Recent Release | 12 Dec 2022

Crisis resilience of the construction industry

Economic Consulting Team

Oxford Economics

Despite the Covid-19 pandemic, the German construction industry developed positively in 2020 and 2021 supporting the overall economy during the crisis. The study took this as an opportunity to take a closer look at the extent and determinants of the crisis resilience of the German construction industry in various crises and a European comparison.

The construction industry is often seen as a pillar of macroeconomic development during economic crises. Against this background, the question arises of how resilient the German construction industry has been in the wake of the Covid-19 pandemic. Using current data, the study aimed at analysing the consequences of past economic crises and which factors and instruments can enhance the resilience of construction companies in coping with past and future crises.

Although each crisis is unique and requires different responses, there are certainly “universal” factors that improve the crisis resilience of companies. These include the strategic safeguarding of liquidity, the management and control of key operating figures, the reduction of structural dependencies through diversification – including customer segments, sales markets, financiers, and suppliers – strategic relationship and reputation management and access to external advice. We also recommend that construction companies adapt early to trends that harbour crisis potential. Particularly concerning the potential risk of climate change and digitalisation, the findings indicate that the construction industry still has some catching up to do.

At the sector level, our empirical findings also indicated that diversifying markets was an effective means of increasing the sector’s resilience. In contrast, a high share of large, young, and potentially less-solvent firms reduced the sector’s resilience. In addition, the sector’s availability of skilled labour played a crucial role: a high share of vacant positions and a higher share of workers with a higher education level tended to reduce resilience by reducing a company’s flexibility in responding to a crisis. Furthermore, factors that cannot be influenced by the companies themselves played a central role. Factors indicating an overheating and the formation of housing bubbles in the construction and real estate industry tended to reduce the overall resilience of the industry.

About the team

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
Johanna Neuhoff

Associate Director of Economic Consulting, Continental Europe

'+49 (0) 69 80 88 30 16

Johanna Neuhoff

Johanna Neuhoff

Associate Director of Economic Consulting, Continental Europe

Berlin

Johanna Neuhoff is Associate Director for economic consulting services in Continental Europe. She is an expert evaluating the impact of policy changes, in forecasting and scenario building as well as in economic impact assessment. Her extensive knowledge in the real estate, housing, mobility/transport, and green economy sector helped her in leading several complex and international consulting projects for public and private clients such as the Ministry of Justice and consumer protection (BMJV), the Ministry of Environment, Nature Conservation and Nuclear Safety (BMU), Ministry of Transport and Digital Infrastructure (BMVI), German Music Industry Association (BVMI), Association of the German Automobile Industry (VDA) and the Association of private building societies (Verband der Privaten Bausparkassen e.V.).

Prior to Oxford Economics, Johanna Neuhoff worked at DIW Econ, the consultancy firm of the German Institute for Economic Research, at GESI Gesellschaft für Systeminnovation mbH – a consultancy firm focused on green transformation projects in the field of mobility – and empirica ag – one of the leading German research and consultancy institute for urban and regional economics. Johanna Neuhoff holds a Diploma with a focus on social and political sciences in Economics from the University of Potsdam, Germany, and a Master’s Degree in Economics from the University of Milwaukee-Wisconsin, USA, – both degrees with special distinction.

Hannah Marie Zick
Hannah Marie Zick

Economist

+49 69 96758872

Hannah Marie Zick

Hannah Marie Zick

Economist

Frankfurt, Germany

Hannah Zick is part of the Economic Impact Consulting Team in Continental Europe. She is mainly involved in projects in Germany and the DACH region. Her work focuses on public economics, policy analysis, applied econometrics and environmental economics.

Before joining Oxford Economics, Hannah studied economics in Marburg and Mannheim, with periods abroad in the UK and Switzerland. She has previously worked at ZEW Mannheim and the University of Marburg.

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