Publisher: The Construction Industry Institute, Austin, Texas 
Source Document Volume 64

Authors: Dr. J. K. Yates, Subhransu Mukerjee, and Steve Njos 
Length: 367 pages
Published: March 1991

 

Ever since the beginning of the 20th century, unrivaled domination of the world construction market was the hallmark of the U.S. construction industry. The Marshall plan for the rebuilding of Europe after World War II provided the impetus and scope for the U.S. construction industry to make significant and lasting inroads into the global construction arena. Up until the mid-1970s U.S. engineering and construction firms obtained far more global contracts than firms from any other nation. The capabilities and competence of U.S. construction firms were superior to many other competitors in the global construction arena, having earned a reputation for supplying top quality construction methods, management, and engineering technology, irrespective of the size of the project.

 

The 1980s ushered in a new era into the global construction scenario. In a predicament shared by numerous other firms in the manufacturing industry, the U.S. construction industry found the unprecedented entry of equally competitive new entrants in the global construction arena slowly but steadily eroding its ubiquitous and forceful presence. This precipitous decline in its share of the world market was aggravated by declining growth rates in developing countries, falling oil prices and the fiercely competitive nature of the construction companies of less developed and newly industrialized countries that have since come of age.

 

Over the past few decades, the U.S. construction industry has literally been struggling to maintain its status as the world leader in engineering and construction services. There is an urgent need to take stock of the situation at hand and devise competitive strategies to arrest and possibly reverse the slide. In this regard, an awareness of the forces that shape and influence competitiveness in the global construction marketplace is imperative.

 

The entry of construction firms from less developed and newly industrialized countries (LDC's and NIC's) into the global construction marketplace has generated considerable literature on competitiveness of foreign firms. However, a limited amount of information is available on the nature and structure of global competitiveness in the construction industry. Therefore, information was needed on the salient factors affecting global competitiveness: strategies, costs, financing, technology, and management skills.

This book summarizes the results obtained from a research project that provided broad-based insight into the future state of competitiveness, both domestic and global, that was obtained by developing scenarios for the state of competition in the construction industry. Historical and current trends were systematically analyzed to identify the driving forces shaping the future of the construction industry.

 

Specific research objectives included an in-depth study of: 1) the shaping of corporate capabilities: vertical integration and horizontal expansion to increase corporate capabilities and market share, including acquisition and mergers by offshore conglomerates and the acquisition of foreign firms by U.S. companies. This area also includes project teaming and partnering to develop and undertake future projects, and an enumeration of the requirements necessary for performing in the global marketplace, 2) the role of privatization and build-own-transfer projects and the nature of project financing in future markets, 3) management, organization and structure: future management and organizational approaches and structures and techniques to attract personnel to work in a global environment.

 

This study was aimed at providing the construction industry with a predictive scenario encompassing the strategies that are likely to shape both domestic and global competition from a U.S. standpoint. The scenarios were developed based on an extensive literature review on pertinent subjects and a series of personal interviews with over fifty executives from construction firms, engineering firms, owner organizations, developers and government agencies. Within the limitations of the study, considerable attention was paid to keeping the geographical, industry, and sectors as broad-based and representative as possible. The interviews were intended to be "blue sky" or subjective in nature.

Table of Contents

Introduction. Driving Forces in the 1980s. Priviatization. International Alliances. The 1990s - A Decade of Change. Competition in the Year 2000. Research Methodology. Results and Conclusions. Analysis, Conclusions, and Recommendations.