Recent Release | 19 Dec 2023
Analysing the German construction industry’s supply chains
Economic Consulting Team
Oxford Economics
The supply chain disruptions triggered by the coronavirus pandemic, the blockade of the Suez Canal, and Russia’s invasion of Ukraine were historically unique for Germany’s construction sector. Our research showed how these supply chain disruptions affected construction companies in various ways and identified strategies to help overcome them.
The dominant effects were higher purchase prices, longer waiting times, and increased resources devoted towards planning. These longer waiting times meant greater difficulties in processing existing orders and a consequent need to forego new orders, which in turn led to a loss of turnover.
Our research also found its supply chain was more globally intertwined than previously understood: the sector generates 40% of gross value added via imported services. Thirteen of the 57 imported intermediate inputs were found to be highly vulnerable. Other industry-specific characteristics include a high level of manufacturing complexity, which leads to a large number of required products. Meanwhile warehousing is often difficult, meaning supply chain interruptions have a direct impact on production capacity.
Our recommendations to the Federal Institute for Research on Building, Urban Affairs, and Spatial Development were that companies should:
- Control their supply chains as completely as possible with digital technologies —from procurement and logistics to delivery to the construction site;
- Use digitalisation to detect disruptions at an earlier stage and react to them;
- Secure greater supply of raw materials through domestic production;
- Replace fossil energy sources with renewable energies;
- Select their suppliers in a diversified manner as far as possible; and
- Promote innovation for new future technologies.
The experts behind the research
Our Economic Consulting team are world leaders in quantitative economic analysis, working with clients around the globe and across sectors to build models, forecast markets and evaluate interventions using state-of-the art techniques. Lead consultants on this project were:
Johanna Neuhoff
Associate Director of Consulting, Economic Impact
Hannah Zick
Economist, Economic Impact
Andy Logan
Director of Industry Consulting
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