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.
To read the full report in German, please click here.
To read the English executive summary, please fill out the form below.
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
Andy Logan
Director of Industry Consulting
Read the report
Complete the form below to download the report.
Tags:
Recent related reports
2024 Insights: Australian Construction & Infrastructure
Calendar 2024 marks a turning point in the construction and infrastructure industry in Australia. While construction activity is expected to fall slightly in aggregate terms, there is also a shift in infrastructure priorities from transport to utilities, social building and resources infrastructure which will present regional challenges.
Find Out MoreInsight Forecast: Gain insights into the North American construction market
Oxford Economics and ConstructConnect produce forecasts for US and Canadian construction starts as part of ConstructConnect’s Insight Forecast. These forecasts include 34 building categories in the US and 23 categories in Canada, and the US and Canada national and regional data segmented by state, MSA (CMA), and county level. With these changes in the market dynamics, prudent forecasts help businesses to make informed decisions, and ultimately help support the wider economy.
Find Out MoreWeakness in construction and its related sectors show the impact of interest rate hikes
Ever since the onset of advanced economies’ campaign of interest rate hikes in December 2021 there has been a lively debate about the impact and efficacy of tighter monetary policy in terms of reducing inflation and slowing growth. While inflation has indeed fallen across the world, the relative economic resilience in the United States in particular, which has raised interest rates significantly more than the eurozone, has raised questions about if and how much interest rates are actually depressing activity.
Find Out MoreChartbook: Global Construction Outlook Q3 2023
Global construction activity is now forecast to fall 1.6% in 2023 and rebound 0.5% in 2024 to $9.6tn. China’s real estate downturn continues to dominate the global outlook. We now expect a slower recovery in both residential and non-residential building activity – and anticipate a more muted recovery in Chinese GDP over the medium term.
Find Out More