, Cor Quist, Mark Suntjens and Harrie Zeeuwen have as part of their assignment for the course New Global Business Environment looked at the future of the Heavy Building Materials Industry in Europe in 2020. To download their full report in PDF please click here.

Introduction

Many companies in the heavy building materials industry in Europe are facing challenging circumstances. Declining economic growth, a stable or declining population and tightening government budgets put pressure on investments in this sector. In addition the industry has been put in the spotlight in several countries (Netherlands, Germany) for issues regarding competition law, which has not helped the image nor the competitive environment. As the industry also consumes significant volumes of the Earth’s natural resources in terms of sand, gravel, clay and related materials, the availability of these resources may pose a challenge in the future..

Scenarios

Looking for alternatives

In the period 2015-2019 the economy slowed down to a moderate growth rate of around 2-3% per year. Due to further price increases for the natural resources and the stimulation by European parliament and other governments, many big companies within the industry really made efforts to look for alternatives. Several alliances between heavy building materials groups and research institutes emerged to investigate alternatives.

Luxury or not?

During the period 2005-2009, the economic growth was limited to a maximum of 0,5%. Discoveries of new natural resources and an economy that slowed down building activities as well resulted in very cheap access to natural resources. Significant capacity underutilisation made it difficult for many companies to operate profitably and a race for efficiency emerged. This resulted in a trend for consolidation within the industry to search for synergy and accompanied cost savings. The abundance of natural resources, available at low prices reduced the impact of pressure from NGO’s as Greenpeace that started a lobby for resource recycling.

Construction Paradise

In the period 2010-2014 the average family size was at a historically low but the European prosperity attracted many immigrants. Emigration to Europe was stimulated by the fact that the USA had closed their borders in 2010 and did not accept any foreigner anymore. Also, Europe needed these immigrants to do the work native Europeans did not want to do anymore and to generate the funds for the retired people. As a result, the population size of Europe was growing rapidly. New cities were being built to provide housing for the increasing population.

Depleted earth

Only a few European countries like Poland and Germany did have sufficient resources for their construction projects. However, they were not willing to trade these resources with the other European countries. The other countries considered this behaviour as totally unacceptable. This resulted in the European war that started in 2018 and ended in 2020.

To download the full report in PDF please click here.