2020 Top 250 International contractors: struggling with COVID-19
20 August 2020
The global construction market has had a rocky few years, with political upheavals, tariffs, trade wars and fluctuations in oil and metals prices hitting international contractors like a series of body blows.
But now, the COVID-19 pandemic — and related plunge in oil prices from global shutdowns and price wars within OPEC— has put heavy pressure on large international contractors and their clients as they try to cope with markets under siege.
The uncertainties in the international market can be seen in the results of the ENR Top 250 International Contractors survey. This list ranks firms based on contracting revenue from projects outside of their home countries, measuring their presence in international commerce. The accompanying Top 250 Global Contractors list ranks contractors based on total worldwide contracting revenue, regardless of project locations.
The Top 250 International Contractors reported $473.07 billion in contracting revenue in 2019 from projects outside their home countries, down 2.9%, from $487.29 billion, in 2018. As a group, firms also reported $1.287 trillion in revenue from domestic projects in 2019, up 12.1%, from $1.148 trillion in 2018.
But the shaky state of the market in the past is nothing compared to what has happened since COVID-19 hit. The disease has affected the economies of countries across the globe and forced delays or shutdowns of projects worldwide.
The uncertainties in the international market can be seen in the results of the ENR Top 250 International Contractors survey. This list ranks firms based on contracting revenue from projects outside of their home countries, measuring their presence in international commerce. The accompanying Top 250 Global Contractors list ranks contractors based on total worldwide contracting revenue, regardless of project locations.
The Top 250 International Contractors reported $473.07 billion in contracting revenue in 2019 from projects outside their home countries, down 2.9%, from $487.29 billion, in 2018. As a group, firms also reported $1.287 trillion in revenue from domestic projects in 2019, up 12.1%, from $1.148 trillion in 2018.
But the shaky state of the market in the past is nothing compared to what has happened since COVID-19 hit. The disease has affected the economies of countries across the globe and forced delays or shutdowns of projects worldwide.
While past bumps in the global market have generally been localized by country, region or market sector, the COVID-19 crisis has been universal in its impact. “One of the main dangers of the pandemic, as compared to other risks usually faced in business, is that it directly hit every element of the supply chain and has spread across all sectors and markets,” says Joseph Gebara, CEO of Contracting and Trading Co. of Lebanon. He notes that clients, suppliers, manufacturers, subcontractors, banks and the like all have been impeded in various ways, forcing contractors to come up with mitigation plans for all aspects of business impacted by the pandemic. Disruption of the global supply chain also has led to the rise in lead time and cost of raw materials. “This puts intense time and cost pressure on existing projects,” says S. Paramasivan, managing director of Afcons Infrastructure Ltd., India. He says many construction sites are facing an acute shortage of labor, and firms now are forced to adhere to new on-site protocols that are reducing productivity.
Nationalistic reactions to the crisis also are taking a toll, even where projects continue. “Closed borders and not being able to transport materials have been common issues for almost every business for construction, literally bringing some projects to halt,” says Emre Baki, CFO of Renaissance Construction, Turkey.
Many countries are now taking steps to address the economic damage caused by COVID-19, looking at infrastructure packages to help people get back to work. “Unprecedented public relief packages and development funding in the infrastructure industry to revive the economy could support a rapid recovery in the near future,” says Paramasivan. But he worries that funds for such projects may be limited. “As substantial funds in all markets are put into addressing the pandemic, we expect a slowdown of project awards, in spite of the fact that infrastructure is one of the largest creators of employment.”
Some contractors fear the pandemic may lead to an international recession, further dampening the construction market. Some firms say this is likely if the U.S. economy continues to sag. If the spread of the virus in the U.S. continues at the current pace, it “will be a threat to the world economy and in the long term,” says Burhan Kurt, president of Turkey’s Ant Yapi U.S Holding Corp.
Nationalistic reactions to the crisis also are taking a toll, even where projects continue. “Closed borders and not being able to transport materials have been common issues for almost every business for construction, literally bringing some projects to halt,” says Emre Baki, CFO of Renaissance Construction, Turkey.
Many countries are now taking steps to address the economic damage caused by COVID-19, looking at infrastructure packages to help people get back to work. “Unprecedented public relief packages and development funding in the infrastructure industry to revive the economy could support a rapid recovery in the near future,” says Paramasivan. But he worries that funds for such projects may be limited. “As substantial funds in all markets are put into addressing the pandemic, we expect a slowdown of project awards, in spite of the fact that infrastructure is one of the largest creators of employment.”
Some contractors fear the pandemic may lead to an international recession, further dampening the construction market. Some firms say this is likely if the U.S. economy continues to sag. If the spread of the virus in the U.S. continues at the current pace, it “will be a threat to the world economy and in the long term,” says Burhan Kurt, president of Turkey’s Ant Yapi U.S Holding Corp.
Source: www.enr.com
