Market Trends, Marketing Spend and Sales Strategies in the Global Construction Industry

© Timetric. This report is a licensed product and is not to be photocopied

Global Construction Industry Supplier

Outlook Survey 2013–2014:

Market Trends, Marketing Spend and Sales Strategies in

the Global Construction Industry

Reference code: CN2145SU

Published: June 2013

Timetric

John Carpenter House

7 Carmelite Street

London EC4Y 0BS

United Kingdom

Tel: +44 (0)20 7936 6400

Fax: +44 (0)20 7336 6813

Website: www.timetric.com

http://www.timetric.com/

TABLE OF CONTENTS

Global Construction Supplier Industry Outlook Survey 2013–2014:

Market Trends, Marketing Spend and Sales Strategies in the Global Construction Industry

© Timetric. This product is licensed and is not to be photocopied Published: June 2013

TABLE OF CONTENTS

1 Introduction .................................................................................................................. 8

1.1 What is this report about? ...................................................................................................... 8

1.2 Definitions .............................................................................................................................. 8

1.3 Methodology .......................................................................................................................... 9

1.4 Global Construction Industry: Profile of Survey Respondents .............................................. 11

1.4.1 Global construction industry: profile of contractor and developer respondents ........................... 11

1.4.2 Global construction industry: profile of supplier respondents ...................................................... 12

2 Executive Summary ................................................................................................... 14

3 Global Construction Industry Dynamics .................................................................. 16

3.1 Revenue Growth Projections in the Global Construction Industry ........................................ 17

3.1.1 Revenue growth projections by company type ............................................................................ 19

3.1.2 Revenue growth projections by region ......................................................................................... 21

3.1.3 Revenue growth projections by turnover ..................................................................................... 22

3.1.4 Revenue growth projections by senior-level respondents ........................................................... 24

3.2 Future Developments in Business Structure in the Global Construction Industry ................. 25

3.2.1 Future developments in business structure by contractors and developers ................................ 25

3.2.2 Future developments in business structure by suppliers ............................................................. 28

3.3 Merger and Acquisition Activity Projections in the Global Construction Industry ................... 31

3.3.1 M&A activity projections by contractors and developers ............................................................. 31

3.3.2 M&A activity projections by suppliers ........................................................................................... 33

3.3.3 M&A activity projections by region ............................................................................................... 37

3.3.4 M&A activity projections by company turnover ............................................................................ 38

3.4 Estimation of Capital Expenditure in the Global Construction Industry ................................. 39

3.4.1 Estimation of capital expenditure by contractors and developers ................................................ 39

3.4.2 Estimation of capital expenditure by suppliers ............................................................................. 41

3.4.3 Estimation of capital expenditure by region ................................................................................. 43

3.4.4 Estimation of capital expenditure by company turnover .............................................................. 44

3.5 Planned Change in Staff Recruitment Activity in Global Construction Industry ..................... 45

3.5.1 Planned change in staff recruitment activity by contractors and developers ............................... 45

3.5.2 Planned change in staff recruitment activity by suppliers ............................................................ 47

3.5.3 Planned change in staff recruitment activity by region ................................................................ 48

3.5.4 Planned change in staff recruitment activity by company turnover.............................................. 49

4 Global Construction Industry Market Growth Outlook ........................................... 50

4.1 Global Construction Industry – Demand in Emerging Markets ............................................. 51

4.1.1 Demand in emerging markets by contractors and developers .................................................... 51

4.1.2 Demand in emerging markets by suppliers .................................................................................. 53

4.1.3 Demand in emerging markets by region ...................................................................................... 57

4.1.4 Demand in emerging markets by company turnover ................................................................... 58

4.2 Global Construction Industry – Growth Projections in Developed Countries ........................ 59

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4.2.1 Growth projections in developed countries by contractors and developers ................................ 60

4.2.2 Growth projections in developed countries by suppliers .............................................................. 62

4.2.3 Growth projections in developed countries by region .................................................................. 65

4.2.4 Growth projections in developed countries by company turnover ............................................... 67

5 Threats and Opportunities for the Global Construction Industry .......................... 68

5.1 Global Construction Industry – Leading Business Concerns for 2013–2014 ........................ 69

5.1.1 Leading business concerns for 2013–2014 by company type ..................................................... 72

5.1.2 Leading business concerns for 2013–2014 by region ................................................................. 74

5.1.3 Leading business concerns for 2013–2014 by company turnover .............................................. 75

5.2 Global Construction Industry – Key Supplier Actions to Maintain and Win Buyer Business .. 76

5.2.1 Actions to maintain and secure buyer business by company type .............................................. 76

5.2.2 Actions to maintain and secure buyer business by region ........................................................... 78

5.2.3 Actions to maintain and secure buyer business by turnover ....................................................... 80

5.2.4 Actions to maintain and secure buyer business by senior-level respondents ............................. 81

5.3 Global Construction Industry – Key Variations in Operational Costs .................................... 82

5.3.1 Key variations in operational costs by contractors and developers ............................................. 82

5.3.2 Key variations in operational costs by suppliers .......................................................................... 84

5.3.3 Key variations in operational costs by region ............................................................................... 86

5.3.4 Key variations in operational costs by company turnover ............................................................ 87

5.4 Global Construction Industry – Impact of Costs on Product Pricing ...................................... 88

5.4.1 Impact of costs on product pricing by contractors and developers .............................................. 88

5.4.2 Impact of costs on product pricing by suppliers ........................................................................... 89

6 Global Construction Industry - Supplier Marketing Spend Activity ...................... 90

6.1 Annual Marketing Budgets – Global Construction Industry Suppliers ................................... 91

6.1.1 Annual marketing budgets by suppliers ....................................................................................... 91

6.1.2 Annual marketing budgets by region ........................................................................................... 93

6.1.3 Annual marketing budgets by company turnover ......................................................................... 94

6.2 Planned Change in Marketing Expenditure Levels – Global Construction Industry Suppliers95

6.2.1 Planned change in marketing expenditure by suppliers .............................................................. 96

6.2.2 Planned change in marketing expenditure by region ................................................................. 100

6.2.3 Planned change in marketing expenditure by company turnover .............................................. 101

6.2.4 Planned change in marketing expenditure levels by revenue growth expectations .................. 102

6.3 Future Investment in Media Channels – Global Construction Industry Suppliers ................ 103

6.3.1 Future investment in media channels by suppliers .................................................................... 103

6.3.2 Future investment in media channels by region ........................................................................ 106

6.3.3 Future investment in media channels by company turnover ..................................................... 107

6.4 Global Construction Industry Suppliers' Future Investment in Marketing and Sales Technology

108

6.4.1 Planned investment in marketing and sales technologies by suppliers ..................................... 108

6.4.2 Planned investment in marketing and sales technologies by region ......................................... 110

6.4.3 Planned investment in marketing and sales technologies by company turnover ...................... 111

7 Marketing and Sales Behaviors and Strategies in 2013–2014 ............................. 112

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7.1 Key Marketing Aims for 2013–2014 – Global Construction Industry ................................... 113

7.1.1 Key marketing aims by suppliers ............................................................................................... 113

7.1.2 Key marketing aims by region .................................................................................................... 116

7.1.3 Key marketing aims by company turnover ................................................................................. 116

7.1.4 Key marketing aims by revenue growth expectations ............................................................... 117

7.2 Essential Amendments to Marketing Activities in 2013–2014 ............................................. 118

7.2.1 Amendments to marketing activities by suppliers ...................................................................... 118

7.2.2 Amendments to marketing activities by region .......................................................................... 120

7.2.3 Amendments to marketing activities by company turnover ....................................................... 122

7.3 Best Uses of New Media for Business Prospects – Global Construction Industry .............. 123

7.3.1 Best uses of new media by suppliers ......................................................................................... 123

7.3.2 Best uses of new media by region ............................................................................................. 125

7.3.3 Best uses of new media by company turnover .......................................................................... 127

7.4 Critical Success Factors for Choosing a Marketing Agency ............................................... 129

7.4.1 Critical success factors by suppliers .......................................................................................... 129

7.4.2 Critical success factors for choosing a marketing agency by region ......................................... 132

7.4.3 Critical success factors for choosing a marketing agency by company turnover ...................... 133

8 Appendix ................................................................................................................... 134

8.1 Survey Results – Closed Questions ................................................................................... 134

8.2 Methodology ...................................................................................................................... 152

8.3 Contact Us ......................................................................................................................... 152

8.4 About Timetric.................................................................................................................... 152

8.5 Disclaimer .......................................................................................................................... 153

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LIST OF FIGURES

Figure 1: Revenue Growth Optimism in the Global Construction Industry (%), 2009–2013 ......................................................................18 Figure 2: Revenue Growth Optimism in the Global Construction Industry by Company Type (%), 2009–2013 .........................................21 Figure 3: Revenue Growth Optimism in the Global Construction Industry by Region (%), 2013 ...............................................................22 Figure 4: Revenue Growth Optimism in the Global Construction Industry by Turnover (%), 2013 ............................................................23 Figure 5: Revenue Growth Optimism by Senior-Level Respondents (%), 2013 ........................................................................................24 Figure 6: Key Expected Changes in the Business Structure of Construction Contractors and Developers (%), 2013 ...............................27 Figure 7: Key Expected Changes in the Business Structure of Construction Equipment and Materials Suppliers (%), 2013 ....................29 Figure 8: Key Expected Changes in the Business Structure of Other Construction Suppliers (%), 2013 ..................................................30 Figure 9: M&A Activity Projections of Construction Contractors and Developers (%), 2009–2013 ............................................................33 Figure 10: M&A Activity Projections of Construction Equipment and Materials Suppliers (%), 2009–2013 ...............................................35 Figure 11: M&A Activity Projections of Other Construction Suppliers (%), 2009–2013 .............................................................................36 Figure 12: Capital Expenditure Expectations by Construction Contractors and Developers (%), 2013 .....................................................40 Figure 13: Capital Expenditure Expectations by Construction Equipment and Materials Suppliers (%), 2013 ..........................................41 Figure 14: Capital Expenditure Expectations by Other Construction Suppliers (%), 2013.........................................................................42 Figure 15: Global Construction Industry – Increase in Capital Expenditure by Region (%), 2013 .............................................................43 Figure 16: Global Construction Industry – Increase in Capital Expenditure by Turnover (%), 2013 ..........................................................44 Figure 17: Global Construction Industry – Planned Change in Staff Recruitment Activity by Contractors and Developers (%), 2013 .......46 Figure 18: Global Construction Industry – Planned Change in Staff Recruitment Activity by Suppliers (%), 2013 ....................................47 Figure 19: Global Construction Industry – Planned Change in Staff Recruitment Activity by Region (%), 2013 ........................................48 Figure 20: Global Construction Industry – Planned Change in Staff Recruitment Activity by Company Turnover (%), 2013 .....................49 Figure 21: Global Construction Industry – Top Ten Growth Regions (%), 2013 ........................................................................................50 Figure 22: Global Construction Industry – Top Five Emerging Markets, 2013 ..........................................................................................51 Figure 23: Demand in Emerging Markets by Construction Contractors and Developers (%), 2013...........................................................53 Figure 24: Demand in Emerging Markets by Construction Equipment and Materials Suppliers (%), 2013 ................................................55 Figure 25: Global Construction Industry – Increase of Demand in Emerging Markets by Company Turnover (%), 2013 ..........................58 Figure 26: Global Construction Industry – Top Five Developed Regions by Growth (%), 2013 ................................................................59 Figure 27: Construction Contractors and Developers – Growth Projections in Developed Countries (%), 2013 ........................................61 Figure 28: Construction Equipment and Materials Suppliers – Growth Projections in Developed Countries (%), 2013 .............................63 Figure 29: Other Construction Suppliers – Growth Projections in Developed Countries (%), 2013 ...........................................................65 Figure 30: Global Construction Industry – Increase in Growth Projections of Developed Countries by Region (%), 2013 .........................66 Figure 31: Global Construction Industry – Top Five Leading Business Concerns, 2013–2014 .................................................................70 Figure 32: Global Construction Industry – Leading Business Concerns (%), 2009–2013 .........................................................................71 Figure 33: Global Construction Industry – Securing Buyer Business: Buyer vs. Supplier Responses (%), 2013 .......................................77 Figure 34: Global Construction Industry – Securing Buyer Business by Region (%), 2013 .......................................................................79 Figure 35: Global Construction Industry – Securing Buyer Business by Senior-Level Respondents (%), 2013 .........................................81 Figure 36: Key Variations in Operational Costs of Construction Contractors and Developers (%), 2013 ..................................................83 Figure 37: Key Variations in Operational Costs of Construction Equipment and Materials Suppliers (%), 2013 ........................................85 Figure 38: Key Variations in Operational Costs of Other Construction Suppliers (%), 2013 ......................................................................86 Figure 39: Impact of Changing Costs on Product Pricing by Construction Contractors and Developers (%), 2013 ...................................89 Figure 40: Annual Marketing Budgets – Construction Equipment and Materials Suppliers (%), 2009−2013 .............................................92 Figure 41: Annual Marketing Budgets – Other Construction Industry Suppliers (%), 2009−2013 .............................................................92 Figure 42: Annual Marketing Budgets by Region – Global Construction Industry Suppliers (%), 2013 .....................................................93 Figure 43: Annual Marketing Budgets by Company Turnover – Global Construction Industry Suppliers (%), 2013 ..................................94 Figure 44: Planned Change in Marketing Expenditure (%), 2009−2013 ...................................................................................................95 Figure 45: Planned Change in Marketing Expenditure – Construction Equipment and Materials Suppliers (%), 2009−2013 ....................97 Figure 46: Planned Change in Marketing Expenditure – Other Construction Industry Suppliers (%), 2009−2013 .....................................99 Figure 47: Planned Change in Marketing Expenditure Levels by Turnover (%), 2013 ............................................................................ 101 Figure 48: Future Investment in Media Channels by Region (% ‘Increase’ Responses), 2013 ............................................................... 106 Figure 49: Planned Investment in Marketing and Sales Technologies by Suppliers (%), 2013 ............................................................... 110 Figure 50: Key Marketing Aims – Construction Equipment and Materials Suppliers (%), 2013 ............................................................... 114 Figure 51: Key Marketing Aims – Other Construction Industry Suppliers (%), 2013 ............................................................................... 115 Figure 52: Key Marketing Aims by Region – Global Construction Industry Suppliers (%), 2013 ............................................................. 116 Figure 53: Amendments to Marketing Activities by Global Construction Industry Suppliers (%), 2013–2014 .......................................... 120 Figure 54: Best Uses of New Media – Global Construction Industry Suppliers (%), 2013 ....................................................................... 124 Figure 55: Global Construction Industry Suppliers – Best Uses of New Media by Region (%), 2013 ...................................................... 126 Figure 56: Global Construction Industry Suppliers – Best Uses of New Media by Turnover (%), 2013 ................................................... 128 Figure 57: Critical Success Factors – Construction Equipment and Materials Suppliers (%), 2009−2013 .............................................. 130 Figure 58: Critical Success Factors – Other Construction Industry Suppliers (%), 2009−2013 ............................................................... 131

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LIST OF TABLES

Table 1: Global Construction Industry Survey Respondents by Company Type, 2013 .............................................................................11 Table 2: Global Construction Industry Contractor and Developer Respondents by Job Role (%), 2013 ...................................................11 Table 3: Global Construction Industry Contractor and Developer Respondents by Company Turnover (%), 2013 ...................................12 Table 4: Global Construction Industry Contractor and Developer Respondents by Region (%), 2013 ......................................................12 Table 5: Global Construction Industry Supplier Respondents by Job Role (%), 2013 ...............................................................................13 Table 6: Global Construction Industry Supplier Respondents by Company Turnover (%), 2013 ...............................................................13 Table 7: Global Construction Industry Supplier Respondents by Region (%), 2013 .................................................................................13 Table 8: Revenue Growth Optimism in the Global Construction Industry (%), 2009–2013 .......................................................................18 Table 9: Revenue Growth Optimism in the Global Construction Industry by Contractors and Developers (%), 2009–2013 ......................20 Table 10: Revenue Growth Optimism in the Global Construction Industry by Suppliers (%), 2009–2013 .................................................20 Table 11: Revenue Growth Optimism in the Global Construction Industry by Region (%), 2013 ..............................................................22 Table 12: Revenue Growth Optimism in the Global Construction Industry by Turnover (%), 2013 ...........................................................23 Table 13: Revenue Growth Optimism by Senior-Level Respondents (%), 2013 .......................................................................................24 Table 14: Key Expected Changes in the Business Structure of Construction Contractors and Developers (%), 2013 ..............................26 Table 15: Key Expected Changes in the Business Structure of Construction Equipment and Materials Suppliers (%), 2013 ...................29 Table 16: M&A Activity Projections of Construction Contractors and Developers (%), 2009–2013 ...........................................................32 Table 17: M&A Activity Projections of Construction Equipment and Materials Suppliers (%), 2009–2013 ................................................34 Table 18: M&A Activity Projections of Other Construction Suppliers (%), 2009–2013 ..............................................................................36 Table 19: Global Construction Industry – M&A Activity Projections by Region (%), 2013 .........................................................................38 Table 20: Global Construction Industry – M&A Activity Projections by Turnover (%), 2013 ......................................................................38 Table 21: Capital Expenditure Expectations by Construction Contractors and Developers (%), 2013 ......................................................40 Table 22: Capital Expenditure Expectations by Other Construction Suppliers (%), 2013 ..........................................................................42 Table 23: Global Construction Industry – Increase in Capital Expenditure by Region (%), 2013 ..............................................................43 Table 24: Global Construction Industry – Increase in Capital Expenditure by Turnover (%), 2013 ...........................................................44 Table 25: Global Construction Industry – Planned Change in Staff Recruitment Activity by Contractors and Developers (%), 2013.........46 Table 26: Global Construction Industry – Planned Change in Staff Recruitment Activity by Suppliers (%), 2013 ......................................47 Table 27: Global Construction Industry – Planned Change in Staff Recruitment Activity by Region (%), 2013 .........................................48 Table 28: Global Construction Industry – Planned Change in Staff Recruitment Activity by Company Turnover (%), 2013 ......................49 Table 29: Demand in Emerging Markets by Construction Contractors and Developers (%), 2013 ............................................................52 Table 30: Demand in Emerging Markets by Construction Equipment and Materials Suppliers (%), 2013 .................................................54 Table 31: Demand in Emerging Markets by Other Construction Suppliers (%), 2013 ...............................................................................56 Table 32: Global Construction Industry – Increase of Demand in Emerging Markets by Region (%), 2013 ..............................................57 Table 33: Construction Contractors and Developers – Growth Projections in Developed Countries (%), 2013 .........................................61 Table 34: Construction Equipment and Materials Suppliers – Growth Projections in Developed Countries (%), 2013 ..............................63 Table 35: Other Construction Suppliers – Growth Projections in Developed Countries (%), 2013 ............................................................64 Table 36: Global Construction Industry – Increase in Growth Projections of Developed Countries by Region (%), 2013 ..........................66 Table 37: Global Construction Industry – Increase in Growth Projections of Developed Countries by Turnover (%), 2013 .......................67 Table 38: Global Construction Industry – Leading Business Concerns (%), 2009–2013...........................................................................71 Table 39: Leading Business Concerns by Company Type (%), 2013–2014 .............................................................................................73 Table 40: Global Construction Industry – Leading Business Concerns by Region (%), 2013–2014 ..........................................................74 Table 41: Global Construction Industry – Leading Business Concerns by Turnover (%), 2013–2014 .......................................................75 Table 42: Global Construction Industry – Securing Buyer Business: Buyer vs. Supplier Responses (%), 2013 ........................................77 Table 43: Global Construction Industry – Securing Buyer Business by Region (%), 2013 ........................................................................78 Table 44: Global Construction Industry – Securing Buyer Business by Turnover (%), 2013 .....................................................................80 Table 45: Key Variations in Operational Costs of Construction Contractors and Developers (%), 2013 ...................................................83 Table 46: Key Variations in Operational Costs of Construction Equipment and Materials Suppliers (%), 2013 .........................................84 Table 47: Key Variations in Operational Costs of Other Construction Suppliers (%), 2013 .......................................................................85 Table 48: Key Variations in Operational Costs by Region (%), 2013 ........................................................................................................86 Table 49: Key Variations in Operational Costs by Company Turnover (%), 2013 .....................................................................................87 Table 50: Impact of Changing Costs on Product Pricing by Construction Contractors and Developers (%), 2013 ....................................88 Table 51: Impact of Changing Costs on Product Pricing by Suppliers (%), 2013 ......................................................................................89 Table 52: Annual Marketing Budgets – Construction Equipment and Materials Suppliers (%), 2009−2013 ..............................................91 Table 53: Annual Marketing Budgets – Other Construction Industry Suppliers (%), 2009−2013 ...............................................................92 Table 54: Annual Marketing Budgets by Region – Global Construction Industry Suppliers (%), 2013 ......................................................93 Table 55: Annual Marketing Budgets by Company Turnover – Global Construction Industry Suppliers (%), 2013 ...................................94 Table 56: Planned Change in Marketing Expenditure – Construction Equipment and Materials Suppliers (%), 2009−2013 .....................97 Table 57: Planned Change in Marketing Expenditure – Other Construction Industry Suppliers (%), 2009−2013 ......................................99 Table 58: Planned Change in Marketing Expenditure Levels by Region (%), 2013 ................................................................................ 100 Table 59: Planned Change in Marketing Expenditure Levels by Revenue Growth Expectations (%), 2013 ............................................ 102 Table 60: Future Investment in Media Channels – Construction Equipment and Materials Suppliers (%), 2013 ..................................... 104 Table 61: Future Investment in Media Channels – Other Construction Industry Suppliers (%), 2013 ..................................................... 105 Table 62: Future Investment in Media Channels by Turnover (% ‘Increase’ Responses), 2013 .............................................................. 107 Table 63: Planned Investment in Marketing and Sales Technologies by Suppliers (%), 2013 ................................................................ 109

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Table 64: Planned Investment in Marketing and Sales Technologies by Region (%), 2013 .................................................................... 111 Table 65: Planned Investment in Marketing and Sales Technologies by Company Turnover (%), 2013 ................................................. 111 Table 66: Key Marketing Aims – Construction Equipment and Materials Suppliers (%), 2013 ................................................................ 114 Table 67: Key Marketing Aims – Other Construction Industry Suppliers (%), 2013................................................................................. 115 Table 68: Key Marketing Aims by Turnover – Global Construction Industry Suppliers (%), 2013 ........................................................... 117 Table 69: Key Marketing Aims by Revenue Growth Expectations (%), 2013 .......................................................................................... 117 Table 70: Amendments to Marketing Activities by Global Construction Industry Suppliers (%), 2013–2014 ........................................... 119 Table 71: Amendments to Marketing Activities by Region – Global Construction Industry (%), 2013–2014 ............................................ 121 Table 72: Amendments to Marketing Activities by Turnover – Global Construction Industry (%), 2013–2014 ......................................... 122 Table 73: Best Uses of New Media – Global Construction Industry Suppliers (%), 2013 ........................................................................ 124 Table 74: Global Construction Industry Suppliers – Best Uses of New Media by Region (%), 2013 ....................................................... 125 Table 75: Global Construction Industry Suppliers – Best Uses of New Media by Turnover (%), 2013 .................................................... 127 Table 76: Critical Success Factors by Region – Global Construction Industry (%), 2013........................................................................ 132 Table 77: Critical Success Factors by Turnover – Global Construction Industry Suppliers (%), 2013 ..................................................... 133 Table 78: Global Construction Industry Survey Results – Closed Questions .......................................................................................... 134

INTRODUCTION




1 Introduction

1.1 What is this report about?

This report is the result of an extensive survey drawn from Timetric’s exclusive panel of leading

construction industry companies. This report provides the reader with a definitive analysis of the global

construction industry outlook, and explores how business opportunities and demands are expected to

change in 2013–2014. This report not only provides access to the opinions and strategies of business

decision makers and competitors, but also examines the actions surrounding business priorities. The

report provides respondent information by region, company type and size.

The report also examines:

Revenue growth expectations: projects the revenue growth expectations of major stakeholders of

the industry

Market-specific growth opportunities: identifies the main growth prospects in order to provide

assistance for companies in effectively allocating their marketing activities and budgets

M&A: expectations surrounding M&A activity and core influencing factors

Leading business concerns: identifies leading business concerns and subsequent efforts to

negate them

Marketing expenditure trends: tracks the marketing budgets of supplier companies and forecasts

possible changes to expenditure

Key factors for marketing agency selection: provides insights into the marketing needs of

competitors among supplier companies

1.2 Definitions

Construction contractors and developers (buyer): includes construction contractors or

subcontractors, private-sector project sponsors, developers or investors, and public-sector project

sponsors and developers.

Construction equipment and material suppliers (supplier 1): includes construction equipment

suppliers; building merchants or products distributors; construction materials or building products

manufacturers; furniture, fittings or interior products manufacturers; and other suppliers for raw

materials, logistics and factory equipment.

Other construction industry suppliers (supplier 2): includes architecture and design companies,

planning; surveying or civil engineering companies; trade bodies; academia or industry observers;

government or public-sector organizations; and other suppliers of technology and consultancy

services.

INTRODUCTION




Email marketing: It is defined as directly marketing a business message to a group of customers

using email.

Customer relationship management (CRM): It involves using technology to organize, automate,

and synchronize sales, marketing, customer service, and technical support.

Company turnover: companies with turnover of less than US$100 million are identified in the

report as small companies. In addition, companies with turnover between US$100 million–US$1

billion are referred to as medium-sized companies, and companies with turnover of more than US$1

billion as large companies.

1.3 Methodology

All Timetric reports are rigorously sourced and created according to a comprehensive four-stage

methodology:

1) Online survey

The research source in this report is based on the surveyed opinions and expectations of senior

industry professionals. Timetric conducted an extensive online survey in March-April 2013, which was

taken by 126 senior global industry executives worldwide; the respondents include C-level executives,

directors, and managers.

The survey’s respondents are drawn from the Timetric Industry Insight Panel, an exclusive industry

panel covering over 2 million business professionals worldwide. Respondents represent a dedicated

professional community where participants are surveyed ‘in context’, drawn from industry magazine and

media communities including the readership of Blueprint, designbuild-network.com, Tunnels &

Tunneling International and Cranes Today, as well as delegate relationships across Timetric’s global

industry conference and forum events. These business communities are made up of qualified

professionals who rely on Timetric’s flagship media brands, enabling Timetric to access informed

industry opinions.

INTRODUCTION




2) Secondary research

Collection of the latest market-specific data from a wide variety of respected third-party industry

sources:

Government statistics

Industry associations

Company filings

Broker reports

International organizations

Industry news websites

Industry reports

3) Data analysis and report writing

The results of this research have been analyzed and evaluated by Timetric’s industry-specific in-house

analysts. The analysts’ research and expertise, pedigree in marketing, market research, consulting

backgrounds in their industry, and ongoing education on leading economic and industry news have

shaped their analytical judgments and conclusions of the opinions gathered.

4) Quality control

Detailed process manuals

Standardized report templates and accompanying style guides

Advanced data analysis and survey programming tools

QC checklists

Randomized spot checks on data integrity

Peer review

Senior-level QC

INTRODUCTION




1.4 Global Construction Industry: Profile of Survey Respondents

Timetric’s in-depth industry survey was completed by 126 respondents, employed by the organizations

shown in the table below:

Table 1: Global Construction Industry Survey Respondents by Company Type, 2013

Company Type Number of Respondents

Construction contractors and developers 60

Construction equipment and materials suppliers 43

Other construction industry suppliers 23

Overall 126

Source: Timetric Industry Survey 2013 © Timetric

1.4.1 Global construction industry: profile of contractor and developer respondents

The contractors and developers in the global construction industry include construction contractors or

subcontractors; private-sector project sponsors, developers or investors; and public-sector project

sponsors and developers. Of the survey’s total respondents, 48% were from construction contracting

and developer companies.

Of all contractor and developer respondents, 12% belong to organizations with a turnover of more than

US$1 billion, and 72% belong to organizations with a turnover of less than US$100 million. In addition,

71% of all contractor and developer respondents are C-level or director-level executives, while the

remaining 29% are managers and professionals with technical backgrounds. Furthermore, 48% of

contractor and developer respondents are from companies in Europe, 25% are from companies in

North America and 18% are from companies in the Asia-Pacific.

Table 2: Global Construction Industry Contractor and Developer Respondents by Job Role (%),

2013

Role Percentage of Operator Respondents

CEO / president / MD / board member / C-level executive 22%

Director / VP / SVP 25%

Head of business unit 7%

Head of department 17%

Manager 12%

Professional and technical staff (e.g. lawyer, engineer, architect) 13%

Staff 5%

Overall 100%

N.B. Results may not equal 100% due to rounding


INTRODUCTION




Table 3: Global Construction Industry Contractor and Developer Respondents by Company

Turnover (%), 2013

Turnover Percentage of Operator Respondents

Less than US$100 million 72%

US$100 million–US$1 billion 17%

More than US$1 billion 12%

Overall 100%



Table 4: Global Construction Industry Contractor and Developer Respondents by Region (%),

2013

Region Percentage of Operator Respondents

North America 25%

Europe 48%

Asia-Pacific 18%

Rest of the World 9%

Overall 100%


1.4.2 Global construction industry: profile of supplier respondents

Suppliers to the global construction industry include construction equipment and materials suppliers,

and other construction industry suppliers. Construction equipment and materials suppliers include

construction equipment suppliers; building merchants or products distributors; construction materials or

building products manufacturers; furniture, fittings or interior products manufacturers; and other

suppliers for raw materials, logistics and factory equipment. Other construction industry suppliers

include architecture and design companies; planning, surveying or civil engineering companies; trade

bodies; academia or industry observers; government or public-sector organizations; and other suppliers

of technology and consultancy services. Of all survey respondents, 34% are from construction

equipment and materials supplier companies, while 18% are from other construction industry supplier

companies.

Of all supplier respondents, 20% belong to organizations with a turnover of more than US$1 billion, and

53% belong to organizations with turnover of less than US$100 million. In addition, 70% of all supplier

respondents are C-level or director-level executives, while the remaining 30% represent managers and

professionals with technical backgrounds.

INTRODUCTION




Table 5: Global Construction Industry Supplier Respondents by Job Role (%), 2013

Role Percentage of Supplier Respondents





Manager 17%

Professional and technical staff (e.g. lawyer, engineer, architect) 5%

Staff 9%

Overall 100%



Table 6: Global Construction Industry Supplier Respondents by Company Turnover (%), 2013

Turnover Percentage of Supplier Respondents

Less than US$100 million 53%

US$100 million–US$1 billion 27%

More than US$1 billion 20%

Overall 100%


Table 7: Global Construction Industry Supplier Respondents by Region (%), 2013

Region Percentage of Supplier Respondents

North America 18%

Europe 53%

Asia-Pacific 21%


Overall 100%


EXECUTIVE SUMMARY




2 Executive Summary

Overall, respondents are optimistic about revenue growth in 2013

Of the survey respondents across the global construction industry, 53% are ‘more optimistic’ about

revenue growth for their companies in 2013, due to increased investments in IT infrastructure and other

public and private-sector construction projects, and growing demand for sustainable construction. The

key expected changes for 2013 are ‘expand in current market’ and ‘improving operational efficiency’,

while in 2012, the emphasis was on ‘improving operational efficiency’, ‘expand operations in domestic

market’, ‘stabilize company finances’ and ‘manage pricing strategies’.

Mergers and acquisitions in the global construction industry expected to increase in 2013

Executives from the global construction industry expect to see increased levels of consolidation, with

50% of respondents anticipating either a significant increase or an increase in M&A activity in 2013.

Slow recovery in the global economy and weak market conditions, a growing desire for large

construction companies to increase their global presence, and increased pressure of rising costs on

small and medium-sized construction companies are considered the key drivers for participating in M&A

activity. Respondents across the global construction industry anticipate a considerable increase in

capital expenditure on ‘new product developments’, ‘IT infrastructure developments’ and ‘machinery

and equipment purchases’. Respondents also anticipate increases in their current workforce in 2013.

China, India, the UAE, Brazil, and Eastern Europe are considered key emerging markets in 2013

Respondents from construction contractor and developer companies identified India, Brazil, the UAE,

China and Saudi Arabia as promising emerging markets for 2013. Construction activity in India has

increased steadily due to growth in infrastructure development in housing, roads, ports, aviation

infrastructure and power generation, leading the country to become one of the emerging markets in the

global construction industry. Additionally, the US, Canada, Singapore, Australia and the UK were

identified as chief growth regions among developed countries. France, Italy and Spain are expected to

offer low growth potential.

Companies face key challenges due to ‘cost containments’, market uncertainty’, ‘retention or

recruitment of skilled staff’ and ‘rising competition’

‘Cost containments’ will be a leading challenge for the global construction industry in 2013–2014, as

expressed by 56% of industry respondents, while 55% identified ‘market uncertainty’ as important.

Regardless of company size, global construction industry companies consider ‘market uncertainty’ and

‘cost containments’ as leading business concerns. As a result, the key objectives for suppliers were

identified as ‘provide support for generating new businesses’ and the adoption of practices to ‘innovate

product’ and ‘improve customer services’, as identified by construction contractors and developers.

EXECUTIVE SUMMARY




Supplier marketing budgets are projected to increase by 7% in 2013

Timetric’s industry survey revealed that the average supplier marketing budgets, of both construction

equipment and material suppliers and other construction industry suppliers, are expected to rise by 7%

in 2013. Moreover, 67% of respondents from the construction equipment and materials supplier

companies expect an increase in their marketing budgets in 2013. The average size of the annual

marketing budget of global construction industry supplier respondents’ companies is US$5.4 million for

2013. In 2013, the average marketing budget is US$4.4 million for construction equipment and material

supplier companies, and is US$7.3 million for other construction industry supplier companies.

‘Email and newsletters’, ‘social media and networking sites’, ‘online portals’ and ‘corporate and

brand websites’ to dominate future investment

Of all construction equipment and material supplier companies, 63% of respondents plan to increase

marketing expenditure on ‘email and newsletters’, 62% of respondents plan to increase marketing

expenditure on ‘social media and networking sites’, and 52% plan to increase expenditure on ‘corporate

and brand websites’. ‘CRM systems’ and ‘market intelligence research’ emerged as the two marketing

and sales solutions that will receive the most investment in 2013. In contrast, marketing and sales

solutions such as ‘customer segmentation solutions’, ‘loyalty solutions’ and ‘direct internet distribution

systems’ are expected to register the least amount of investment in 2013.

Customer retention, customer acquisition and brand building dominate key marketing aim of

suppliers for 2013–2014

‘Customer retention’, ‘brand building or awareness’, and ‘customer acquisition’ are the key marketing

aims of supplier respondents for 2013, as expressed by 87%, 79%, and 72% respectively. Key

amendments to marketing agencies for 2013, as identified by global construction industry suppliers,

include changes in ‘web design and development’, ’branding and imaging’, and ‘direct marketing’

respectively. Other amendments expected to be included are ‘advertizing’, ‘special programs’ and

‘interactive marketing’.

‘Ability to target specific audience niches’, ‘ability to generate leads or setup customer

meetings’ and ‘low cost’ are the three leading critical success factors for suppliers in 2013

In 2013, the ‘ability to target specific audience niches’, ‘ability to generate leads or setup customer

meetings’ and ‘low cost’ are identified as important factors when sourcing marketing vendors by global

construction industry suppliers. This is due to the fact that, as a result of an increase in business

competition and expectations of gradual economic recovery, the need for strategic and tactical inputs

on specific target segments has gained importance. Moreover, of all construction equipment and

material supplier respondents, 49% identified ‘email promotions’ as an effective use of new media to

generate business in 2013, while 44% identified ‘networking through social media websites’ and 26%

anticipated ‘email educational messages’ to be important uses of new media.

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3 Global Construction Industry Dynamics

In this chapter, survey respondents in the global construction industry detail the future growth

expectations of their companies, and provide insights into mergers and acquisitions (M&A) and

business structure in the global construction industry. This chapter provides an overview of the

business outlook for the global construction industry, including the overall change in organizations’

capital expenditure and staff recruitment activity. Industry trends in this area are also analyzed in

comparison with the results of the 2009, 2011 and 2012 construction industry surveys, providing an

opportunity to follow changes in respondents’ attitudes.

Key Findings:

Of all respondents across the global construction industry, 53% are ‘more optimistic’ about revenue growth in 2013 as compared with the previous 12 months

A total of 62% of contractor and developer respondents are ‘more optimistic’ about revenue growth in 2013

Respondents from companies operating in the Rest of the World and North America are more

optimistic about revenue growth in 2013

‘Expand in current market’ and ‘improving operational efficiency’ are the key priorities for

construction contractors and developers in 2013

In total, 50% of construction contractors anticipate either a ‘significant increase’ or ‘increase’ in

M&A activity during 2013

Survey results reveal that 46% of construction industry supplier respondents expect either a

‘significant increase’ or ‘increase’ in M&A activity in 2013

‘New product developments’, ‘IT infrastructure developments’, and ‘machinery and equipment

purchases’ are expected to increase significantly in 2013

A total of 40% of respondents from construction contractor and developer companies anticipate a

maximum 2% increase of their current workforce in 2013

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3.1 Revenue Growth Projections in the Global Construction Industry

Within the global construction industry, 53% of survey respondents are ‘more optimistic’ about revenue

growth expectations in 2013 as compared to the previous 12 months. Meanwhile, 24% of respondents

are ‘less optimistic’ about revenue growth, while 22% expect ‘no change’ whatsoever. Increased

investments in IT infrastructure and other public and private-sector construction projects, in tandem with

growing demand for sustainable construction, are considered key drivers of revenue-growth optimism

for 2013. For example, according to a press release from Singapore’s Building and Construction

Authority (BCA) in January 2013, construction demand in Singapore is forecast to register a growth of

53%, totaling US$26–32 billion for 2013. The BCA notes that growth is expected due to the sector’s

healthy performance in 2012, and strong growth potential generated from the public sector and rail

construction. The key public-sector projects in Singapore which are likely to be awarded in 2013, as

projected by the BCA, include:

Construction of undergraduate halls in Nanyang Technological University

Construction of storage tanks at Jurong Island

Construction of Jurong Town Corporation’s large floating oil storage structure at Pulau Sebarok

Construction contracts for the Thomson Mass Rapid Transit Line

Furthermore, according to the 2013 Timetric Research survey results, revenue growth optimism levels

increased by nine percentage points in comparison to 2012, though optimism levels remained similar to

2011’s survey results. This indicates that the construction sector is forecast to perform well in 2013 as

compared with 2012, mainly due to the growing number of projects in the pipeline that are expected to

benefit global construction companies and stakeholders. For example, Primoris Services Corporation, a

contractor and engineering company serving the US power and energy sectors, secured new contracts

worth US$322.7 million between January 2013 and March 2013. These contracts are spread across

power, pipeline, gas utility, water, wastewater treatment and highway infrastructure projects throughout

the US.

Similarly, in January 2013, Manchester City Council UK announced the selection of Solutions 4

Brunswick (S4B) consortium as its preferred developer for the US$118 million Brunswick regeneration

scheme. The project includes the renovation of 650 council homes, construction of 500 new homes for

rent or sale, as well as new road layouts and open spaces. A senior executive from Brunswick S4B

commented:

“The area deserves and needs substantial investment to bring the homes and environment up to decent

modern homes’ standards set by the government.”

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Table 8: Revenue Growth Optimism in the Global Construction Industry (%), 2009–2013

Growth Optimism 2009 2011 2012 2013

More optimistic 34% 53% 44% 53%

Neutral 25% 27% 36% 22%

Less optimistic 38% 15% 16% 24%

Don't know 3% 5% 5% 1%

Overall 100% 100% 100% 100%



Figure 1: Revenue Growth Optimism in the Global Construction Industry (%), 2009–2013


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3.1.1 Revenue growth projections by company type

In total, 62% of contractors and developers are ‘more optimistic’ about revenue growth in 2013 as

compared to the previous 12 months. The improvement is expected to be driven by gradual recovery in

both the residential and non-residential construction markets, and expansion in the real estate industry

in several countries, including the US, one of the largest construction markets. For example, in

February 2013, project development and construction group, Skanska, secured a US$48 million

contract for the Green Court Bucharest office project in Bucharest, Romania.

Furthermore, a total of 51% of construction equipment and materials suppliers, and 35% of other

construction industry suppliers are ‘more optimistic’ about revenue growth in 2013, primarily driven by

increases in construction contracts. For example, in March 2013, crane dealer Manitex US announced

an increase in its overall revenue by 44% from US$142.3 million in 2011 to US$205.2 million in 2012.

The company notes that the increase in sales was due to the higher level of penetration of products

specifically targeting construction projects in the energy and power line distribution sectors. Moreover,

the company expects healthy returns for 2013 with a set target of US$350 million by 2015. Emphasizing

this point, a senior executive from the company noted:

“We have 25% of our current sales coming from products that we've recently introduced into the

markets. We've considered that trend by introducing into the fourth quarter a 15-ton Badger crane,

which we believe will show some positive returns in the not-too-distant future. And we are very excited

about seven new products which we will be introducing this year.”

Similarly, engineering services provider, Sparrows Group, from Scotland secured contracts worth

US$285 million in the first quarter of 2013, from clients such as Shell, CNR, ConocoPhillips, Perenco,

and Wood Group in the North Sea. The company also won orders and contracts worth US$60 million in

the US, the Middle East, and Asia. It also secured renewals of agreements to work with BP in Angola

and CNR in Gabon and Côte d’Ivoire. The company notes that its new contract wins for 2013 succeed

favorable results in 2012, when its revenues grew by 10% from 2011. A senior executive from Sparrows

commented:

“We will be reporting robust results for 2012 later this year and, with these latest contract wins, are well

on course to deliver exceptional results for 2013. Our focus is firmly on excelling in delivery for our

clients. We have a strong reputation for delivering on our promises and this is underlined by the amount

of renewals we are securing.”

Notably, 28% and 22% of respondents respectively from the two supplier categories expressed neutral

sentiments about revenue growth, while 43% from other construction industry suppliers are ‘less

optimistic’ about revenue growth in 2013. The recent deceleration in the growth rate of several

economies due to the impact of the European sovereign debt crisis may have adversely affected some

construction companies due to unforeseen delays and postponements.

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Table 9: Revenue Growth Optimism in the Global Construction Industry by Contractors and

Developers (%), 2009–2013

Growth Optimism 2009 2011 2012 2013


Neutral 25% 21% 37% 18%


Don't know 4% 3% 3% 2%

Overall 100% 100% 100% 100%



Table 10: Revenue Growth Optimism in the Global Construction Industry by Suppliers (%), 2009–

2013

Growth Optimism Construction Equipment and Materials Suppliers Other Construction Industry Suppliers

2009 2011 2012 2013 2009 2011 2012 2013

More optimistic 32% 56% 56% 51% 35% 45% 43% 35%

Neutral 20% 10% 33% 28% 25% 13% 35% 22%

Less optimistic 46% 30% 10% 21% 36% 30% 10% 43%

Don't know 1% 4% 1% 0% 4% 13% 12% 0%

Overall 100% 100% 100% 100% 100% 100% 100% 100%



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Figure 2: Revenue Growth Optimism in the Global Construction Industry by Company Type (%),

2009–2013


3.1.2 Revenue growth projections by region

Of all survey respondents, 70% from companies that operate in the Rest of the World and 63% from

companies operating in North America are optimistic about revenue growth in 2013. Meanwhile, 48% of

respective respondents from companies operating in Europe and Asia-Pacific are optimistic about

revenue growth in 2013.

Interestingly, a significant percentage of respondents from companies operating in the Rest of the

World anticipate increased optimism for revenue growth due to the rising number of infrastructure

projects in several countries. For example, in March 2013, construction equipment manufacturer

Liebherr Group, based in Germany, opened a new sales and service subsidiary in Mexico. This unit will

initially handle sales and servicing of Liebherr mobile cranes in Mexico and other neighboring countries

in Central America. The company noted that the move to establish a Mexican subsidiary was in

response to the growing importance of this market for Liebherr, as large-scale investments in Mexico’s

energy sector and infrastructure have contributed for increased demand for mobile and crawler cranes.

The reason respondents from companies operating in North America are more optimistic about revenue

growth is because the US construction industry has started to recover alongside the country’s

improving GDP. In reference to the trend, in March 2013, Howard University in Washington, DC

partnered with Campus Apartments for a US$107 million residential expansion at its Northwest DC

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campus. The project will feature two on-campus residential facilities, which will house 1,360 students

and include social, study and programming spaces.

Table 11: Revenue Growth Optimism in the Global Construction Industry by Region (%), 2013

Growth Optimism North America Europe Asia-Pacific Rest of the World


Neutral 26% 17% 36% 10%


Don't know 0% 0% 4% 0%

Overall 100% 100% 100% 100%



Figure 3: Revenue Growth Optimism in the Global Construction Industry by Region (%), 2013


3.1.3 Revenue growth projections by turnover

Survey respondents from small companies are more optimistic about revenue growth than those from

medium-sized and large companies. This is indicated by the fact that 58% of respondents from small

companies are more optimistic of revenue growth in 2013, while 46% of respondents from medium-

sized and 45% from large companies share similar expectations. Additionally, a total of 35% of

respondents from large companies expressed that they are ‘neutral’ about their revenue growth outlook,

while another 20% are ‘less optimistic’.

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Table 12: Revenue Growth Optimism in the Global Construction Industry by Turnover (%), 2013

Growth Optimism Less than US$100 million US$100 million–US$1 billion More than US$1 billion

More optimistic 58% 46% 45%

Neutral 18% 25% 35%

Less optimistic 23% 29% 20%

Don't know 1% 0% 0%

Overall 100% 100% 100%



Figure 4: Revenue Growth Optimism in the Global Construction Industry by Turnover (%), 2013


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3.1.4 Revenue growth projections by senior-level respondents

A total of 58% of senior-level respondents expressed optimism regarding revenue growth. This

suggests that senior-level respondents are focusing on creating strategies for revenue growth as the

global economy continues to recover.

Please note that senior-level respondents comprise CEOs, MDs, VPs, SVPs, HODs and directors.

Table 13: Revenue Growth Optimism by Senior-Level Respondents (%), 2013

Growth Optimism Senior-Level Respondents

More optimistic 58%

Neutral 18%

Less optimistic 24%

Don't know 0%

Overall 100%



Figure 5: Revenue Growth Optimism by Senior-Level Respondents (%), 2013


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3.2 Future Developments in Business Structure in the Global Construction Industry

Construction companies across the world are being forced to adjust their business structures due to the

changing economic conditions. As a result, construction companies are focusing more on the business

structures that affect their future developments. Respondents were asked what their top priorities are in

developing their company's business structure in 2013. Respondents were also asked if they will be

expanding or diversifying into specific regions or product types. The answers have been analyzed into

different groups, which identify the apparent changes anticipated across the industry and provide an

insight into general global construction industry dynamics.

3.2.1 Future developments in business structure by contractors and developers

Overall, the key anticipated changes in business structure for construction contractors and developers

have not changed considerably from those identified in the 2012 Timetric construction survey. The main

priorities identified by construction contractors and developers for 2013 are the need to ‘expand in

current market’ and ‘improving operational efficiency’. The priorities indentified in the 2012 survey were

‘improving operational efficiency’, to ‘expand operations in domestic market’, ‘stabilize company

finances’, and ‘manage pricing strategies’.

‘Expand operations in domestic market’ has emerged as an important business priority for construction

contractors and developers. With the gradual recovery of the global construction industry, these

companies are looking to shift their focus from survival to growth. For example, in March 2013, London-

based construction services firm, Morgan Sindall, won a contract to build a new US$36 million office

building in Glasgow as part of the Clyde Gateway regeneration project. Morgan Sindall will redevelop

the vacant land on the banks of the River Clyde into 11,000 sq. m of office accommodation in a new

five-story building by October 2014. Similarly, in February 2013, Australian property development firm,

Stockland, selected Brookfield Multiplex as the preferred contractor for its US$125 million

redevelopment of the Stockland Wetherill Park shopping centre in south-west Sydney. Commenting on

the agreement, a senior executive from Brookfield Multiplex said:

“We have forged a strong relationship in recent years, having been involved in the redevelopment of

Stockland Merrylands, completed in October 2012, as well as Stockland Shellharbour which we're set

to hand over mid this year.”

For ‘improving operational efficiency’, several construction companies have started to implement

advanced IT technologies such as building information modeling (BIM). A company’s operational

efficiency directly affects its profit margins, and construction contractors and developers are

increasingly employing technological initiatives to improve their operational efficiency. In April 2013,

radio systems developer HBC-radiomatic, based in Germany, announced the introduction of Spectrum

E, a new radio control system, which has space for a large number of operating elements and features.

The device is suited for applications with large function ranges, such as bucket excavators, special

transport vehicles, and drilling machines, and also features a newly developed live video transmission

and user identification with the HBC data logger.

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Notably, 33% of respondents plan to ‘expand abroad’ to increase their revenue. Highlighting this trend,

in February 2013, real estate firm Tishman Speyer US formed a joint venture with residential property

developer, China Vanke, to develop a luxury residential complex in California. The new residential

condominium project will comprise two residential towers of 37 and 42 stories connected to each other,

which together will accommodate 655 residences in total. China Vanke believes the project will be a

new beginning for its overseas activity and will help influence required co-operation and benefits to

explore similar projects outside China. Commenting on the partnership, a senior executive from China

Vanke said:

“The company is entering into the American market to better understand business models in a mature

market and to gain management experience through project cooperation. We selected the project as

Tishman Speyer is a global industry leader and a business partner who inspires our full confidence.”

In February 2013, the University of East London (UEL) and Sahara India Pariwar signed a MoU to

develop a new building in London's Docklands. UEL and Sahara India will work in partnership to invest,

develop and manage the International India Centre (IIC). Construction on the IIC is expected to

commence in 2014 and completion is expected by December 2015.

According to a press release from Oxford Business Group in December 2012, the slowdown in the

South African construction industry due to a limited number of state infrastructure projects presents

itself as a substantial stimulus for local construction firms to try and expand their activity abroad. A

senior executive from construction and engineering group Aveng said:

“The market remained tight, with tenders taking much longer to be awarded and contract terms

increasingly onerous. In South Africa, the envisaged US$96 billion public-sector infrastructure spend

has not yet translated into increased tender activity in the local market.”

Table 14: Key Expected Changes in the Business Structure of Construction Contractors and

Developers (%), 2013

Key Expected Changes Construction Contractors and Developers

Expand in current market 82%

Improving operational efficiency 53%

Expand abroad 33%

Hiring new talent 30%

Stabilizing company finances 25%

New products and services 25%

Focus on sustainability 22%

Pricing management 13%

Others 3%

Don't know 0%

N.B. Responses are not mutually exclusive, and therefore do not equal 100%


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Figure 6: Key Expected Changes in the Business Structure of Construction Contractors and



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3.2.2 Future developments in business structure by suppliers

The key changes in business priorities identified by construction equipment and materials supplier

companies for 2013 are ‘expand in current market’, ‘new products and services’, and ‘improving

operational efficiency’.

Survey results demonstrate that a total of 77% of supplier respondents are willing to ‘expand in current

market’. For example, in February 2013, All Erection & Crane Rental, based in Ohio, added 66 new

Link-Belt cranes including 14 truck cranes, 32 rough-terrain cranes and 20 crawler cranes to its national

fleet. A senior executive from the company commented:

“It's a huge deal, but a regular part of our annual fleet expansion. Doing such a large package here in

the first quarter reflects more on the surging appetite for cranes. Spread out to our branches, the cranes

will immediately start answering local needs, from daily rentals to major projects begging for longer-

term rentals."

Suppliers are also more focused on launching new products and services, to add value to their product

offerings and subsequently increase sales, as identified by 67% of respondents. For example, in April

2013, manufacturer of heavy equipment, Terex Corporation, announced the introduction of its new five-

axle all-terrain crane range at the Bauma Trade Fair 2013.

‘Improving operational efficiency’ is the business priority identified by the largest share, 51%, of

construction equipment and material supplier respondents. By improving operational efficiency,

suppliers can significantly reduce their operational expenses and improve their profitability. For

example, in April 2013, crane software supplier Hirschmann announced the introduction of the qScale

I2 telescopic crane control system through its Mobile Machine Control Solutions division. The new

crane control system is intended to simplify applications for smaller and medium-sized telescopic

cranes, and features both visualization and load moment indication for load measurement.

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Table 15: Key Expected Changes in the Business Structure of Construction Equipment and

Materials Suppliers (%), 2013

Key Expected Changes Construction Equipment and Materials Suppliers




Expand abroad 44%





Others 7%

Don't know 0%



Figure 7: Key Expected Changes in the Business Structure of Construction Equipment and

Materials Suppliers (%), 2013


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The key changes in business structure as identified by other construction industry supplier companies

for 2013 are ‘expand in current market’, ‘expand abroad’, and introduce ‘new products and services’.

Due to the increasing number of construction projects in several regions, many suppliers are recording

an increase in their business activities, and plan to expand their operations abroad. For example,

Manitowoc, a supplier company based in the US, announced the expansion of its customer support

services in Australasia with the opening of a new contact center in Sydney. Through this initiative, the

company strives to improve customer support for the growing number of its dealers and customers in

the region. The center, staffed by experienced engineers and technicians, organizes on-site support

and training, dispatches parts, provides technical assistance, and all other additional services to ensure

the correct and effective use of its products. A senior executive from the company stated:

“The new center is designed to promote better crane use and efficient operation while creating a new

platform to deliver customer support. We are expanding our operations in Australia and New Zealand,

and remain committed to helping our dealers and customers get the most from their cranes. This new

channel of communication will provide assistance and advice based on global experience and expert

knowledge. It will also help us to improve our services and meet the specific needs of customers and

dealers across the region."

Figure 8: Key Expected Changes in the Business Structure of Other Construction Suppliers (%),

2013


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3.3 Merger and Acquisition Activity Projections in the Global Construction Industry Executives from the global construction industry anticipate increased levels of consolidation in 2013, as

50% of respondents expect either a ‘significant increase’ or an ‘increase’ in merger and acquisition

(M&A) activity during 2013, as compared to 49% in 2012.

Slow recovery in the global economy and weak market conditions, a growing desire by large

construction companies to increase their global presence, and increased pressure of rising costs on

small and medium-sized construction companies are considered key drivers of M&A in 2013. In

January 2013, ground engineering company Keller Group UK announced the acquisition of Geo-

Foundations Contractors, based in Toronto, for US$9.3 million. Geo-Foundations offers design-build

solutions to the construction and mining industries across Canada, in addition to micro-piling, ground

anchors and specialty grouting services. Keller added that a combination of increasing market

acceptance of these techniques in Canada, along with the ground improvement techniques and

assistance from Keller’s existing US business, is expected to fuel significant growth over time. A senior

executive from Keller stated:

“Keller has worked in partnership with Geo-Foundations on a number of projects in recent years,

building a relationship of mutual respect. I am confident that together we are well positioned to fully

exploit the opportunities in this attractive market. This acquisition builds on our strong track record of

expanding into higher-growth geographic regions through both organic growth and targeted

acquisitions.”

3.3.1 M&A activity projections by contractors and developers

Respondents from construction contractor and developer companies expect increased levels of

consolidation in 2013, and 50% of contractor and developer respondents forecast either a ‘significant

increase’ or an ‘increase’ in M&A activity as a result of gradual recovery in the global construction

industry, growing infrastructure needs due to urbanization, and increased demand for sustainable

construction. A staff-level executive from a construction contractor company based in North America

stated:

“We expect a continued consolidation within the industry due to pressure on medium-sized firms, as

large construction companies seem to ride the uneven market conditions better and have better orders

on the books.”

Several construction contractors and developers view mergers and acquisitions as a preferred method

for enhancing their operational efficiency. An executive from a construction sub-contractor company

based in Europe noted:

“As the construction industry is oversubscribed with a number of wealthy players looking to broaden

skills and market exposure, we forecast an increase in M&A activity in 2013.”

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In addition, a staff-level executive from an architecture and design company based in Europe

commented:

“We project a significant increase in M&A activity in 2013 as there is insufficient work for architects in

the UK. Clients and developers are working with unqualified people to save money.”

For example, in January 2013, shopping center Westfield Australia and property developer Hammerson

in the UK announced a joint venture to redevelop the US$1.6 billion (GBP1 billion) Whitgift and Centrale

shopping centers in Croydon, London. Westfield acquired a 50% interest in the US$184 million Centrale

shopping centre from Hammerson, and will jointly redevelop and combine the two shopping centers into

a mixed-use scheme, which will accommodate approximately 200,000 sq. m of retail, leisure, and

residential facilities for hotels and offices.

Table 16: M&A Activity Projections of Construction Contractors and Developers (%), 2009–2013

M&A Projections 2009 2011 2012 2013

Significant increase 5% 10% 9% 8%

Increase 43% 48% 43% 42%

No change 32% 26% 27% 32%

Decrease 9% 3% 5% 3%

Significant decrease 2% 1% 0% 0%

Don't know 9% 13% 16% 15%

Overall 100% 100% 100% 100%



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Figure 9: M&A Activity Projections of Construction Contractors and Developers (%), 2009–2013


3.3.2 M&A activity projections by suppliers

Respondents from global equipment and materials supplier companies expect increased levels of

consolidation in the global construction industry in 2013, as 46% of respondents expect either a

‘significant increase’ or ‘increase’ in M&A activity. Some of the main reasons for this projected increase

include uneven market conditions, growing infrastructure needs, rising operational costs, and the need

for geographic expansion. A C-level executive from construction materials supplier based in North

America commented:

“The rate at which companies are liquidating is still high versus the pre-recession period, and to survive,

organizations will pursue mergers within their industry sectors to create larger barriers to entry for new

entrants, and ensure more substantial economies of scale.”

In addition, a manager-level executive from a construction equipment supplier stated:

“The ongoing financial constraints will continue to drive companies to reduce costs and consolidate.”

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A senior executive from a supplier company that operates in the Asia-Pacific region stated:

“We are quite optimistic about what lies ahead of us. We do believe that most of the countries in the

Middle East and Asia will continue to grow steadily for the next few years, especially those that have

plenty of natural resources.”

Highlighting this rising trend in M&A, in January 2013, TNT Crane & Rigging based in the US

announced a merger agreement with Southway Crane & Rigging in the US. The deal is expected to

expand TNT’s geographic operations along the Gulf Coast and into the South-East. A senior executive

from TNT commented on the merger:

“This combination puts us in a stronger and more competitive position from numerous perspectives. We

will achieve greater industry and geographic diversification which greatly mitigates our overall business

and concentration risk. Our combined fleets and capabilities, strong customer relationships and deep

operational experience provide an excellent runway for strategic growth through maximizing utilization,

penetrating new contiguous markets and taking advantage of pull-through customer relationships in

new geographies.”

Table 17: M&A Activity Projections of Construction Equipment and Materials Suppliers (%),

2009–2013

M&A Projections 2009 2011 2012 2013


Increase 46% 42% 40% 44%

No change 21% 25% 33% 30%

Decrease 10% 6% 0% 9%


Don't know 14% 14% 16% 14%

Overall 100% 100% 100% 100%



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Figure 10: M&A Activity Projections of Construction Equipment and Materials Suppliers (%),

2009–2013


Furthermore, respondents from other construction industry supplier companies expect increased levels

of consolidation in 2013, as 57% of respondents expect either a ‘significant increase’ or ‘increase’ in

M&A activity. Several other supplier companies are focusing on overseas acquisitions to expand their

operations and diversify their activities. For example, in January 2013, Swedish mining equipment

supplier Atlas Copco announced its decision to acquire Meyco Equipment from BASF Construction

Chemicals Europe. Atlas Copco stated that the contract broadens its offering of mobile equipment for

applying sprayed concrete in underground operations. A senior executive from Atlas Copco noted:

“This acquisition is a good strategic fit for Atlas Copco as it broadens the offering for our existing

customers. Shotcreting is a growth segment thanks to high safety requirements in tunneling, and we

look forward to introducing these products through our global sales channels, both to mining and

underground civil construction customers."

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Table 18: M&A Activity Projections of Other Construction Suppliers (%), 2009–2013

M&A Projections 2009 2011 2012 2013


Increase 44% 43% 38% 48%

No change 19% 23% 35% 26%

Decrease 12% 2% 4% 0%


Don't know 14% 21% 14% 17%

Overall 100% 100% 100% 100%



Figure 11: M&A Activity Projections of Other Construction Suppliers (%), 2009–2013


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3.3.3 M&A activity projections by region

The majority of respondents from companies that operate in North America and Europe expect an

increase in M&A activity during 2013. Specifically, 53% of respondents from companies that operate in

Europe expect increased levels of M&A activity, along with 52% of respondents from companies that

operate in North America and 44% of respondents from companies operating in Asia-Pacific.

Interestingly, European construction companies are particularly focused on acquiring firms in the rapidly

developing regions of India and China. Such initiatives will not only help companies improve their

profitability over the long term, but also diversify and mitigate risks. For example, a C-level executive

from an architecture company based in Europe stated:

“As businesses are still struggling following the economic downturn, it makes sense for companies to

join forces, even in an informal partnership setup.”

The Asia-Pacific and the Rest of the World regions have also emerged as important hubs in M&A for

construction equipment suppliers, due to the introduction of large-scale construction projects across key

countries. For example, in February 2013, Finnish engineering and technology firm Metso Corporation

announced its decision to strengthen its presence and capabilities in mining and construction through

the acquisition of manganese steel foundry, JX, in China. Metso notes that the acquisition of JX will

improve its capabilities to supply wear parts to customers in China and other markets of Asia Pacific. A

senior executive from Metso commented on the acquisition:

“The acquisitions of JX and Shaorui Heavy Industries Ltd and the joint venture with LiuGong Group

Corp. Ltd, announced in November 2012, significantly strengthen our supply capabilities for mining and

construction industries in China. Metso now has a complete range of capital equipment and wear parts

covering a wide range of customer requirements. By acquiring a new steel foundry in China we are able

to better serve the needs of our Chinese customers. We already have the most extensive services hub

and distribution network in our industry. With this acquisition we will strengthen our manufacturing

presence in China and further develop our services business. We will improve our capability to supply

wear parts to our mining and construction customers close to their operations and increase the flexibility

and resilience of our wear-products supply chain. We also intend to use the acquired site as a platform

to further develop our services capabilities in China.”

Zamil Industrial Investment Company, based in Saudi Arabia, announced the purchase of two

undisclosed companies for US$80 million in 2013. Zamil Industrial posted a 39.4% increase in its third-

quarter net profits in 2012, and forecasts similar growth in 2013 due to heavy expenditure by the

government of Saudi Arabia on infrastructure. A senior executive from the company noted:

“We think expanding through acquisitions along with organic growth gives us the targeted growth that

we aspire to attain.”

INDUSTRY DYNAMICS




Table 19: Global Construction Industry – M&A Activity Projections by Region (%), 2013

M&A Projections North America Europe Asia-Pacific Rest of the World


Increase 48% 47% 32% 40%

No change 37% 25% 32% 40%

Decrease 0% 5% 8% 10%


Don't know 11% 17% 16% 10%

Overall 100% 100% 100% 100%



3.3.4 M&A activity projections by company turnover

An analysis of survey results reveals that 54% of respondents from medium-sized companies expect an

increase in M&A activity during the next 12 months, while 51% of respondents from small companies

and 40% from large companies anticipate similar trends.

Table 20: Global Construction Industry – M&A Activity Projections by Turnover (%), 2013

M&A Projections Less than US$100 million US$100 million–US$1

billion

More than US$1 billion

Significant increase 9% 0% 5%

Increase 42% 54% 35%

No change 24% 36% 45%

Decrease 4% 7% 5%

Significant decrease 0% 0% 0%

Don't know 21% 4% 10%

Overall 100% 100% 100%



INDUSTRY DYNAMICS




3.4 Estimation of Capital Expenditure in the Global Construction Industry

Capital expenditure is the amount spent on buying fixed assets, including mergers and acquisitions.

Capital expenditure accounts for all the investments designed to drive future growth of a construction

company. This section identifies the change in the capital expenditure of construction industry

contractors and developers and suppliers. Respondents were asked: “How do you expect your firm’s

capital expenditure to change in 2013?” The responses have been analyzed by company type, region

and turnover.

3.4.1 Estimation of capital expenditure by contractors and developers

An analysis of responses by construction contractor and developer companies reveals that capital

expenditure is expected to increase in 2013 on ‘new product developments’, ‘IT infrastructure

developments’, and ‘machinery and equipment purchases’.

‘New product developments’ or new project development is an important area of capital investment for

construction contractors and developers. For example, in March 2013, LuLu Group of the UAE

announced investments of US$293 million to open a new shopping mall in India, designed by UK

engineering consultancy firm Atkins. Similarly, in January 2013, American soccer team New York

Cosmos submitted a proposal to the New York's Empire State Development to construct a US$400

million soccer stadium at Belmont Park racetrack in Nassau County, New York, in cooperation with

Turner Construction. Cosmos employed architecture and construction companies such as Populous,

Spector Group and Cameron Engineering for building the project, named Elmont Crossings, on 28

acres of land with seating capacity for 25,000 people.

Additionally, in April 2013, UK construction and support services firm Interserve announced a joint-

venture agreement with Tiger Developments to construct a US$307 million mixed-use development

next to Haymarket station in Edinburgh. Furthermore, in March 2013, real estate firm Education Realty

Trust (EdR), based in the US, secured a contract to develop a US$46.1 million collegiate housing

community at Duke University in Durham, North Carolina. EdR will provide development, construction

oversight, and management services for the 386-bed community building.

Furthermore, construction developers have started investing in IT solutions to improve productivity and

lower overhead charges. They have also started to invest in technologies such as cloud computing and

enterprise resource planning applications, leading to significant savings. For example, in January 2013,

Rendsburg Port Authority in Germany announced an investment in Tandem Lift Assistant through Terex

Port Solutions, a supplier of industrial cranes. The new unit allows the two existing cranes at its port to

be used simultaneously for computer-controlled tandem lifts. A senior executive from Rendsburg Port

Authority stated:

“The Tandem Lift Assistant enables us to perform lifts with loads weighing up to 250 tons, which is

more than any other crane in this region of Germany. Thanks to this capability, our cranes offer

customers around the Kiel Canal a unique opportunity, which, of course, ensures us a competitive

advantage when it comes to handling large, bulky and very heavy cargoes.”

INDUSTRY DYNAMICS




‘Machinery and equipment purchases’ have also turned into a chief area of investment for contractors

and developers, as large companies expect to get their work done faster and with more efficiency. For

example, in April 2013, Baldwins Crane Hire of the UK announced an investment in two new heavy

lifting mobile cranes from Liebherr UK. Baldwins notes that its investment in the new LTM 1500 8.1 and

a LTM 1350 6.1 crane models will complement its existing range of Liebherr cranes and improve its

overall operational efficiency and timeline adherence.

Table 21: Capital Expenditure Expectations by Construction Contractors and Developers (%),

2013

Expenditure Categories

Increase

significantly

Increase

slightly

Stay

unchanged

Reduce

slightly

Reduce

significantly

Don’t

know Overall

New product developments 16% 40% 38% 3% 2% 2% 100%

IT infrastructure

developments

5% 48% 40% 3% 3% 0%

100%

Machinery and equipment

purchases

7% 41% 34% 11% 5% 2%

100%

New facility acquisitions 4% 20% 59% 5% 5% 7% 100%

Mergers and acquisitions 0% 14% 67% 5% 4% 11% 100%



Figure 12: Capital Expenditure Expectations by Construction Contractors and Developers (%),

2013


INDUSTRY DYNAMICS




3.4.2 Estimation of capital expenditure by suppliers

Construction equipment and materials suppliers plan to increase capital expenditure on ‘new product

developments’ in 2013, as indicated by 70% of survey respondents. Several suppliers focus on

developing new and innovative solutions, and have started to invest in R&D to develop their product

portfolios and gain business from new contractors and developers. For example, in January 2013,

metal roofing solutions provider, S-5, introduced its new S-5-N attachment clamp, designed specifically

for distinctive one-inch nail strip-metal roof profiles and solves a long-standing problem within the metal

roof industry, that of attaching ancillaries to nail strip profiles.

In 2013, suppliers also plan to increase capital expenditure on ‘IT infrastructure developments’ and

‘machinery and equipment purchases’ as identified by 56% and 54% of respondents respectively. For

example, in April 2013, French anti-collision system manufacturer SMIE launched Prosite Safety, the

first module of its completely new crane management system. Designed in consultation with SMIE

customers and users, the company expects this new modular system to satiate the needs of the

business and help construction professionals in their day-to-day site-management activities.

Figure 13: Capital Expenditure Expectations by Construction Equipment and Materials Suppliers

(%), 2013


INDUSTRY DYNAMICS




Similarly, other construction industry suppliers also plan to ‘increase’ their capital expenditure on ‘new

product developments’, ‘IT infrastructure developments’, and ‘machinery and equipment purchases’.

For example, in January 2013, Morrow, a supplier for Liebherr, introduced the new Liebherr 81K to the

North American market. Morrow noted that building contractors, material handlers and manufacturers

will be able to benefit from the 81K's ease of use, lifting capacities and versatility. In addition, in April

2013, German supplier Zandt Cargo introduced trailer solutions including 10 low-loader trailers and

tandem trailers. In April 2013, Akerstroms Bjorbo announced investment in several radio-remote-control

products as part of its new product series Era, belonging to the Remotus family of radio-control

products and instrumental for safety in industrial and mobile applications.

Table 22: Capital Expenditure Expectations by Other Construction Suppliers (%), 2013


Increase

significantly

Increase

slightly

Stay

unchanged

Reduce

slightly

Reduce

significantly

Don’t

know Overall

New product developments 14% 64% 9% 0% 14% 0% 100%

IT infrastructure

developments

4% 35% 39% 4% 13% 4%

100%


purchases

4% 22% 52% 9% 9% 4%

100%

Mergers and acquisitions 0% 23% 50% 0% 9% 18% 100%

New facility acquisitions 5% 14% 45% 9% 14% 14% 100%



Figure 14: Capital Expenditure Expectations by Other Construction Suppliers (%), 2013


INDUSTRY DYNAMICS




3.4.3 Estimation of capital expenditure by region

Analysis of responses by region reveals no significant variations in capital expenditure expectations.

Most respondents expect investment to increase in ‘new product development’ and ‘IT infrastructure

developments’, regardless of their region of operation. Respondents from North America, Europe and

the Rest of the World also prefer ‘machinery and equipment purchases’.

The figure and table below compare the opinions of respondents, and only include the percentage of

responses that expect an increase in capital expenditure.

Table 23: Global Construction Industry – Increase in Capital Expenditure by Region (%), 2013

Expenditure Categories North America Europe Asia-Pacific Rest of the World

IT infrastructure developments 66% 50% 46% 40%

Machinery and equipment purchases 70% 42% 31% 50%

Mergers and acquisitions 8% 21% 21% 20%

New facility acquisitions 27% 27% 33% 30%

New product developments 85% 62% 59% 40%



Figure 15: Global Construction Industry – Increase in Capital Expenditure by Region (%), 2013


INDUSTRY DYNAMICS




3.4.4 Estimation of capital expenditure by company turnover

Respondents’ capital expenditure expectations demonstrate minor variations according to company

size. ‘New product development’ is the area most expected to receive increased investment, regardless

of company turnover.

The figure and table below compare the opinions of respondents, and only include the percentage of

responses that expect an increase in capital expenditure.

Table 24: Global Construction Industry – Increase in Capital Expenditure by Turnover (%), 2013


Less than

US$100 million

US$100 million–

US$1 billion

More than

US$1 billion

IT infrastructure developments 53% 50% 47%


purchases

49% 52% 30%

Mergers and acquisitions 15% 26% 20%

New facility acquisitions 30% 30% 25%

New product developments 61% 66% 70%



Figure 16: Global Construction Industry – Increase in Capital Expenditure by Turnover (%), 2013


INDUSTRY DYNAMICS




3.5 Planned Change in Staff Recruitment Activity in Global Construction Industry

This section identifies the expected change in staff recruitment by construction buyer and supplier

companies over the next 12 months. Respondents were asked: “What change do you expect in hiring

staff at your organization in 2013?” The responses are analyzed by company type, region and company

turnover.

3.5.1 Planned change in staff recruitment activity by contractors and developers

Regardless of the slow growth rate in many economies, hiring activity is expected to increase in the

construction industry over 2013. According to the survey, a total of 40% of respondents from

construction contractor and developer companies anticipate a maximum 2% increase of their current

workforce in 2013. Information released by the Associated General Contractors of America and

Computer Guidance Corporation in January 2013 reveals that more construction firms are planning to

add new staff as demand for various private-sector construction projects is forecast to increase in 2013.

A senior executive from the association commented:

“While the outlook for the construction industry appears to be heading in the right direction for 2013,

many firms are still grappling with significant economic headwinds. With luck and a lot of work, the

hard-hit construction industry should be larger, healthier, more technologically savvy and more

profitable by the end of 2013 than it is today.”

In addition, in January 2013, the BCA of Singapore revealed that strong construction demand is

projected for 2013, along with increased demand for manpower development programs. The BCA also

noted that, along with its current BCA-Industry undergraduate scholarship, diploma scholarship and

sponsorship and apprenticeship programs, it intends to roll out two new manpower development

programs – a full-time undergraduate sponsorship program and an ITE scholarship program. A senior

executive from BCA commented:

“The two new programs are the latest additions to BCA’s comprehensive suite of manpower

development programs to meet the strong demand from the industry and to attract and retain talents to

pursue a meaningful and rewarding career in the built environment sector.”

Furthermore, in March 2013, according to the data released by the Associated General Contractors of

America, the construction industry in the US recruited 48,000 people in February 2013. Residential

construction firms added 19,400 jobs in February 2013, while non-residential construction, including

building, specialty trade, and heavy and civil engineering construction, expanded by 29,000 employees.

A senior executive from the association commented:

“With construction employment increasing by the largest amount for a single month in nearly six years,

the steady improvement in construction hiring is particularly encouraging. The job gains are coming

from every part of the construction industry, and while the sector’s unemployment rate remains

stubbornly high, it is heading in the right direction.”

INDUSTRY DYNAMICS




Table 25: Global Construction Industry – Planned Change in Staff Recruitment Activity by

Contractors and Developers (%), 2013

Staff Hiring Construction Contractors and Developers

Large increase – 2%+ of current workforce 22%

Steady increase – up to 2% of current workforce 40%

No change 22%

Steady decrease – up to 2% of current workforce 7%

Large decrease – 2%+ of current workforce 7%

Don't know 3%

Overall 100%



Figure 17: Global Construction Industry – Planned Change in Staff Recruitment Activity by

Contractors and Developers (%), 2013


INDUSTRY DYNAMICS




3.5.2 Planned change in staff recruitment activity by suppliers

Overall, 56% of respondents from construction equipment and materials supplier organizations, and

39% of respondents from other construction industry supplier companies expect a maximum increase

of 2% of their current workforce in 2013. A total of 16% of respondents from construction equipment

and materials supplier companies and 13% of respondents from other construction industry supplier

companies expect substantial increases in staff recruitment of over 2% of their current workforce in

2013.


Suppliers (%), 2013

Staff Hiring

Construction Equipment and

Materials Suppliers

Other Construction

Industry Suppliers

Large increase – 2%+ of current workforce 16% 13%

Steady increase – up to 2% of current workforce 40% 26%

No change 30% 39%

Steady decrease – up to 2% of current workforce 7% 17%

Large decrease – 2%+ of current workforce 7% 4%

Don't know 0% 0%

Overall 100% 100%




Suppliers (%), 2013


INDUSTRY DYNAMICS




3.5.3 Planned change in staff recruitment activity by region

Analysis of the planned change in recruitment activity by region shows that 80% of respondents

operating in the Rest of the World expect to increase their current workforce in 2013, compared to 74%

in North America, 60% in Asia-Pacific, and 43% in Europe. However, 34% of respondents from Europe

forecast ‘no change’ in the size of their current workforce during 2013.


Region (%), 2013

Staff Hiring North America Europe Asia-Pacific Rest of the World

Large increase – 2%+ of current workforce 30% 13% 20% 20%

Steady increase – up to 2% of current workforce 44% 30% 40% 60%

No change 15% 34% 32% 10%

Steady decrease – up to 2% of current workforce 7% 11% 4% 10%

Large decrease – 2%+ of current workforce 4% 9% 4% 0%

Don't know 0% 3% 0% 0%

Overall 100% 100% 100% 100%


Source: Timetric Industry Survey 2013 v © Timetric


Region (%), 2013


INDUSTRY DYNAMICS




3.5.4 Planned change in staff recruitment activity by company turnover

An analysis of the planned change in staff recruitment activity by company turnover shows that 57% of

respondents from both small and medium-sized companies expect an increase in their companies’

workforces in 2013, compared to 50% from large companies. However, 40% of respondents from large

companies anticipate ‘no change’ in the size of their current workforce during 2013.


Company Turnover (%), 2013

Staff Hiring

Less than US$100

million

US$100 million–

US$1 billion

More than US$1

billion

Large increase – 2%+ of current workforce 22% 11% 15%

Steady increase – up to 2% of current workforce 35% 46% 35%

No change 28% 18% 40%

Steady decrease – up to 2% of current workforce 9% 11% 5%

Large decrease – 2%+ of current workforce 4% 14% 5%

Don't know 3% 0% 0%

Overall 100% 100% 100%




Company Turnover (%), 2013


MARKET GROWTH OUTLOOK




4 Global Construction Industry Market Growth Outlook

This chapter provides an assessment of the emerging markets that marketing executives should target,

and the survey respondents’ interpretations of the economic situation in developed markets. Responses

are analyzed by company type, region and company turnover.

Key Findings:

Across the global construction industry, China, India, the UAE, Brazil, and Eastern Europe are identified as promising emerging markets for construction activity in 2013

Respondents from construction contractor and developer companies identified India, Brazil, the UAE, China and Saudi Arabia as emerging markets that are expected to offer strong growth opportunities

The US; Canada; Singapore, Taiwan and Hong Kong; the UK and Australia are developed countries with the strongest growth potential in 2013

Construction contractors and developers identified the US, Canada, the UK, South Korea and Australia as developed countries with strong growth potential

Respondents from construction equipment and materials supplier companies identified the US; Singapore, Taiwan and Hong Kong; and Canada as promising developed countries

Figure 21: Global Construction Industry – Top Ten Growth Regions (%), 2013






4.1 Global Construction Industry – Demand in Emerging Markets

Respondents were asked: “Which emerging markets do you expect to offer your industry significant

growth prospects in 2013–2014?” Responses have been categorized by different stakeholder

categories to identify the specific growth regions for each.

Figure 22: Global Construction Industry – Top Five Emerging Markets, 2013


4.1.1 Demand in emerging markets by contractors and developers

Respondents from construction contractor and developer companies identified India, Brazil, the UAE,

China and Saudi Arabia as the most promising emerging markets in terms of growth opportunities for

the global construction industry in 2013. In 2012, China, India, the UAE, Saudi Arabia, and Eastern

Europe were identified as the most promising emerging markets.

Construction activity in India increased steadily over the last decade due to growth in infrastructure

developments in housing, roads, ports, aviation and power generation, turning it into one of the most

sought-after emerging markets. In April 2013, the shipping ministry announced plans to award contracts

worth US$4.57 billion in 2013 for port development projects, aiming to bring an additional 288.48 million

metric tons per annum (MMTPA) to the existing facilities. A senior-level government executive of the

shipping industry in India stated:

“The achievement of the ministry during 2012–2013 has been outstanding. We have finalized the action

plan for this year (2013–2014) and a target of 30 port development projects has been fixed.”





The Indian Government has also decided to establish two new major ports at West Bengal, and another

in Andhra Pradesh, expected to add capacity of 100 MMTPA. The government is also developing new

nuclear power reactors worth US$4.47 billion at its Kakrapar, Gujarat and Rawatbhata, Rajasthan

locations.

Brazil has emerged as another important market for the global construction industry, as identified by

34% of contractors and developers. In preparation for two major sporting events, the 2014 FIFA World

Cup and the 2016 Olympic Games, Brazil is experiencing a major construction upheaval. Significantly,

both sporting events together are expected to create 12,265 infrastructure projects across the country,

adding to its emergence as a sought-after destination for construction companies. In the past few years,

major investments have been made in every sector of the country's construction industry: transport

links, such as roads, railways, airports and seaports are being improved and expanded, new power

plants are being planned to meet the increasing demand for electricity, and programs have been

implemented to overcome the constantly growing shortage of housing. The Brazilian Government’s

public housing program, called ‘minha casa minha vida', aims to build 18 million new homes by 2022,

revolutionizing the country’s residential sector. Additionally, Belo Monte, the world’s third most powerful

hydroelectric dam, is under construction on the Xingu river, targeted to deliver 11,233MW of power on

its completion in 2015 in a project worth US$10.13 billion.

Table 29: Demand in Emerging Markets by Construction Contractors and Developers (%), 2013

Emerging Markets Construction Contractor and Developers

India 34%

Brazil 34%

UAE 34%

China 29%

Saudi Arabia 21%

Eastern Europe 21%

Russia 16%

Mexico 16%

Turkey 16%

Vietnam 9%

Argentina 5%

Indonesia 5%

South Africa 5%







Figure 23: Demand in Emerging Markets by Construction Contractors and Developers (%), 2013


4.1.2 Demand in emerging markets by suppliers

Respondents from construction equipment and materials supplier companies identified China, India

Russia, Eastern Europe and Brazil as emerging markets that offer strong growth potential for the global

construction industry in 2013. These results vary slightly from those recorded in the 2012 survey, where

China, Russia, Brazil, South Africa and Saudi Arabia were identified as promising emerging markets.

Unlike contractors and developers, who chose India, equipment and materials suppliers consider China

to be a promising emerging market, as indicated by 46% of respondents. Demand for construction

equipment and materials in China has increased in the last five years due to increased investments in

the infrastructure sector, as plans for the construction of roads, rail projects, high-rise residential

complexes, hotels and urban planning projects are under way in different states across China. In

September 2012, US construction equipment manufacturer Caterpillar forecast that China's

construction equipment market would finally emerge from its downturn in 2013, following an

announcement by the Chinese government’s infrastructure investment program. A senior executive

from Caterpillar commented:

“With the announcement of the US$150 billion infrastructure investments made by China's National

Development and Reform Commission, we could expect to see some positive change in the industry,

maybe as early as the first quarter of 2013. In addition, China's decision to accelerate investment in

infrastructure projects is going to have a direct positive impact on our industry and Caterpillar's

business in China."

In March 2013, the Urban Planning and Design Institute of Shenzhen and architectural firm Hassell

together secured a deal for an urban planning project in China. This has created opportunities for

construction equipment and materials suppliers to develop strategies for strengthening their positions in

China.





Russia has also emerged as an important emerging market, as identified by 34% of construction

equipment and materials suppliers. The Russian government’s focus on improving infrastructure has

increased investments in the sector, with various road construction and highway development projects

until 2020. Russia is also hosting the Winter Olympics 2014 in Sochi, followed by the Russian Grand

Prix at the same location. The construction of Olympic venues, race tracks and the development of rail

and highway projects connecting Sochi worth US$18 billion are under way. Russia also won the bid to

host the 2018 FIFA World Cup, and the sports ministry has already announced a budget of US$19

billion for efficient commissioning of the tournament. Significantly, 40% of this amount will be invested

towards the renovation and construction of stadiums, presenting substantial opportunities for suppliers.

Table 30: Demand in Emerging Markets by Construction Equipment and Materials Suppliers (%),

2013

Emerging Markets Construction Equipment and Materials Suppliers

China 46%

India 37%

Russia 34%

Eastern Europe 32%

Brazil 27%

UAE 24%

Turkey 22%

Mexico 20%

Saudi Arabia 20%

Indonesia 15%

Argentina 12%

Vietnam 12%

South Africa 10%







Figure 24: Demand in Emerging Markets by Construction Equipment and Materials Suppliers (%),

2013


Overall, respondents from other construction industry supplier companies identified China, the UAE,

Russia, Brazil and Turkey as emerging markets with growth potential in 2013. These results slightly

differ from 2012, when China, Brazil, India, Russia and South Africa were identified as promising

markets.

In 2013, China emerges as a key market that will offer strong growth opportunities, as identified by 43%

of the respondents. In January 2013, Atkins was selected by Karamay Construction Bureau, China, to

design the new Donghu central leisure area in Karamay, China. Additionally, in March 2013, Atkins

secured a contract to design a hotel and residential complex in Sanya, China. In March 2013,

Germany-based GMP Architekten won an international competition to design a 1.2 million sq. m

exhibition centre in China for Tianjin Planning Bureau, while in February 2013, Dutch architecture firm

OMA won a competition to design a financial office tower in Shenzhen, China.

The UAE is considered another significant emerging market by 35% of other construction industry

supplier respondents. According to a study by the Dubai Chamber of Commerce and Industry in

January 2013, the UAE's construction industry is expected to show sustainable growth in the next few

years, with investments gained from both public and private enterprises. Interestingly, the construction

industry contributed 10.3% of UAE’s GDP in 2011, and is forecast to contribute 11.1% in 2015.

Therefore, noticeable growth in the UAE’s construction industry is expected to provide significant

opportunities for construction suppliers to expand their operations in the country. For example, in

November 2012, the UAE government unveiled plans for a new city in Dubai which will feature a park

30% larger than Hyde Park in London, and in February 2013, US architectural firm Skidmore, Owings &

Merrill designed a 50-story twin-tower project for Emaar properties in Dubai.





According to suppliers’ opinions, other significant emerging markets for the global construction industry

in 2013 include Russia, Brazil and Turkey. US architectural firm Populous secured a contract in

December 2012 to design the Rostov stadium, one of the venues for the 2018 FIFA World Cup.

Additionally, in February 2013, UK architectural firm Scott Brownrigg was selected to provide a master

plan and architectural design for Skolkovo Park, Moscow, Russia, for Millhouse. The 104,000 sq. m

business park will feature six office buildings with an area of 14,300 sq. m, designed around a central

landscaped space with pools and woodland. In May 2012, Swanke Hayden Connell Architects US won

a contract to design the Palladium Tower project in Istanbul, Turkey. The Palladium Tower is expected

to provide 49,500 sq. m of office space, and each level of the building features naturally ventilated

landscape.

Table 31: Demand in Emerging Markets by Other Construction Suppliers (%), 2013

Emerging Markets Other Construction Industry Suppliers

China 43%

UAE 35%

Russia 30%

Brazil 26%

Turkey 26%

Eastern Europe 26%

India 22%

Indonesia 17%

Saudi Arabia 17%

Vietnam 13%

Argentina 9%

Mexico 9%

South Africa 4%







4.1.3 Demand in emerging markets by region

Respondents from all regions identified China as a key emerging market for the global construction

industry, followed by India and the UAE. Brazil, China and Mexico were also identified as promising

emerging markets by 52%, 48% and 40% respectively of respondents from companies operating in

North America. Of respondents operating in Europe, 43%, 39%, 38% expect Eastern Europe, Russia

and China respectively to be the most significant emerging markets. Meanwhile, respondents from

companies operating in the Asia-Pacific region identified India, the UAE, Indonesia, Vietnam and China

as potential high-growth markets.

The following figure compares the opinions of respondents by region, and only the percentage of

responses expecting increased growth opportunities are provided.

Table 32: Global Construction Industry – Increase of Demand in Emerging Markets by Region

(%), 2013

Emerging Market North America Europe Asia-Pacific Rest of the World

Argentina 20% 5% 8% 0%

Brazil 52% 26% 17% 30%

China 48% 38% 29% 30%

Eastern Europe 4% 43% 13% 10%

India 24% 33% 46% 20%

Indonesia 12% 3% 33% 0%

Mexico 40% 11% 8% 0%

Russia 12% 39% 13% 0%

Saudi Arabia 20% 18% 25% 20%

South Africa 4% 10% 4% 0%

Turkey 8% 28% 13% 20%

UAE 20% 31% 42% 30%

Vietnam 8% 5% 33% 0%







4.1.4 Demand in emerging markets by company turnover

Survey results show that respondents from large companies expect India, Brazil and China to provide

higher growth prospects. Meanwhile, respondents from small companies expect China, the UAE, India,

Brazil, Eastern Europe and Russia to offer the most growth opportunities. Respondents from medium-

sized companies identified China, Eastern Europe, Brazil, Russia, Turkey, India, and the UAE as

promising emerging markets for the global construction industry.

The following figure compares the opinions of respondents by company turnover. Only the percentage

of responses expecting increased growth opportunities are provided.

Figure 25: Global Construction Industry – Increase of Demand in Emerging Markets by Company

Turnover (%), 2013






4.2 Global Construction Industry – Growth Projections in Developed Countries

In the recovering global economy, expectations over developed markets to offer growth opportunities

are raising. This section identifies the developed markets that are expected to offer growth potential for

the global construction industry during 2013–2014. Respondents were asked: “For the following

developed markets, how do you expect demand to change in 2013–2014?”

Survey results indicate that the five developed markets that are projected to generate strong growth

prospects for the global construction industry in 2013 are the US, Canada, Singapore, Australia and the

UK.

Figure 26: Global Construction Industry – Top Five Developed Regions by Growth (%), 2013






4.2.1 Growth projections in developed countries by contractors and developers

Overall, of respondents from construction contractor and developer companies, 40% identified the US

as a developed market with strong growth opportunities, followed by Canada, as identified by 29%, and

the UK, as identified by 25% of respondents. These differ from the 2012 construction industry survey,

where Singapore, Taiwan and Hong Kong; the US and Australia, were identified as promising

developed markets.

According to the Bureau of Economical Analysis in the US, the percentage contribution of the

construction industry to the country’s GDP increased by 0.11% in 2012, as compared to -0.01% in

2011. Low interest rates, a gradual decline in unemployment, and overall improvement in the economy

have contributed to the US construction sector gaining strength in 2013, which is expected to provide

significant opportunities for construction contractors and developers. For example, in January 2013,

EPR Properties, in cooperation with Empire Resorts and Monticello Raceway Management, received

approval from the Thompson Town Board to construct a US$600 million resort in New York by 2014.

The development will feature an indoor water park, golf course, an entertainment village with a cinema

and supporting retail, a casino resort including horse racetrack and grandstand, and a hotel. In March

2013, Malaysian gaming company Genting unveiled plans to construct a US$2 billion development

project, known as Resorts World Las Vegas, in Nevada. On completion in 2016, the project will feature

25,000 sq. m of retail space, over 50,000 sq. m of convention space, a hotel, theatre and a water theme

park.

Suppliers have also identified Canada as a developed market with ample growth opportunities for the

construction industry. Statistics Canada stated that overall profits of the construction industry grew from

US$3.2 billion in 2011 to US$3.7 billion in 2012. After an encouraging year in 2012, Statistics Canada

also forecasts an upward trend for the Canadian construction industry in 2013. For example, in January

2013, Bondfield Construction, based in Canada, secured the construction and financing contract for

renovating the Etobicoke Olympium community aquatics center at a cost of US$20 million, to be jointly

funded by the Government of Canada and the City of Toronto.

Among other developed markets, the UK is expected to offer strong growth opportunities in 2013, as

identified by 25% of respondents. For example, in March 2013, a Miller Construction-led consortium

won the bid for North Tyneside's Quality Homes for Older People project worth US$457 million. The

consortium, called Solutions for North Tyneside, will carry out the refurbishment and construction work,

and the development will feature over 900 apartments across 10 new and 16 refurbished sheltered

housing schemes. In April 2013, the University of Portsmouth in the UK selected ISG Construction for

the extension of the New Theatre Royal in Hampshire, a project that will include a four-floor extension

to the existing theatre, at a cost of US$18 million.





Table 33: Construction Contractors and Developers – Growth Projections in Developed

Countries (%), 2013

Developed Countries Increase

Remain

the same Decrease Don't know Overall

US 40% 23% 12% 25% 100%

Canada 29% 31% 5% 35% 100%

UK 25% 32% 16% 28% 100%

South Korea 22% 29% 5% 44% 100%

Australia 22% 30% 4% 44% 100%

Singapore, Taiwan and Hong Kong 22% 25% 4% 49% 100%

Japan 15% 35% 9% 41% 100%

Germany 13% 45% 7% 36% 100%

France 5% 41% 18% 36% 100%

Italy 4% 16% 43% 38% 100%

Spain 4% 20% 38% 38% 100%



Figure 27: Construction Contractors and Developers – Growth Projections in Developed

Countries (%), 2013






4.2.2 Growth projections in developed countries by suppliers

Respondents from construction equipment and material supplier companies identified the US;

Singapore, Taiwan and Hong Kong; and Canada as developed markets with the high growth potential

for the global construction industry. This is slightly different from the 2012 survey results where the US;

Australia; and Singapore, Taiwan and Hong Kong were identified as the key developed markets.

A rise in construction activity and recovery of the country’s economy has turned the US into a key

developed market for the construction industry. For example, in March 2013, North American Properties

started construction on a US$600 million mixed-use development in Georgia. The project, scheduled for

completion by 2014, will feature shops and restaurants, multi-family townhomes, offices, an ice skating

rink, a 300-room hotel and a 175-room boutique hotel. The project also includes a rainwater collection

system to irrigate landscaping throughout the development. In February 2013, Washington University

obtained approval from the city of St Louis and University City for its US$80 million student apartment

and retail project in the Delmar Loop. The project includes the construction of three residential

apartment buildings and two mixed-use buildings. The development will feature apartments for about

600 undergraduate students and 2,000 sq. m of new retail space to be located along Delmar Boulevard.

Singapore has emerged as another developed market with growth opportunities. In August 2012,

Ascendas Land formed a joint venture with Mitsui & Co to develop a US$295 million business park in

Singapore. Mitsui and Ascendas Land jointly established a special-purpose company, known as

Ascendas Fusion 5, for the project. The project, to be completed by 2014, will feature a 17-story facility

with a floor area of 67,490 sq. m, and is anticipated to offer ready-built spaces and lifestyle amenities to

industries such as IT, media and electronics. Additionally, in October 2012, the Housing and

Development Board of Singapore unveiled development plans for the second phase of Punggol town,

which will feature the development of seven waterfront housing districts. The second phase of

development will increase the number of housing units in Punggol from the existing 26,000 to 100,000,

making it Singapore's biggest housing town.

Hong Kong was identified as another important developed market to offer good growth opportunities

among construction equipment and supplier companies. In March 2013, Hong Kong’s Highways

Department signed a US$622 million contract with China State Construction Engineering for the

Central-Wan Chai Bypass. The contract involves the construction of a 300m-long section of twin-box

tunnel under the seabed of Causeway Bay Typhoon Shelter and a 150m-long slip-road tunnel beneath

the existing Victoria Park Road and the northern part of Victoria Park, scheduled to be completed by

2017. Additionally, the Government of Hong Kong has planned a cultural development project, called

the West Kowloon Cultural District, at a consideration of US$2.79 billion. The project will start in mid-

2013, and will include a new museum, and a number of theatres, concert halls and additional

performance venues.





Table 34: Construction Equipment and Materials Suppliers – Growth Projections in Developed

Countries (%), 2013

Developed Countries Increase Remain the same Decrease Don't know Overall

US 50% 37% 3% 11% 100%


Canada 41% 32% 5% 22% 100%

Germany 40% 43% 9% 9% 100%

Australia 40% 37% 3% 20% 100%

UK 39% 33% 17% 11% 100%

South Korea 26% 32% 6% 35% 100%

Japan 21% 32% 12% 35% 100%

France 17% 46% 26% 11% 100%

Italy 9% 43% 37% 11% 100%

Spain 9% 35% 41% 15% 100%



Figure 28: Construction Equipment and Materials Suppliers – Growth Projections in Developed

Countries (%), 2013






Respondents from other construction supplier companies identified the US, Canada and Australia as

developed markets with strong growth potential for the global construction industry in 2013. This varies

from the 2012 survey results, where Singapore, Taiwan and Hong Kong, Canada and the US were

considered promising developed markets

Of all respondents, 55% from other construction suppliers expect an increase in demand for

construction activities in the US. For example, the John F Kennedy Center for the Performing Arts has

selected Steven Holl Architects to design a US$100 million expansion project. The project will feature

rehearsal space, classroom space and multipurpose rooms for the center’s arts education and arts

management education programs.

Respondents from other construction supplier companies also expect Australia to offer growth

opportunities among the developed markets in 2013, as identified by 33% of respondents. In April 2013,

Paramatta city council announced plans to build a 90-story residential complex worth US$375 million in

Paramatta, New South Wales. The tower will feature 700 apartments, retail space in the lower levels

and a 150-room hotel. A senior executive from architectural company Grimshaw stated:

"The project has the ability to be transformative of its place and of the standards that can be achieved

within the models of affordable urban intensification."

Furthermore, property and infrastructure firm Sweett Group has been awarded a project management

contract worth US$653 million by CBus Property for its 1 William Street skyscraper project. On

completion, this project will be the second-tallest tower in Brisbane.

Table 35: Other Construction Suppliers – Growth Projections in Developed Countries (%), 2013

Developed Countries Increase Remain the same Decrease Don't know Overall

US 55% 27% 14% 5% 100%

Canada 41% 36% 0% 23% 100%

Australia 33% 24% 10% 33% 100%


South Korea 24% 29% 0% 48% 100%

UK 23% 45% 18% 14% 100%

Japan 19% 29% 19% 33% 100%

Germany 14% 48% 19% 19% 100%

Spain 10% 5% 62% 24% 100%

France 9% 45% 27% 18% 100%

Italy 0% 29% 48% 24% 100%







Figure 29: Other Construction Suppliers – Growth Projections in Developed Countries (%), 2013


4.2.3 Growth projections in developed countries by region

Analysis of responses by region reveals variations in growth expectations. Respondents operating in

North America expect the US and Canada to be promising developed markets, as identified by 81%

and 68% respectively. In contrast, respondents operating in Europe identified the UK and the US as

high-growth markets.

Furthermore, companies operating in the Asia-Pacific region anticipate Singapore, Taiwan and Hong

Kong, and Australia as developed markets projected to offer high growth opportunities. Additionally,

respondents operating in the Rest of the World expect South Korea and Singapore, Taiwan and Hong

Kong to offer growth opportunities among the developed markets in 2013.





Table 36: Global Construction Industry – Increase in Growth Projections of Developed Countries

by Region (%), 2013

Developed Countries North

America

Europe Asia-Pacific Rest of the

World

Overall

Australia 32% 25% 41% 33% 100%

Canada 68% 28% 23% 22% 100%

France 9% 15% 0% 0% 100%

Germany 18% 27% 18% 0% 100%

Italy 9% 5% 0% 0% 100%

Japan 27% 10% 30% 11% 100%


South Korea 32% 21% 14% 44% 100%

Spain 0% 12% 0% 0% 100%

UK 27% 41% 5% 0% 100%

US 81% 39% 36% 11% 100%



Figure 30: Global Construction Industry – Increase in Growth Projections of Developed

Countries by Region (%), 2013






4.2.4 Growth projections in developed countries by company turnover

Regardless of company turnover, respondents identified the US as a promising developed market for

the global construction industry in 2013. Respondents from small companies identified the UK and

Canada as other developed markets with growth potential. Respondents from large companies expect

Singapore, Taiwan and Hong Kong, and South Korea as promising markets among the developed

nations. Respondents from large and medium-sized companies expect Canada and Australia to provide

the most growth opportunities in 2013.

The following figure compares the opinions of respondents by company turnover. Only the percentage

of responses expecting increased growth opportunities are provided.

Table 37: Global Construction Industry – Increase in Growth Projections of Developed Countries

by Turnover (%), 2013

Developed Countries Less than

US$100 million

US$100 million–

US$1 billion

More than

US$1 billion

Overall

Australia 22% 44% 40% 100%

Canada 28% 48% 40% 100%

France 10% 13% 5% 100%

Germany 24% 20% 15% 100%

Italy 3% 8% 5% 100%

Japan 17% 17% 21% 100%

Singapore, Taiwan and Hong Kong 26% 29% 58% 100%

South Korea 20% 17% 45% 100%

Spain 6% 13% 0% 100%

UK 30% 29% 25% 100%

US 39% 50% 65% 100%



CONSTRUCTION INDUSTRY SUPPLIER MARKETING SPEND ACTIVITY




5 Threats and Opportunities for the Global Construction Industry

Constantly changing business dynamics present both threats and opportunities to companies in the

global construction industry. The important challenges currently facing contractors and developers and

suppliers, and how these can be overcome, have been identified in our industry survey. Respondents

were also surveyed on how suppliers can better maintain or secure business from contractors and

developers, and what the key opportunities for the global construction industry are during the next 12

months.

Key Findings

‘Cost containments’, ‘market uncertainty’, ‘retention or recruitment of skilled staff’ and ‘rising competition’ are immediate business concerns for the global construction industry

For construction contractors and developers, the three leading concerns for 2013–2014 are ‘cost containments’, ‘market uncertainty’ and ‘retention or recruitment of skilled staff’

The three leading concerns for other construction industry supplier respondents are ‘market uncertainty’, ‘cost containments’ and ‘rising competition’

Contractor and developer respondents consider supplier efforts to ‘provide support for generating new businesses’ and the adoption of practices to ‘innovate product’ and ‘improve customer services’ will help their businesses

As identified by senior-level executives, the most useful actions that suppliers should undertake are to ‘innovate products’, ‘improve customer services’ and ‘provide support for generating new businesses’

A total of 71% of respondents from construction contractor and developer companies expect ‘raw material’ costs, and 65% expect ‘energy’ costs, to ‘increase by less than 10%’ for 2013

According to the survey, 40% of respondents from construction equipment and materials supplier companies expect to increase their ‘energy’ costs by ‘5–25%’ during 2013

The majority of contractor and developer respondents indicate that their change in the costs structure will positively impact their contract values in 2013





5.1 Global Construction Industry – Leading Business Concerns for 2013–2014

‘Cost containments’ emerged as a leading challenge for the global construction industry in 2013–2014,

as showcased by the largest share, 56%, of industry respondents, while 55% identified ‘market

uncertainty’ as a key challenge. Other challenges that industry executives expect to face in 2013 are

‘retention or recruitment of skilled staff’ and ‘rising competition’. This indicates that the leading business

concerns of construction industry executives’ have not changed significantly from results recorded in

construction survey reports in 2009, 2011 and 2012.

Across the industry, ‘cost containment’ and ‘market uncertainty’ were identified as key business

concerns, reflecting industry sentiment that these factors could force industry contractors and

developers to re-evaluate their pricing strategies to adapt to market fluctuations, as well as compelling

suppliers and vendors to reduce prices as a result of an increased focus on cost preservation.

Moreover, companies plan to address ‘cost containment’ issues through the adoption of various

methods such as the streamlining of operations, usage of renewable sources of energy, mainly bio-

fuels, and the efficient utilization of equipment and resources. In April 2013, components supplier SKF

announced plans to introduce a new system to detect leakage within the centralized lubrication systems

of construction machines. The new system eliminates leakage, prevents the impact of leakage on the

environment, and also reduces clean-up and disposal costs.

Additionally, ‘retention or recruitment of skilled staff’ was identified as an important concern by 45% of

respondents in 2013. As demand for construction increases, the ‘retention or recruitment of skilled staff’

will be a key challenge for builders, as recruitment processes have been slowed down due to their

failure to locate skilled construction workers. For example, in February 2013, Rampart Construction US

announced the addition of 25 skilled workers in 2012, but cannot expand its worker count in 2013, as

many skilled workers have left the field to find other jobs due to uneven market conditions. A senior

executive from the company comments:

“People had to find other work to survive. Some of the laborers during the housing boom were

immigrants who went back to their home countries and haven't returned. In addition, our subcontractors

– such as those that install sheet rock – have also had a difficult time filling their staff, and are working

with smaller crews, which mean projects take longer to complete.”

Noticeably, ‘climate change challenges’ was identified as an important concern by 15% of respondents

in 2009. However, fewer respondents from the construction industry identified this as a concern in

2013. This suggests that companies are successfully implementing measures to combat the effects that

climate change will have. Furthermore, ‘rising competition’ has led to increased ‘pricing pressure’ for

many companies, which has negatively affected their bottom-line performance.





Figure 31: Global Construction Industry – Top Five Leading Business Concerns, 2013–2014






Table 38: Global Construction Industry – Leading Business Concerns (%), 2009–2013

Business Concerns 2009 2011 2012 2013

Cost containments 39% 42% 31% 56%

Market uncertainty 51% 54% 57% 55%

Retention or recruitment of skilled staff 25% 33% 31% 45%

Rising competition 0% 35% 32% 42%

Responding to pricing pressure 53% 44% 43% 38%

Reducing demand for products and services 47% 30% 26% 29%

Regulatory changes 16% 21% 21% 22%

Political interference 11% 25% 21% 21%

Lack of liquidity 26% 19% 15% 18%

Dealing with staff shortages 29% 16% 16% 17%

Debt 17% 23% 15% 14%

Climate change challenges 15% 9% 9% 7%

Natural hazards 0% 6% 4% 2%

Others 5% 3% 1% 5%

None of these 0% 0% 2% 1%



Figure 32: Global Construction Industry – Leading Business Concerns (%), 2009–2013






5.1.1 Leading business concerns for 2013–2014 by company type

The three leading concerns identified by construction contractors and developers for 2013–2014 are

‘cost containments’, ‘market uncertainty’, and ‘retention or recruitment of skilled staff’. Several

companies in the global construction industry are uncertain about the industry’s future growth due to

market uncertainty. To address this, companies are looking to improve productivity, expand into new

markets, strengthen their product portfolios, reduce unprofitable businesses, and use new technology

and materials. In February 2013, building contractor DPR Construction in California announced plans to

expand into South-East USA by acquiring Atlanta-based general contractor Hardin Construction. A

senior executive from DPR construction stated:

“Hardin is involved in the South-East and Florida and Texas, and was perfect for how we were trying to

grow.”

High employee attrition rates are an important cause of concern for many construction contractors and

developers, as organizations have to invest time and resources in hiring and training new recruits.

Several companies are, therefore, concentrating on developing strategies to retain their workforces by

providing quality training, enhancing their facilities and providing better amenities.

The three leading business concerns indentified by construction equipment and material supplier

respondents are ‘market uncertainty’, ‘cost containments’ and ‘responding to pricing pressure’. In

addition, ‘market uncertainty’, ‘cost containments’, and ‘rising competition’ are key concerns as

identified by other construction industry supplier respondents. This indicates that respondents still

consider cost-containment measures to be as effective as working-capital-management strategies, and

this could lead to pricing pressures and the promotion of unsustainable pricing in the global construction

industry. Consequently, many companies are planning to restructure their businesses and overhaul

their operational costs to improve profitability.

In January 2013, CoverGlobal, a Finnish manufacturer of balcony and terrace glazing products,

successfully restructured its global business operations. A senior executive from the company

commented that:

“The strength of our operation lies in our multi-cultural core team which is able to serve customers in six

different languages. In addition to Finns, the team has employed people from Asia, Africa and South

America. We feel that it is important to truly understand the culture and conditions of the country our

products are sold in and where our partner is operating in. In addition, Cover has developed a customer

program to support its partners; our company uses the program to help local operators develop their

own businesses. The program includes training and a versatile selection of tools which help the partner

launch their business operation with Cover solutions.”





Table 39: Leading Business Concerns by Company Type (%), 2013–2014

Business Concerns

Construction

Contractors

and Developers

Construction

Equipment

and Materials

Suppliers

Other Construction

Industry Suppliers

Climate change challenges 7% 9% 4%

Cost containments 53% 60% 52%

Dealing with staff shortages 22% 14% 9%

Debt 15% 19% 4%

Lack of liquidity 20% 21% 9%

Market uncertainty 43% 70% 57%

Natural hazards 0% 5% 4%

Political interference 23% 16% 22%

Reducing demand for products and services 25% 30% 35%

Regulatory changes 28% 16% 17%

Responding to pricing pressure 32% 49% 35%

Retention or recruitment of skilled staff 50% 47% 30%

Rising competition 42% 42% 43%

Others 3% 7% 4%

None of these 2% 0% 0%







5.1.2 Leading business concerns for 2013–2014 by region

When survey responses are analyzed by region, the results indicate that construction industry

companies across the globe have minor variations in their challenges. ‘Market uncertainty’ and ‘cost

containments’ are leading concerns for respondents operating from North America, Europe and Asia-

Pacific. In addition, ‘responding to pricing pressure’, ‘regulatory changes’ and ‘political interference’ are

key challenges identified by respondents from the Rest of the World region. Moreover, for respondents

from companies operating in North America and Asia-Pacific, the main business concern includes the

‘retention or recruitment of skilled staff’, while the main business concerns for those in Europe include

‘rising competition’.

Table 40: Global Construction Industry – Leading Business Concerns by Region (%), 2013–2014

Business Concerns North America Europe Asia-Pacific Rest of the

World

Climate change challenges 7% 6% 8% 10%

Cost containments 59% 55% 68% 20%

Dealing with staff shortages 33% 5% 24% 30%

Debt 15% 13% 16% 20%

Lack of liquidity 7% 19% 32% 10%

Market uncertainty 48% 61% 64% 10%

Natural hazards 0% 2% 4% 10%

Political interference 15% 20% 20% 40%

Reducing demand for products and services 15% 39% 20% 20%

Regulatory changes 15% 22% 24% 40%

Responding to pricing pressure 37% 41% 32% 40%

Retention or recruitment of skilled staff 63% 36% 56% 30%

Rising competition 37% 47% 44% 20%

Others 7% 5% 4% 0%








5.1.3 Leading business concerns for 2013–2014 by company turnover

Regardless of company size, survey respondents in the global construction industry consider ‘market

uncertainty’ and ‘cost containments’ to be leading business concerns. However, the ‘retention or

recruitment of skilled staff’ was identified as an important business concern by more respondents from

small and large companies than medium-sized companies. In addition, ‘responding to pricing pressure’

is identified as a business concern by respondents from medium-sized companies.

Table 41: Global Construction Industry – Leading Business Concerns by Turnover (%), 2013–

2014

Business Concerns

Less than

US$100 million

US$100 million–

US$1 billion

More than US$1

billion

Climate change challenges 6% 11% 5%

Cost containments 54% 57% 60%

Dealing with staff shortages 18% 11% 20%

Debt 18% 7% 10%

Lack of liquidity 21% 7% 25%

Market uncertainty 51% 54% 70%

Natural hazards 1% 7% 0%

Political interference 23% 11% 25%

Reducing demand for products and services 32% 32% 10%

Regulatory changes 27% 18% 10%

Responding to pricing pressure 35% 54% 30%

Retention or recruitment of skilled staff 44% 36% 65%

Rising competition 38% 46% 50%

Others 3% 7% 10%








5.2 Global Construction Industry – Key Supplier Actions to Maintain and Win Buyer

Business

Global economic uncertainty has forced companies in the global construction industry to prioritize cost

concerns in their business agenda. The industry’s demand dynamic is changing as regular purchasing

patterns have become disrupted due to the recession and the subsequent signs of recovery in some

areas of the world. These changes require proactive and improved methods of securing new business

and maintaining current business for supplier respondents, as construction industry contractors and

developers will review their current supplier base with increased scrutiny to identify potential cost

savings.

5.2.1 Actions to maintain and secure buyer business by company type

Contractors and developers, and suppliers were simultaneously asked about the three important ways

that suppliers can help secure business from contractors and developers during the current economic

climate. A comparison of contractors and developers’ and suppliers’ responses indicates little disparity

between contractors and developers’ expectations and suppliers’ understanding. Contractor and

developer respondents consider that supplier efforts to ‘provide support for generating new businesses’

and the adoption of practices to ‘innovate product’ and ‘improve customer services’ will help their

businesses. In comparison, supplier respondents are of the view that strategies to ‘innovate product’,

‘improve customer service’, and ‘reduce prices’ will benefit suppliers to stabilize their business. In the

2012 survey, contractors, developers and suppliers identified the need to ‘improve customer service’ as

an effective way for suppliers to gain business from contractors and developers.

It is evident from the results that contractors and developers’ requirements have changed slightly

between the 2012 and 2013 surveys, suggesting that although the industry is optimistic about revenue

growth expectations, concerns such as volatility in demand and supply, pricing pressures, rising costs,

and slow economic recovery have forced contractors and developers to shift their focus to ‘innovate

product’ and ‘provide support for generating new businesses’. For example, in April 2013, Italian truck-

mounted crane manufacturer Fratelli Ferrari announced the introduction of its new 700 series crane

model and new FL stability system. The new 729 crane is available with up to eight hydraulic

extensions and two jib versions: A4J4 and A6J4. The company will also be introducing a new stability

control system, named FL, which will be optional on most of its small range. This system will improve

control of the crane and make its operation much safer.

Notably, 14% of contractor and developer respondents want suppliers to ‘provide other concessions

and incentives’, whereas only 6% of suppliers are willing to do so. Moreover, ‘cost containment’ was

mentioned as one of the leading business concerns by 53% of contractor and developer respondents in

section 5.1.1 and, as a result, contractors and developers are focusing their efforts to reduce

unnecessary expenses and minimize costs; any help offered by the suppliers to supplement these

efforts should ensure increased loyalty to their services.





Table 42: Global Construction Industry – Securing Buyer Business: Buyer vs. Supplier

Responses (%), 2013

Actions

Contractors and

Developers Suppliers

Innovate products 41% 45%

Improve customer services 37% 39%

Provide support for generating new businesses 36% 32%

Reduce prices 34% 33%

Improve payment terms 32% 30%

Work harder to reduce costs 20% 32%

Engage in partnerships to optimize working capital and reduce costs 20% 23%

Offer more flexibility in delivery 17% 14%

Provide other concessions and incentives 14% 6%

Provide support for offsetting existing business attrition 12% 5%

Sign longer-term agreements 7% 6%

Demonstrate better ROI 7% 9%

Others 2% 3%

None of these 0% 2%



Figure 33: Global Construction Industry – Securing Buyer Business: Buyer vs. Supplier

Responses (%), 2013






5.2.2 Actions to maintain and secure buyer business by region

Respondents from companies across all regions consider efforts to ‘innovate products’ as an important

action that suppliers should take to secure business from contractors and developers. However, there

are some minor variations in different regions. Respondents from companies that operate in Europe

and Asia-Pacific assigned high importance to the need to ‘reduce prices’ and ‘improve customer

services’. Meanwhile, respondents from companies operating in North America identified ‘improve

payment terms’ and ‘provide support for generating new businesses’ as important actions that suppliers

can take to improve secure business from contractors and developers. Respondents from companies

operating in the Rest of the World identified ‘reduce prices’ as an important action for 2013.

Table 43: Global Construction Industry – Securing Buyer Business by Region (%), 2013

Actions North America Europe Asia-Pacific Rest of the

World

Demonstrate better ROI 11% 6% 8% 10%

Engage in partnerships to optimize working capital

and reduce costs

22% 17% 33% 20%

Improve customer services 37% 42% 46% 0%

Improve payment terms 41% 25% 38% 30%

Innovate products 41% 41% 50% 50%

Offer more flexibility in delivery 15% 20% 8% 0%

Provide other concessions and incentives 11% 8% 13% 10%

Provide support for generating new businesses 44% 34% 21% 30%

Provide support for offsetting existing business

attrition

7% 6% 4% 30%

Reduce prices 22% 36% 38% 40%

Sign longer-term agreements 0% 5% 17% 10%

Work harder to reduce costs 26% 33% 13% 20%

Others 4% 2% 4% 0%








Figure 34: Global Construction Industry – Securing Buyer Business by Region (%), 2013






5.2.3 Actions to maintain and secure buyer business by turnover

An analysis of responses by company turnover identified minor variations in the perceived importance

of actions to secure business for suppliers. Regardless of company turnover, ‘innovate products’ and

‘improve customer services’ are identified as important actions for suppliers to maintain and secure

business from contractors and developers.

However, 38% and 35% of respondents from small and large companies respectively expect suppliers

to ‘reduce prices’ to maintain and secure business. Meanwhile, 32% of respondents each from medium-

sized companies expect suppliers to ‘provide support for generating new businesses’ and ‘engage in

partnerships to optimize working capital and reduce costs’.

Table 44: Global Construction Industry – Securing Buyer Business by Turnover (%), 2013

Actions

Less than

US$100 million

US$100 million–

US$1 billion

More than

US$1 billion

Demonstrate better ROI 8% 7% 10%

Engage in partnerships to optimize working capital and reduce costs 17% 32% 25%

Improve customer services 36% 43% 40%

Improve payment terms 36% 18% 30%

Innovate products 38% 50% 55%

Offer more flexibility in delivery 14% 21% 10%

Provide other concessions and incentives 14% 4% 0%

Provide support for generating new businesses 36% 32% 25%

Provide support for offsetting existing business attrition 12% 4% 0%

Reduce prices 38% 21% 35%

Sign longer-term agreements 3% 18% 5%

Work harder to reduce costs 26% 25% 30%

Others 1% 7% 0%








5.2.4 Actions to maintain and secure buyer business by senior-level respondents

According to senior-level executives, the key actions for suppliers to undertake to maintain and secure

business from contractors and developers are to ‘innovate products’, ‘improve customer services’ and

‘provide support for generating new businesses’. Other important actions are to ‘improve payment

terms’ and ‘reduce prices’, as identified by 31% of senior-level executives respectively.

Figure 35: Global Construction Industry – Securing Buyer Business by Senior-Level

Respondents (%), 2013






5.3 Global Construction Industry – Key Variations in Operational Costs

This section discusses the overall expected increase of operational costs in the construction industry in

2013. The section will provide a comparative view of the changes in the cost structure of contractors

and developers and suppliers. The survey responses will be analyzed by company type, region and

company turnover.

5.3.1 Key variations in operational costs by contractors and developers

A total of 71% of respondents from construction contractor and developer companies expect their ‘raw

material’ costs, and 65% expect their ‘energy’ costs, to increase by ‘less than 10%’ for 2013. However,

12% of respondents expect an ‘increase of 10–25%’ in their ‘energy’ costs. Increases in raw material

costs such as cement and steel, and higher labor costs are creating challenges for construction

developers and contractors. Moreover, rising oil and energy costs have increased surcharges in

deliveries, and have also encouraged prices to rise for other types of raw materials such as concrete,

insulation and waterproofing materials. As a result, the production costs of construction contractors and

developers have increased significantly.

Additionally, construction services suffered severely from the uneven market conditions. As a result, the

profit margins of several construction contractors and developers have been impeded, and some are

looking for solutions to improve their operational efficiency, such as using energy-efficient equipment

and advanced IT in their production processes. For example, a study by the UK’s National Association

of Home Builders (NAHB) in February 2013 reported that architects and contractors are looking for

energy-efficient options that will guarantee lower utility costs and greater durability. A senior executive

from Priority Energy, an energy efficiency services provider based in Chicago, noted:

“We have found that construction contractors are often unaware of advanced construction components

and building standards, or it is assumed these measures will be too expensive or time-consuming. In

actuality, with the stricter IECC 2012 Building codes in effect this year, these high-performance

products can save builders time and money by making it easier for their homes to pass the more

rigorous efficiency tests while increasing marketability. Raw material products such as Aeroseal for duct

sealing, and EnviroDri as an exterior air and moisture barrier, have attained unsurpassed efficiency,

comfort and durability results.”

Notably, 22% and 21% of respective contractor and developer respondents anticipate ‘no change’ in

their ‘labor costs and salaries’ and ‘energy costs’. Deteriorating confidence among construction

contractors and developers due to uneven market conditions may restrict ‘labor costs and salaries’ in

2013.





Table 45: Key Variations in Operational Costs of Construction Contractors and Developers (%),

2013

Cost Type

Increase

by 25%+

Increase

between

10–25%

Increase

between

5–10%

Increase

between

0–5% No change

Decrease

between

1–5% Overall

Energy 2% 12% 22% 43% 21% 0% 100%

Raw materials 0% 7% 28% 43% 19% 3% 100%

Labor costs and salaries 3% 5% 27% 37% 22% 7% 100%



Figure 36: Key Variations in Operational Costs of Construction Contractors and Developers (%),

2013






5.3.2 Key variations in operational costs by suppliers

A total of 40% of respondents from construction equipment and materials supplier companies expect an

increase of 5–25% in their ‘energy’ costs during 2013. However, 79% of respondents expect their ‘labor

costs and salaries’ to increase by less than 10%.

Therefore, with the globally rising ‘energy’ costs, construction equipment and material suppliers are

focused on energy-efficient solutions, such as energy-efficient heating and lighting systems for

production facilities and energy-efficient production technologies. For example, in February 2013,

sustainable solutions provider Kebony AS, based in Norway, won the 2013 Rushlight Responsible

Products or Service Award for its sustainable wood. The company notes that through the

environmentally friendly process of 'Kebonization', sustainable wood species are turned into Kebony,

which is more durable, harder and stable than tropical hardwood. This new wood has been used in a

number of projects in applications including decking, flooring, cladding, roofing, windows, furniture and

other construction materials.

French cement manufacturer Lafarge is also focusing on reducing its carbon footprint through a gradual

reduction in its production of clinker, by developing and selling blended cements that utilize more

environmentally-friendly cement additives.

Furthermore, a total of 7% of respondents expect to increase their ‘raw materials’ prices by 10–25%

during 2013. ‘Raw materials’ prices are increasing due to the price volatility in steel, iron and polymer.

As a result, many construction supplier companies are required to increase their project prices to

accommodate the increasing operational prices.

Table 46: Key Variations in Operational Costs of Construction Equipment and Materials

Suppliers (%), 2013

Cost Type

Increase

by 25%+

Increase

between

10–25%

Increase

between

5–10%

Increase

between

0–5%

No

change

Decrease

between

1–5% Overall


Raw materials 2% 7% 23% 49% 12% 7% 100%

Energy 2% 5% 35% 37% 19% 2% 100%







Figure 37: Key Variations in Operational Costs of Construction Equipment and Materials

Suppliers (%), 2013


A total of 69% of respondents from other construction supplier companies expect their ‘raw material’

costs, and 65% expect their ‘energy’ costs, to increase by less than 10% for 2013. Notably, another

35% of respondents expect ‘no change’ in their ‘labor costs and salaries’ for 2013.

Table 47: Key Variations in Operational Costs of Other Construction Suppliers (%), 2013

Cost Type

Increase

by 25%+

Increase

between

10–25%

Increase

between

5–10%

Increase

between

0–5%

No

change

Decrease

between

1–5% Overall

Raw materials 0% 9% 30% 39% 22% 0% 100%

Energy 0% 13% 30% 35% 17% 4% 100%








Figure 38: Key Variations in Operational Costs of Other Construction Suppliers (%), 2013


5.3.3 Key variations in operational costs by region

Regardless of region of operation, respondents from the global construction industry expect a

significant rise in ‘energy’, ‘raw materials’ costs and ‘labor costs and salaries’ for 2013. For example,

according to a press release from MEED Events, an organizer of Qatar Projects, Qatar’s construction

industry will have to deal with rising construction costs as the country is organizing the 2022 FIFA World

Cup. MEED notes that the construction costs in 2017 will be 18% higher than the 2013 price levels. As

a result, the rise in costs is expected to impact Qatar’s overall supply chain and the value of contract

awards from 2013. A senior executive from MEED events stated that:

“Qatar Projects presents an unrivalled opportunity to understand the full spectrum of Qatar’s projects

market and to leverage the insights gained to not only take full advantage of opportunities but also to

effectively mitigate risks, such as a projected increase in construction costs and ultimately higher

project values.”

The following figure below compares the opinions of respondents by region, and only the percentage of

responses expecting increased growth opportunities are provided.

Table 48: Key Variations in Operational Costs by Region (%), 2013

Cost Type North America Europe Asia-Pacific Rest of the World

Energy 82% 75% 83% 90%

Labor costs and salaries 88% 60% 92% 80%

Raw materials 89% 74% 83% 80%







5.3.4 Key variations in operational costs by company turnover

A total of 94% and 93% respectively of respondents from medium-sized companies plan to increase

their ‘energy’ and ‘raw materials’ costs in 2013. Additionally, 80% and 73% of respondents from large

and small companies respectively expect to increase their expenditure on ‘raw material’ costs.

The following figure below compares the opinions of respondents by company turnover, and only the

percentage of responses expecting increased growth opportunities are provided.

Table 49: Key Variations in Operational Costs by Company Turnover (%), 2013

Cost Type Less than US$100 million US$100 million–US$1 billion More than US$1 billion

Energy 74% 94% 75%

Labor costs and salaries 67% 86% 80%

Raw materials 73% 93% 80%







5.4 Global Construction Industry – Impact of Costs on Product Pricing

This section analyses the impact of cost on product pricing, and provides a comparative view of the

changes in product pricing and contract values based on changes in cost structure for contractors and

developers and suppliers. Respondents were asked: “How will the change in costs impact the price of

your products or contract values?” The responses are analyzed by company type, region and company

turnover.

5.4.1 Impact of costs on product pricing by contractors and developers

The majority of contractor and developer respondents indicate that changes in their cost structures will

positively impact their contract values in 2013. Of all contractor and developer respondents, 48%

expect an increase in contract values by less than 5%, while 22% expect an increase of 5–10% and 5%

expect an increase of more than 10%.

However, 18% of respondents expect ‘no change’ in their contract values as a result of changes in their

cost structures.

Table 50: Impact of Changing Costs on Product Pricing by Construction Contractors and


Contract Values Construction Contractors and Developers

Increase by 25%+ 2%

Increase between 10–25% 3%



No Change 18%

Decrease between 1–5% 3%



Decrease by 25%+ 0%

Not applicable 2%

Overall 100%






Figure 39: Impact of Changing Costs on Product Pricing by Construction Contractors and



5.4.2 Impact of costs on product pricing by suppliers

The majority of supplier respondents indicated that the change in their cost structure will positively

impact their contract values in 2013. Of all supplier respondents, 56% from construction equipment and

materials supplier companies, and 43% from other construction supplier companies, expect to increase

their contract values by less than 5%. Furthermore, 19% of respondents from construction equipment

and materials supplier companies and 39% of respondents from other construction industry supplier

companies expect ‘no change’ in their contract values in 2013.

Table 51: Impact of Changing Costs on Product Pricing by Suppliers (%), 2013

Contract Values

Construction Equipment and

Materials Suppliers

Other Construction Industry

Suppliers

Increase by 25%+ 2% 4%

Increase between 10–25% 5% 0%



No Change 19% 39%

Decrease between 1–5% 5% 0%



Decrease by 25%+ 0% 0%

Not applicable 2% 0%

Overall 100% 100%







6 Global Construction Industry - Supplier Marketing Spend Activity

This chapter reveals the current size of construction equipment and material supplier companies’ and

other construction industry supplier companies’ marketing and advertizing budgets, and how

expenditure by construction suppliers will change over 2013. As such, this chapter provides insights

into the global construction industry marketing behavior. Expectations regarding expenditure and

investment in specific marketing solutions, along with key marketing adoptions in 2013–2014, reveal the

future needs and strategies of the respondents in the global construction industry.

Key Findings:

For 2013, the average annual marketing budget of global construction industry supplier

respondents is US$5.4 million

The percentage of respondents spending between ‘US$250,000–US$1 million’ on marketing

activities in 2013 remained similar to 2012

Timetric’s construction industry survey revealed that, in 2013, the average marketing budget

for construction equipment and material supplier respondents is projected at US$4.4 million,

and US$7.3 million for other construction industry suppliers

In total, 67% of construction equipment and materials suppliers, and 79% of other construction

supplier respondents expect their marketing budgets to increase in 2013

Respondents from both supplier groups expect to increase their marketing expenditure on

‘email and newsletters’, ‘social media and networking sites’, ‘online portals’ and ‘corporate and

brand websites’

‘CRM systems’ and ‘market intelligence research’ emerged as the two important marketing

and sales solutions in 2013





6.1 Annual Marketing Budgets – Global Construction Industry Suppliers

The size of construction equipment and material supplier companies’ and other construction industry

supplier companies’ annual marketing budgets reveal the scope of marketing investment in 2013–2014.

This section identifies the marketing budgets of suppliers by company type, turnover and geography.

For 2013, the average annual marketing budget of global construction industry supplier respondents is

US$5.4 million.

When segmented by groups, an average marketing budget of US$4.4 million is projected for

construction equipment and material supplier respondents, in comparison to US$7.3 million for other

construction industry suppliers. This is compared to 2012 results, which revealed an average marketing

budget of US$4.9 million for construction equipment and material supplier respondents, against a

budget of US$1.7 million for other construction industry suppliers. Incidentally, the average annual

marketing budget for other construction industry supplier companies increased significantly in 2013 in

comparison to 2012, which indicates an increased focus by suppliers to enhance sales and sustain

uneven market conditions.

Please note that there will be some discrepancy due to different sample sets being interviewed in the

2012 and 2013 industry surveys.

6.1.1 Annual marketing budgets by suppliers

A total of 53% of respondents from construction equipment and materials supplier companies will spend

‘less than US$250,000’ on marketing, while 21% will spend between ‘US$250,000–US$1 million’.

Notably, the percentage of respondents spending between ‘US$250,000–US$1 million’ on marketing

activities in 2013 remained similar to 2012. Additionally, 68% of respondents from other construction

industry suppliers intend to spend ‘less than US$250,000’ for marketing activities, while 14% will spend

‘more than US$50 million’.

Table 52: Annual Marketing Budgets – Construction Equipment and Materials Suppliers (%),

2009−2013

Budgets 2009 2011 2012 2013

Less than US$250,000 72% 80% 58% 53%

US$250,000–US$1 million 13% 12% 21% 21%

US$1–US$10 million 13% 7% 10% 16%

US$10–US$50 million 2% 0% 8% 7%

More than US$50 million 0% 1% 4% 2%

Overall 100% 100% 100% 100%







Figure 40: Annual Marketing Budgets – Construction Equipment and Materials Suppliers (%),

2009−2013


Table 53: Annual Marketing Budgets – Other Construction Industry Suppliers (%), 2009−2013

Budgets 2009 2011 2012 2013

Less than US$250,000 70% 93% 75% 68%

US$250,000–US$1 million 10% 5% 11% 14%

US$1–US$10 million 13% 3% 13% 5%

US$10–US$50 million 5% 0% 0% 0%


Overall 100% 100% 100% 100%



Figure 41: Annual Marketing Budgets – Other Construction Industry Suppliers (%), 2009−2013






6.1.2 Annual marketing budgets by region

A comparison of global marketing budgets by operating region shows that construction industry supplier

companies that operate in the Rest of the World region have the highest average marketing budgets of

US$10.2 million in 2013, as compared to US$8.3 million in North America and US$4.9 million in

Europe.

Table 54: Annual Marketing Budgets by Region – Global Construction Industry Suppliers (%),

2013

Budgets North America Europe Asia-Pacific Rest of the World

Less than US$250,000 34% 59% 72% 80%

US$250,000–US$1 million 25% 18% 21% 0%

US$1–US$10 million 25% 15% 0% 0%

US$10–US$50 million 8% 3% 7% 0%


Overall 100% 100% 100% 100%



Figure 42: Annual Marketing Budgets by Region – Global Construction Industry Suppliers (%),

2013






6.1.3 Annual marketing budgets by company turnover

A comparison of global annual marketing budgets by company turnover indicates that construction

industry supplier respondents with turnover of ‘more than US$1 billion’ have an average budget of

US$21.8 million. This can be compared to companies with turnover of ‘US$100 million–US$1 billion’,

whose average marketing budget is US$3.3 million, and companies with turnover of ‘less than US$100

million’, whose average marketing budget is US$0.3 million.

Table 55: Annual Marketing Budgets by Company Turnover – Global Construction Industry

Suppliers (%), 2013

Budgets Less than US$100 million US$100 million–US$1 billion More than US$1 billion

Less than US$250,000 88% 42% 0%

US$250,000–US$1 million 12% 30% 23%

US$1–US$10 million 0% 24% 30%

US$10–US$50 million 0% 6% 15%

More than US$50 million 0% 0% 31%

Overall 100% 100% 100%



Figure 43: Annual Marketing Budgets by Company Turnover – Global Construction Industry

Suppliers (%), 2013






6.2 Planned Change in Marketing Expenditure Levels – Global Construction

Industry Suppliers

Timetric’s construction industry survey revealed that the average marketing budgets, of both

construction equipment and material, and other construction industry suppliers, are expected to

increase by 7% in 2013. This is similar to the expected increase recorded in 2012. Since the average

marketing budget for construction industry supplier respondents is projected at US$5.4 million, the

average increase in budget1 is expected to be at US$364,000 in 2013.

Construction equipment and material supplier respondents’ and other construction industry supplier

companies’ marketing budgets are expected to increase by 7% in 2013. Since the average marketing

budget of construction equipment and material suppliers is recorded at US$4.4 million, the average

expected increase in 2013 will be US$307,000. Meanwhile, the average marketing budget of other

construction industry suppliers is projected at US$7.3 million, and the average increase at US$486,000.

Furthermore, marketing expenditure expectations of suppliers varied slightly between the 2012 and

2013 survey. In 2012, while construction equipment and material supplier companies’ marketing

budgets were expected to increase by 7.9%, other construction industry supplier respondents’ market

budgets were expected to increase by 6.1%.

Figure 44: Planned Change in Marketing Expenditure (%), 2009−2013


1 Please note, the average marketing budget has been calculated through responses received in the survey, and may not reflect

the overall industry sentiment.





6.2.1 Planned change in marketing expenditure by suppliers

In total, 67% of respondents from construction equipment and materials supplier companies expect an

increase in their marketing budgets for 2013, while 23% expect ‘no change’ and 9% expect a decrease.

Overall, the percentage of respondents who expect their marketing budgets to increase in 2013 has

dipped slightly by 3 percentage points, when compared to survey results for 2012.

Construction industry suppliers plan to increase their marketing budgets to capitalize on the emerging

business opportunities in the global construction industry. The main motivations for increasing

marketing budgets include the need to explore opportunities for business growth, capitalize on

improving consumer confidence, support the introduction of new products and services, increase

market share, and expand customer base. For example, a director-level executive from a construction

equipment supplier company operating in Europe states:

“We expect an ‘increase of 5–10%’ in our marketing expenditure in 2013 as we need to grow our overall

market share and also gain new clients. Moreover, we see opportunity in the markets we currently

serve, as some of our competition has exited. As a result, we plan to increase our share through heavy

marketing.”

A business unit head of a supplier company operating in Asia-Pacific comments:

“Increasing our marketing budget is the best avenue to growth in our sales. Therefore, we are in plans

to increase our marketing budget to grow proportionate to the market.”

Additionally, some respondents plan to increase their company’s revenues by expanding operations to

other countries. For example, a managerial executive from a construction equipment supplier company

operating in Europe notes:

“We expect to increase our marketing budget by 5–10% to enhance our brand awareness across the

global market.”

Companies which expect a ‘decrease’ or ‘no change’ in marketing expenditure consider overall budget

constraints and uncertainty in local markets as key triggers. Evidencing the trend, a technical staff

executive from a construction supplier company operating in Europe states:

“We expect ‘no change’ in our marketing budgets in 2013 as we are already spending adequate

amounts on marketing and all our working capital is devoted to basic operational issues.”





Table 56: Planned Change in Marketing Expenditure – Construction Equipment and Materials

Suppliers (%), 2009−2013

Change 2009 2011 2012 2013

Increase by 25%+ 5% 9% 6% 9%

Increase between 10–25% 10% 13% 26% 16%



No change 22% 28% 18% 23%

Decrease between 1–5% 13% 2% 3% 7%



Decrease by 25%+ 2% 0% 0% 0%

Not applicable 0% 0% 5% 0%

Overall 100% 100% 100% 100%



Figure 45: Planned Change in Marketing Expenditure – Construction Equipment and Materials

Suppliers (%), 2009−2013






A total of 79% of respondents from other construction industry supplier companies expect an increase

in their marketing budgets in 2013, while 13% expect ‘no change’ and 4% anticipate a ‘decrease’.

Notably, 35% of other suppliers expect to increase their marketing budgets by 1–5% in 2013. Moreover,

the overall percentage of respondents who expect an increase in marketing budgets for 2013 has

increased by 24 percentage points as compared to 2012.

Other construction industry supplier companies that have grown rapidly over the past few years will

continue to invest in marketing to maintain their growth levels. For example, a manager from a

technology supplier company operating in North America states:

“As we plan to launch new products into the construction market, we expect to promote these products

by increasing our marketing expenditure by 5–10% in 2013. Moreover, as we are forecasting growth in

our new product segments, we definitely identify a need to increase marketing budgets in line with

revenue expectations.”

Some respondents also foresee business opportunities in the global construction industry, and are

investing in marketing to capitalize on these opportunities. A departmental head from a supplier

company operating in Europe states:

“We are expecting an ‘increase of 25%’ in our marketing budgets in 2013 to invest more in terms of

participating on various exhibitions for marketing our new products.”

A senior executive from a construction industry supplier company from Asia-Pacific states:

“There are opportunities out there to win contracts, so more effort is being placed on marketing to

position oneself to take advantage of these.”

Furthermore, some respondents consider it to be the ideal time to invest in marketing activities as most

economies are emerging from the adverse effects of the economic downturn. For example, a staff-level

executive from a construction material supplier company based in North America states:

“Marketing has not typically been a main function in our organization until 2011. That is changing, as we

have hired a marketing manager in 2012 in response to positive growth in the economy and we are in

plans to invest more on promotions and advertising of our new products in 2013.”

Additionally, a staff-level executive from a supplier company with headquarters in Asia-Pacific

comments:

“We are increasing our marketing budget by 5–10% in 2013, as we are allocating more funds towards

online advertising and SEO expenses and on other premium promotional materials.”





Table 57: Planned Change in Marketing Expenditure – Other Construction Industry Suppliers

(%), 2009−2013

Change 2009 2011 2012 2013

Increase by 25%+ 8% 9% 6% 9%




No change 23% 30% 25% 13%




Decrease by 25%+ 0% 0% 1% 0%


Overall 100% 100% 100% 100%



Figure 46: Planned Change in Marketing Expenditure – Other Construction Industry Suppliers

(%), 2009−2013






6.2.2 Planned change in marketing expenditure by region

Regional analysis of marketing budgets indicates that the highest budget increases are expected by

companies that operate in the Rest of the World region; this is in contrast to Europe, where

respondents expect lower expenditure increases.

The marketing budgets of supplier respondents whose companies operate in the Rest of the World

region are expected to increase by 9%, while respondents in North America anticipate an increase of

8.1%. Additionally, respondents from Asia-Pacific expect to increase their marketing budgets by 7%, as

compared to 5.9% of respondents from Europe. In terms of value, the average increase in budget for

respondents from the Rest of the World region is expected to be US$867,000, as compared to

US$674,000 in North America.

Table 58: Planned Change in Marketing Expenditure Levels by Region (%), 2013

Change North America Europe Asia-Pacific Rest of the World

Increase by 25%+ 11% 9% 8% 10%




No change 15% 30% 16% 20%




Decrease by 25%+ 0% 2% 0% 0%


Overall 100% 100% 100% 100%







6.2.3 Planned change in marketing expenditure by company turnover

Respondents from medium-sized companies expect their marketing expenditure to increase by 8% in

2013, as compared to respondents from small and large companies who expect their marketing

budgets to increase by 7% and 3% respectively. On average, the marketing budgets of respondents

from large companies are expected to increase by US$752,000, as compared to US$272,000 from

medium-sized and US$20,000 from small companies.

Figure 47: Planned Change in Marketing Expenditure Levels by Turnover (%), 2013






6.2.4 Planned change in marketing expenditure levels by revenue growth expectations

In total, 86% of respondents from companies that are optimistic about revenue growth expect marketing

budgets to increase in 2013. Meanwhile, 27% of respondents from companies that are less optimistic

about revenue growth expect their marketing budgets to decrease, and 29% of respondents from

companies that have neutral revenue growth expectations expect no change whatsoever in their

marketing budgets in 2013.

Table 59: Planned Change in Marketing Expenditure Levels by Revenue Growth Expectations

(%), 2013

Change More optimistic Neutral Less optimistic

Increase by 25%+ 13% 6% 5%

Increase between 10–25% 30% 0% 0%



No change 10% 29% 26%

Decrease between 1–5% 0% 0% 16%



Decrease by 25%+ 0% 0% 0%

Not applicable 3% 0% 0%

Overall 100% 100% 100%







6.3 Future Investment in Media Channels – Global Construction Industry Suppliers

Survey respondents in the global construction industry have provided their specific media channel

spending expectations for the next 12 months. Respondents revealed which channels they are planning

to increase or decrease their investment in 2013.

It is evident from the survey results that a significant proportion of respondents from both construction

equipment and material supplier companies and other construction industry supplier companies expect

to increase their marketing expenditure on ‘email and newsletters’, ‘social media and networking sites’,

‘online portals’ and ‘corporate and brand websites’. These respondents plan to shift their marketing

expenditure from traditional marketing channels to more modern online marketing channels due to the

cost effective nature of modern media. After comparing survey responses from the 2012 and 2013

construction industry surveys, it can be concluded that the use of social media and networking sites is

increasing in business-to-business marketing.

6.3.1 Future investment in media channels by suppliers

Of all construction equipment and material supplier companies, 63% of respondents plan to increase

marketing expenditure on ‘email and newsletters’, while 62% of respondents plan to increase marketing

expenditure on ‘social media and networking sites’, and 52% plan to increase expenditure on ‘corporate

and brand websites’. On the other hand, investment in traditional media channels such as ‘television

and video’, ‘radio’ and ‘sponsorship’ are expected to receive the lowest increase in marketing budgets.

This indicates that marketers expect to allocate a higher proportion of their marketing budgets to new

media such as ‘email and newsletters’, ‘social media and networking sites’ and ‘corporate or brand

websites’.

‘Email marketing’ is a low-cost and highly efficient method for reaching potential customers. Email

marketing allows construction suppliers to promote their products in a personalized approach and is

considered one of the most effective tools for increasing sales performance. Consequently, many

marketers are now including email in their marketing strategies.

Moreover, marketers have started to focus more on ‘social media and networking sites’, as they provide

opportunities for businesses to build relationships with clients. The rapid development of online social

networking provides new opportunities for respondents to effectively communicate messages between

industry partners. Exploring the opportunities of internet marketing can enable companies in the global

construction industry to save a significant proportion of their marketing budgets, and internet marketing

can also allow companies to target niche customer groups. In addition, effective online promotions can

help suppliers strengthen their business relationships whilst attempting to procure new project

contracts. Social media channels help construction industry suppliers to enhance their business

opportunities. Twitter allows companies to send short messages under 140 characters in length to

construction contractors. LinkedIn primarily targets business-to-business environments and supports

networking and sharing expertise. Similarly, YouTube allows a supplier company to post and share

videos with customers and Facebook allows suppliers to post company updates and equipment photos

to target end customers. For example, Volvo, a construction equipment supplier, uses social media

channels such as YouTube, Facebook, Twitter, LinkedIn and Google Plus for promoting its product

range to its customers.





Additionally, suppliers are keen to update their ‘online content sites’ to increase the number of qualified

sales leads and to improve their level of online exposure to customers. In the current economic

environment, customers demand valuable and relevant website content that addresses their

requirements. As a result, websites are being adapted to make their content attractive to prospective

customers and provide companies with an improved online presence.

The survey results also indicate the declining popularity of traditional media such as ‘radio’, ‘television’

and ‘newspapers’. This is due to the unattractive features of such channels such as the cluttered

appearance of advertisements, minimal options for differentiation, high costs and low target

segmentation. Most construction equipment and material suppliers are also expecting to reduce their

marketing expenditure on ‘sponsorship’. The main reason for this is its low return on investment (ROI),

high cost, low penetration and decreasing consumer interest.

Although most traditional media has become less relevant in the digital age, ‘public relations’ still

attracts considerable investment from suppliers. The increasing media attention on construction

companies regarding issues related to financial capabilities, corporate affairs, accidents and labor

issues forced companies to maintain a focus on their public relations. Large suppliers also employ the

services of premium public relations agencies to manage their relationships with key stakeholders.

Table 60: Future Investment in Media Channels – Construction Equipment and Materials

Suppliers (%), 2013

Media Channel Increase No Change Decrease Don't

know

Not

applicable

Overall

Email and newsletters 63% 24% 5% 7% 0% 100%

Social media and networking sites 62% 26% 2% 10% 0% 100%

Corporate and brand websites 52% 38% 5% 5% 0% 100%

Online content sites 45% 43% 7% 5% 0% 100%

Online portals 43% 38% 2% 7% 10% 100%

Conferences and events 40% 40% 12% 5% 2% 100%

Trade magazines 31% 52% 12% 5% 0% 100%

Public relations 31% 55% 7% 7% 0% 100%

Consumer and business magazines 29% 48% 14% 5% 5% 100%

Search 26% 50% 5% 12% 7% 100%

Direct mail 21% 45% 24% 5% 5% 100%

Telemarketing 21% 50% 7% 7% 14% 100%

Webcasting 20% 46% 5% 7% 22% 100%

Outdoor 12% 46% 10% 7% 24% 100%

Newspapers 7% 49% 17% 5% 22% 100%

Television and video 7% 45% 7% 10% 31% 100%

Radio 2% 41% 15% 7% 34% 100%

Sponsorship 2% 60% 24% 7% 7% 100%







Of respondents from other construction industry supplier companies, 57% expect to increase their

marketing expenditure on ‘email and newsletters’. ‘Social media and networking sites’, ‘corporate and

brand websites’ and ‘public relations’ emerged as the other key channels expected to receive a large

amount of increased marketing expenditure from other construction industry suppliers. Evidencing the

trend, in April 2013, construction software and website development company, A1A Software (A1A),

appointed engineering and consulting company, Euro-Rigging, as its European marketing

representative. A1A provides digital services to construction industry contractors which aim to keep

customers safe, on schedule, and on budget. Two services provided by A1A are the 3DLiftPlan onsite

plan access application and the iCraneTrax fully functional web-based business management

application. However, traditional channels such as ‘outdoor’, ‘television and video’ and ‘radio’

advertising are expecting the lowest increases in marketing expenditure.

Table 61: Future Investment in Media Channels – Other Construction Industry Suppliers (%),

2013

Media Channel Increase No Change Decrease Don't

know

Not

applicable

Overall

Email and newsletters 57% 38% 0% 5% 0% 100%

Social media and networking sites 52% 38% 0% 5% 5% 100%

Corporate and brand websites 48% 33% 0% 10% 10% 100%

Public relations 48% 33% 0% 5% 14% 100%

Conferences and events 43% 38% 10% 0% 10% 100%

Online content sites 38% 43% 0% 10% 10% 100%

Online portals 38% 48% 0% 5% 10% 100%

Trade magazines 38% 52% 0% 5% 5% 100%

Search 32% 53% 0% 5% 11% 100%

Consumer and business magazines 29% 52% 0% 5% 14% 100%

Direct mail 24% 33% 14% 10% 19% 100%

Webcasting 19% 48% 0% 14% 19% 100%

Newspapers 10% 48% 14% 5% 24% 100%

Sponsorship 10% 52% 5% 5% 29% 100%

Telemarketing 10% 33% 0% 10% 48% 100%

Outdoor 5% 52% 0% 10% 33% 100%

Television and video 0% 43% 0% 10% 48% 100%

Radio 0% 48% 0% 10% 43% 100%







6.3.2 Future investment in media channels by region

An analysis of responses by region reveals some variations regarding future investments in media

channels. Regardless of region of operation, ‘social media and networking sites’, ‘emails and

newsletters’ and ‘corporate and brand websites’ are the main media channels that are expected to

receive the most marketing expenditure from companies.

Respondents in North America also expect ‘conferences and events’, ‘online portals’, ‘online content

sites’ and ‘trade magazines’ to attract increased investment in the next 12 months, while respondents in

Europe expect ‘public relations’ to attract increased expenditure.

The following figure shows the percentage of respondents that expect an increase in expenditure on the

corresponding media channels.

Figure 48: Future Investment in Media Channels by Region (% ‘Increase’ Responses), 2013






6.3.3 Future investment in media channels by company turnover

Regardless of company turnover, ‘social media and networking sites’ and ‘email and newsletters’ are

expected to attract increased expenditure in 2013. Moreover, an analysis of responses by company

turnover reveals some variation regarding future investments in media channels. Although some

similarities exist between companies of different turnovers regarding investment increases in media

channels, the order of importance assigned to different channels varies by company size. The highest

proportion of respondents from small companies expect expenditure to increase in ‘online portals’ and

‘corporate and brand websites’. Meanwhile, the largest proportion of respondents from medium-sized

and large companies expect expenditure to increase in ‘corporate and brand websites’.

The following table provides the percentage of respondents that expect an ‘increase’ in expenditure on

the corresponding media channels.

Table 62: Future Investment in Media Channels by Turnover (% ‘Increase’ Responses), 2013

Media Channel Less than

US$100 million

US$100 million–US$1 billion More than

US$1 billion

Conferences and events 41% 50% 31%

Consumer and business magazines 31% 33% 15%

Corporate and brand websites 53% 50% 46%

Direct mail 25% 33% 0%

Email and newsletters 75% 53% 38%

Newspapers 9% 6% 8%

Online content sites 47% 44% 31%

Online portals 56% 39% 8%

Outdoor 6% 22% 0%

Public relations 34% 44% 31%

Radio 0% 6% 0%

Search 39% 22% 8%

Social media and networking sites 56% 67% 54%

Sponsorship 3% 11% 0%

Telemarketing 19% 28% 0%

Television and video 3% 11% 0%

Trade magazines 34% 39% 23%

Webcasting 19% 28% 8%







6.4 Global Construction Industry Suppliers' Future Investment in Marketing and

Sales Technology

Survey respondents in the global construction industry were asked: ‘Which of the following marketing

and sales solutions do you expect your company to invest in 2013–2014?’ The responses indicate the

key investments planned for the sales strategies of suppliers. The responses received help companies

understand the evolution of marketing tools and solutions in the global construction industry, and

provide a guide for suppliers to adjust their marketing offerings with the new anticipated standards.

‘CRM systems’ and ‘market intelligence research’ emerged as the two important marketing and sales

solutions in 2013. In contrast, marketing and sales solutions such as ‘customer segmentation solutions’,

‘loyalty solutions’ and ‘direct internet distribution systems’ are expected to register the least amount of

investment in 2013.

6.4.1 Planned investment in marketing and sales technologies by suppliers

The survey results show that 53% of respondents from construction equipment and material supplier

companies plan to increase their investment in ‘CRM systems’, as compared to 49% in ‘market

intelligence research’ and 35% in ‘ERP solutions’. Of respondents from other construction industry

supplier companies, 45% and 41% plan to increase their investment in ‘CRM systems’ and ‘market

intelligence research’ respectively.

Building strong relationships with existing buyers has the potential to reduce marketing costs for

respondents and could also help buyers to gain new business. Additionally, increasing investment in

‘CRM systems’ yields increased supply performance dividends both strategically and operationally. The

majority of companies use CRM systems to increase customer retention, respond to competitive

pressures, and improve customer service. The systems are used by companies to develop existing

customer target groups. To compete effectively in the marketplace, companies need an effective CRM

system to attract and nurture high-quality clients and referrals. They also help companies to execute

business strategies on a more consistent and cost-effective basis. Moreover, companies are able to

manage customer experience through all points of contact, including initial online and offline inquiries,

follow-up contact, sales experience, customer service, aftercare, and loyalty programs.

Investment in ‘market intelligence research’ will enable suppliers to improve their recognition of the

changing industry dynamics and gain data on products and services, relevant competitors, business

trends, and target markets. An analysis of these factors helps companies to understand the impact of

external factors on their business.

Comparatively, respondents from other construction industry supplier companies across all markets

conduct some form of competitive intelligence activities, such as continuous monitoring, regular reviews

and ad-hoc reports on the industry dynamics. ‘Competitor intelligence research’ enables suppliers to

benchmark their market intelligence activities against those of their leading competitors. Competitor

intelligence also helps suppliers identify merger and acquisition targets and strategic allies that share a

common interest.





Customers today are more knowledgeable, less loyal and have high expectations regarding supplier

services. Suppliers are therefore required to attract and retain customers, leading to the development of

client acquisition solutions that offer more time to focus on client relationships. These solutions help

companies meet their corporate goals and ensure that a client-servicing framework is consistent across

multiple accounts. It also ensures a standard level of communication on how products are introduced to

the marketplace. These solutions enable companies to target specific customers with the right offer at

the right time and the right cost.

Table 63: Planned Investment in Marketing and Sales Technologies by Suppliers (%), 2013

Marketing and Sales Technologies Construction Equipment and

Materials Suppliers

Other Construction Industry

Suppliers

CRM systems 53% 45%

ERP solutions 35% 14%

Market intelligence research 49% 41%

Competitor intelligence research 19% 32%

Business performance management solutions 19% 14%

Client acquisition solutions 16% 18%

Customer segmentation solutions 16% 5%

Loyalty solutions 19% 5%

Direct internet distribution systems 21% 0%

Others 0% 0%

None of these 5% 14%

Don't know 12% 9%

N.B. Responses are not mutually exclusive, so do not equal 100%






Figure 49: Planned Investment in Marketing and Sales Technologies by Suppliers (%), 2013


6.4.2 Planned investment in marketing and sales technologies by region

An analysis of responses by region shows minor variations between planned investments in marketing

and sales technologies. Regardless of region of operation, ‘CRM systems’ and ‘market intelligence

research’ are solutions that the largest proportion of respondents expect to invest in. Moreover, the

largest proportion of respondents from companies operating in Asia-Pacific and the Rest of the World

expect to increase their investments in ‘ERP solutions’, while respondents from North America prefer

‘competitor intelligence research’.





Table 64: Planned Investment in Marketing and Sales Technologies by Region (%), 2013

Marketing and Sales Technologies North America Europe Asia-Pacific Rest of the World

Business performance management solutions 17% 14% 23% 20%

Client acquisition solutions 17% 17% 15% 20%

Competitor intelligence research 50% 11% 38% 0%

CRM systems 58% 43% 69% 40%

Customer segmentation solutions 42% 9% 0% 0%

Direct internet distribution systems 8% 6% 31% 40%

ERP solutions 33% 14% 46% 60%

Loyalty solutions 8% 11% 23% 20%

Market intelligence research 67% 37% 54% 40%


Others 0% 0% 0% 0%

Don't know 8% 14% 0% 20%



6.4.3 Planned investment in marketing and sales technologies by company turnover

Regardless of company turnover, respondents expect to increase their investment in ‘CRM systems’

and ‘market intelligence research’ in 2013.

Table 65: Planned Investment in Marketing and Sales Technologies by Company Turnover (%),

2013

Marketing and Sales Technologies Less than

US$100 million

US$100 million–

US$1billion

More than

US$1 billion

Business performance management solutions 15% 17% 23%

Client acquisition solutions 15% 33% 0%

Competitor intelligence research 18% 22% 38%

CRM systems 44% 67% 46%

Customer segmentation solutions 12% 11% 15%

Direct internet distribution systems 15% 11% 15%

ERP solutions 18% 39% 38%

Loyalty solutions 18% 17% 0%

Market intelligence research 41% 56% 46%

Others 0% 0% 0%


Don't know 6% 11% 23%



MARKETING AND SALES BEHAVIORS AND STRATEGIES IN 2013–2014




7 Marketing and Sales Behaviors and Strategies in 2013–2014

Well-executed marketing and sales strategies are important to the future success of companies and

their ability to identify and secure new business while retaining existing contracts. During a period of

economic uncertainty, marketing and sales strategies are particularly important as many buyers in the

global construction industry will be reviewing or renegotiating their supplier base to save operational

costs. This chapter identifies the key marketing aims of organizations, and which sales strategies

companies will be adopting to address the current market conditions in 2013–2014. In addition, the

chapter also aims to identify the new media channels that are preferred for business generation, the

most important criteria for marketing agency selection, and the attitudes to marketing and sales of

survey respondents.

Key Findings:

‘Customer acquisition’, ‘customer retention’ and ‘brand building and awareness’ are the three

main marketing aims identified by construction equipment and material supplier respondents

‘Focus sales efforts on generating new business’, ‘invest in brand building’ and ‘focus sales

efforts on existing markets’ are identified as the main marketing and sales practices that are

expected to be adopted in 2013

‘Email promotions’, ‘networking through social media websites’ and ‘email educational

messages’ are considered the best uses of new media by survey respondents

Of all construction equipment and material supplier companies, 51% of respondents consider

the ‘ability to target specific audience niches’ as an important factor when sourcing marketing

vendors

A total of 31% of respondents from large companies consider the ‘ability to customize and

target ad delivery’ and ‘strategic and tactical consulting’ as important attributes in marketing

vendors





7.1 Key Marketing Aims for 2013–2014 – Global Construction Industry

In this section, the marketing goals of construction equipment and material supplier companies and

other construction industry supplier companies have been identified. The suppliers were asked: “How

important are each of the following objectives to your company’s marketing strategy over 2013–2014?”

7.1.1 Key marketing aims by suppliers

‘Customer acquisition’, ‘customer retention’ and ‘brand building and awareness’ are the three main

marketing aims identified by construction equipment and material supplier respondents. When this is

compared to the global construction industry survey results in 2012, it can be noted that suppliers

assign a higher importance to ‘brand building or awareness’ than ‘sales and marketing organizational

alignment’ in 2013.

‘Customer acquisition’ is an important aim of marketing activities and is a key aspect of direct

marketing. The introduction of new technology to aid client acquisition could lead to higher marketing

investment, with technology playing an increasingly important role in customer acquisition strategies.

For example, in October 2012, North American company Reliance Foundry Co. Ltd, a supplier of

bollards and custom castings, announced the introduction of solar-powered lighting bollards in co-

operation with First Light Technologies. The company notes that its new lighting bollards are used to

guide pedestrian traffic and provides illumination that increases safety during construction.

‘Customer retention’ is considered an important marketing aim for supplier organizations. This

demonstrates the importance of customer retention to the growth of suppliers’ businesses through

better awareness of buyers’ expectations, and the development of products that match buyers’

requirements. As discussed in section 6.4, ‘market intelligence’ and ‘CRM systems’ were presented as

chief reasons for an increase in marketing expenditure. These strategies are aimed at retaining and

acquiring customers and are directly linked to increased marketing budgets. Notably, the key marketing

aims of supplier companies remain similar in comparison to the 2012 Timetric survey, in which

‘customer retention’, ‘brand building and awareness’, and ‘customer acquisition’ were presented as key

aims.

Overall, 86% of all supplier respondents consider ‘brand building and awareness’ to be an ‘important’ or

‘very important’ marketing aim of their organization. Although building brand awareness may take more

time than customer retention and acquisition activities, it offers advantages such as the opportunity to

reduce marketing expenditure, long-term planning, ensuring a premium price, setting entry barriers for

competitors and increasing business value.

Additionally, ‘lead generation’ and ‘sales and marketing organizational alignment’ were presented as

other important marketing aims by 83% and 73% of respondents respectively in 2013.





Table 66: Key Marketing Aims – Construction Equipment and Materials Suppliers (%), 2013

Marketing Objectives Very

important

Important Moderately

important

Least

important

Don't

know

Overall

Customer acquisition 49% 46% 2% 0% 2% 100%

Customer retention 73% 17% 10% 0% 0% 100%

Brand building and awareness 43% 43% 14% 0% 0% 100%

Lead generation 43% 40% 10% 2% 5% 100%

Sales and marketing organizational alignment 34% 39% 17% 7% 2% 100%

Marketing performance measurement 7% 56% 24% 7% 5% 100%

Online presence 34% 29% 27% 10% 0% 100%

Cross-selling and up-selling 21% 40% 29% 5% 5% 100%



Figure 50: Key Marketing Aims – Construction Equipment and Materials Suppliers (%), 2013






Of all other construction industry supplier respondents, 64% consider ‘customer retention’ to be a ‘very

important’ marketing strategy, while 50% and 41% consider ‘brand building and awareness’ and ‘lead

generation’ respectively to be ‘important’ marketing strategies.

Table 67: Key Marketing Aims – Other Construction Industry Suppliers (%), 2013

Marketing Objectives Very

important

Important Moderately

important

Least

important

Don't

know

Overall

Customer retention 64% 18% 18% 0% 0% 100%

Brand building and awareness 27% 50% 18% 5% 0% 100%

Lead generation 32% 41% 14% 5% 9% 100%

Sales and marketing organizational alignment 27% 45% 14% 14% 0% 100%

Marketing performance measurement 26% 43% 17% 13% 0% 100%

Online presence 43% 26% 17% 13% 0% 100%

Customer acquisition 36% 27% 18% 14% 5% 100%

Cross-selling and up-selling 14% 45% 27% 5% 9% 100%



Figure 51: Key Marketing Aims – Other Construction Industry Suppliers (%), 2013






7.1.2 Key marketing aims by region

Regardless of region, ‘customer retention’ is an important marketing objective identified by

respondents. ‘Lead generation’ and ‘sales and marketing organizational alignment’ are also presented

as important by respondents from companies operating in Europe and Asia-Pacific, while ‘customer

acquisition’ is considered as important by companies operating in North America.

The following figure only displays the percentage of respondents who consider the corresponding

marketing objective to be ‘very important’ or ‘important’.

Figure 52: Key Marketing Aims by Region – Global Construction Industry Suppliers (%), 2013


7.1.3 Key marketing aims by company turnover

‘Customer retention’ and ‘customer acquisition’ are considered important marketing objectives for

respondents from small companies. Medium-sized companies consider ‘brand building and awareness’

and ‘customer retention’ as important marketing objectives, while ‘lead generation’ and ‘brand building

and awareness’ are considered important by large companies.





The following table only displays the percentage of respondents who consider the corresponding


Table 68: Key Marketing Aims by Turnover – Global Construction Industry Suppliers (%), 2013

Marketing Objectives Less than

US$100 million

US$100 million–US$1 billion More than

US$1 billion

Customer retention 88% 100% 67%

Customer acquisition 88% 88% 69%

Cross-selling and up-selling 57% 61% 69%

Brand building and awareness 78% 94% 77%

Lead generation 78% 83% 77%

Marketing performance measurement 68% 65% 61%

Sales and marketing organizational alignment 75% 82% 53%

Online presence 74% 64% 46%



7.1.4 Key marketing aims by revenue growth expectations

Regardless of revenue growth expectations, ‘customer retention’ and ‘customer acquisition’ have been

identified as important marketing aims by the largest proportion of respondents in the 2013 survey.

However, 93% of respondents who are ‘more optimistic’ about revenue growth also consider ‘brand

building and awareness’ to be an important marketing objective, while 78% of respondents who are

‘less optimistic’ about revenue growth consider ‘sales and marketing organizational alignment’ to be an

marketing objective.

The following table only displays the percentage of respondents who consider the corresponding


Table 69: Key Marketing Aims by Revenue Growth Expectations (%), 2013

Marketing Objectives More optimistic Neutral Less optimistic

Customer retention 100% 75% 79%

Customer acquisition 86% 82% 84%

Cross-selling and up-selling 72% 63% 42%

Brand building and awareness 93% 69% 79%

Lead generation 89% 76% 68%

Marketing performance measurement 71% 59% 64%

Sales and marketing organizational alignment 78% 59% 78%

Online presence 79% 53% 58%







7.2 Essential Amendments to Marketing Activities in 2013–2014

In relation to marketing and sales practices, industry executives from construction industry supplier

companies were asked: ‘Which of the following does your company plan to adopt in 2013–2014?’ The

survey results show that the most significant strategies construction industry supplier companies will

employ are to ‘focus sales efforts on generating new business’ and to ‘focus sales efforts on existing

markets’.

Supplier respondents are optimistic regarding revenue growth in 2013, and plan to ‘focus sales efforts

on generating new business’. Most respondents intend to expand their marketing activities to

counteract the effects of the global economic instability and to gain business from their competitors.

These respondents plan to take advantage of the expiration of many buyer contracts and also dominate

competitors that have been forced to reduce their expenditure on marketing and sales due to uneven

market conditions.

7.2.1 Amendments to marketing activities by suppliers

Overall, 65% of respondents from construction equipment and materials suppliers consider the need to

‘focus sales efforts on generating new business’ as a marketing activity they plan to adopt. Meanwhile,

49% of respondents plan to ‘invest in brand building’ and 47% plan to ‘focus sales efforts on existing

markets’. Moreover, the respondents from other construction industry suppliers also intend to adopt

these three marketing activities, however the proportion of those who intend to adopt these activities

varies. In addition, ‘trial new and innovative products in the market’ is another important activity they

plan to adopt in 2013.

Evidencing the trend, in February 2013, Chinese tunnel boring machine (TBM) supplier CREC-TBM

announced the launch of its new international division, CTE Limited. CTE Limited has been established

in Hong Kong with the purpose of marketing and presenting the TBMs manufactured by CREC-TBM

and to provide support to users of the machines. A senior executive from CTE commented:

“As a result of several technical meetings, factory and site visits, we became convinced that CREC-

TBM lacked international factor. Consequently, CREC-TBM, along with some other internationally

experienced partners, decided to form a new company that would manage all of CREC-TBM's interests

on the international stage."

Most of the changes to marketing activities are being undertaken to help companies address their

current business concerns, such as market uncertainty, responding to price pressures and rising

competition. To ‘focus sales efforts on existing markets’ could ensure that companies have a higher

chance of winning contracts, and, as suppliers have previous relationships with buyers, this could help

them overcome the falling demand in core markets. Focusing sales efforts on existing markets could

also provide suppliers with accurate information about the needs of their existing clients, which could

improve their product and service offerings.





To ‘invest in brand building’ is of key importance among construction suppliers due to uneven economic

conditions. To survive in the competitive market, construction industry suppliers need to acquire new

business opportunities by constantly investing in brand building. For example, in April 2013, Atlas crane

dealers, with headquarters in the UK, undertook global expansion activity for Effer branded cranes.

Effer and Atlas started a mutual cooperation for the UK market in 2012 and its immediate success

paved the way for global expansion.

Table 70: Amendments to Marketing Activities by Global Construction Industry Suppliers (%),

2013–2014

Marketing Amendments Construction

Equipment and

Materials Suppliers

Other Construction

Industry Suppliers

Focus sales efforts on generating new business 65% 68%

Invest in brand building 49% 55%

Focus sales efforts on existing markets 47% 41%

Re-organize sales efforts 47% 23%

Trial new and innovative products in the market 42% 45%

Adapt product portfolios and positioning 33% 36%

Invest in measurable marketing communications 30% 32%

Standardization of marketing approach 26% 36%

Increase advertising 26% 14%

Review pricing policies 23% 14%

Reallocate marketing budgets away from new or trial products to core

products

12% 14%

Reduce sales commission rates 0% 0%

None of these 2% 5%

Others 0% 0%







Figure 53: Amendments to Marketing Activities by Global Construction Industry Suppliers (%),

2013–2014


7.2.2 Amendments to marketing activities by region

The need to ‘invest in brand building’ and to ‘focus sales efforts on generating new business’ are the

marketing strategies that most respondents in North America, Europe and the Asia-Pacific regions

expect to adopt.

Notably, 62% of respondents from supplier companies operating in Asia-Pacific consider the need to

‘trial new and innovative products in the market’ and ‘adapt product portfolios and positioning’ as market

activities they will seek to adopt. Most buyer companies expect innovative products from the supplier

industry and expect to trial or exhibit new products in order to acquire more customers. Additionally,

51% of respondents from companies operating in Europe anticipate to ‘focus sales efforts on existing

markets’.





Please note that this question received a low number of responses from the Rest of the World region

and, as such, the results cannot be considered representative.

Table 71: Amendments to Marketing Activities by Region – Global Construction Industry (%),

2013–2014

Marketing Amendments North America Europe Asia-Pacific Rest of the World

Adapt product portfolios and positioning 25% 26% 62% 40%

Focus sales efforts on existing markets 25% 51% 54% 20%

Focus sales efforts on generating new business 67% 71% 69% 20%

Increase advertising 42% 23% 0% 20%

Invest in brand building 58% 49% 54% 40%

Invest in measurable marketing communications 42% 29% 23% 40%

Reallocate marketing budgets away from new or trial

products to core products

17% 11% 8% 20%

Reduce sales commission rates 0% 0% 0% 0%

Re-organize sales efforts 42% 40% 31% 40%

Review pricing policies 33% 14% 15% 40%

Standardization of marketing approach 8% 31% 54% 0%

Trial new and innovative products in the market 33% 40% 62% 40%


Others 0% 0% 0% 0%







7.2.3 Amendments to marketing activities by company turnover

Respondents from companies of all sizes consider the need to ‘focus sales efforts on generating new

business’ and ‘invest in brand building’ as marketing strategies that they will seek to adopt in 2013. In

addition, 54% of respondents from large companies consider to ‘focus sales efforts on existing markets’

as another important marketing strategy for 2013.

Table 72: Amendments to Marketing Activities by Turnover – Global Construction Industry (%),

2013–2014

Marketing Amendments Less than

US$100 million

US$100 million–

US$1 billion

More than

US$1 billion

Adapt product portfolios and positioning 38% 28% 31%

Focus sales efforts on existing markets 38% 50% 54%

Focus sales efforts on generating new business 68% 72% 54%

Increase advertising 18% 22% 31%

Invest in brand building 53% 50% 46%

Invest in measurable marketing communications 29% 50% 8%

Reallocate marketing budgets away from new or trial products to

core products

12% 22% 0%

Reduce sales commission rates 0% 0% 0%

Re-organize sales efforts 44% 33% 31%

Review pricing policies 24% 17% 15%

Standardization of marketing approach 21% 50% 23%

Trial new and innovative products in the market 50% 39% 31%

Others 0% 0% 0%








7.3 Best Uses of New Media for Business Prospects – Global Construction Industry

Construction industry suppliers are increasingly planning to employ new media channels in order to

receive higher ROI on their marketing expenditure. In this section, construction industry executives

were asked to identify the best uses of new media channels to generate business in the current

economic climate.

7.3.1 Best uses of new media by suppliers

Of all construction equipment and material supplier respondents, 49% identified ‘email promotions’ as

an effective use of new media to generate business in 2013, while 44% identified ‘networking through

social media websites’ and 26% anticipated ‘email educational messages’ to be important uses.

A total of 55% of respondents from other construction industry suppliers identified ‘networking through

social media websites’ as an effective use of new media, while 45% consider ‘email promotions’ and

36% of respondents each consider ‘email educational messages’ and ‘community and industry online

forums’ to be the best uses.

Social media networking enables organizations to discuss and share their ideas on a common and

shared platform. Social media sites provide word-of-mouth publicity for businesses, who then use these

sites to build customer relationship networks. Supplier respondents plan to develop more location-

aware advertising, which enables them to market products and services to consumers in areas where

the product can be purchased locally. Suppliers also intend to adopt loyalty marketing strategies to

increase their customer base. In general, supplier companies use social networks such as Twitter and

Facebook, online communities, blogs, photo-sharing websites such as Flickr, and video-sharing

websites such as YouTube, in order to reach their target customers. The nature of the social media

medium also allows buyers to research and purchase products and services at their own convenience,

while the ease of tracking, measuring and testing social media marketing campaigns appeals to

suppliers in the global construction industry.

New media channels such as ‘email promotions’, ‘online forums’, ‘webinars’, ‘educational email

messages’ and ‘web conferencing’ are relatively inexpensive in terms of the ratio of cost to reach

customers. As such, companies can use these new media channels to reach a wider audience for a

fraction of their traditional marketing budgets.





Table 73: Best Uses of New Media – Global Construction Industry Suppliers (%), 2013

New Media Construction Equipment and

Materials Suppliers

Other Construction

Industry Suppliers

Email promotions 49% 45%

Networking through social media websites 44% 55%

Email educational messages 26% 36%

White paper downloads 16% 23%

Web conferencing for sales presentations 12% 18%

Community and industry online forums 12% 36%

Webinars for sales 9% 18%

Others 2% 0%

None of these 12% 5%

Don't know 16% 9%



Figure 54: Best Uses of New Media – Global Construction Industry Suppliers (%), 2013






7.3.2 Best uses of new media by region

An analysis of responses by region shows no chief variations in the perceived best uses of new media

for generated business sales. ‘Email promotions’ is considered the best use of new media as identified

by the respondents from companies operating in Europe, Asia-Pacific and the Rest of the World

regions. In addition, a total of 58% of respondents from North America and 49% of respondents from

Europe consider ‘networking through social media websites’ as one of the best uses of new media.

Table 74: Global Construction Industry Suppliers – Best Uses of New Media by Region (%), 2013

New Media North America Europe Asia-Pacific Rest of the World

Community and industry online forums 17% 26% 15% 0%

Email educational messages 25% 23% 46% 40%

Email promotions 17% 51% 62% 60%

Networking through social media websites 58% 49% 38% 40%

Web conferencing for sales presentations 17% 9% 15% 40%

Webinars for sales 17% 14% 8% 0%

White paper downloads 25% 20% 0% 40%

Others 0% 0% 8% 0%


Don't know 17% 11% 8% 40%







Figure 55: Global Construction Industry Suppliers – Best Uses of New Media by Region (%), 2013






7.3.3 Best uses of new media by company turnover

An analysis of responses by company turnover shows some variations in the perceived best uses of

new media for generated business sales. A total of 31% of respondents from large companies consider

‘community and industry online forums’ as one of the best uses of new media, while ‘email promotions’

and ‘networking through social media websites’ are considered the best uses of new media by

respondents from small and medium-sized companies.

Table 75: Global Construction Industry Suppliers – Best Uses of New Media by Turnover (%),

2013

New Media Less than US$100

million

US$100 million–

US$1billion

More than US$1

billion

Community and industry online forums 21% 11% 31%

Email educational messages 41% 22% 8%

Email promotions 59% 44% 23%

Networking through social media websites 59% 44% 23%

Web conferencing for sales presentations 15% 22% 0%

Webinars for sales 6% 22% 15%

White paper downloads 24% 11% 15%

Others 0% 6% 0%


Don't know 6% 11% 38%







Figure 56: Global Construction Industry Suppliers – Best Uses of New Media by Turnover (%),

2013






7.4 Critical Success Factors for Choosing a Marketing Agency

This section provides an insight into the marketing requirements of construction equipment and material

supplier companies and other construction industry supplier companies, and how they plan to develop

marketing and sales strategies in the future. The survey respondents were asked: “What are the three

most-important attributes of a marketing or advertising vendor for your company?”

7.4.1 Critical success factors by suppliers

Of all construction equipment and material supplier companies, 51% of respondents consider the ‘ability

to target specific audience niches’ as an important factor when sourcing marketing vendors. Meanwhile,

37% of respondents consider the ‘ability to generate leads or setup customer meetings’ and 35% of

respondents highlight ‘low cost’ as important attributes of marketing and advertising vendors for their

companies. Moreover, the ‘ability to generate leads or setup customer meetings’ was identified as

important in the 2012 construction industry survey.

A total of 59% of respondents from other construction industry supplier companies consider ‘ability to

target specific audience niches’ and 45% consider ‘ability to generate leads or setup customer

meetings’ as important factors for selecting their marketing vendors. This is due to the fact that, as a

result of an increase in business competition and expectations of gradual economic recovery, the need

for strategic and tactical inputs on specific target segments has gained importance. Furthermore, 36%

of other construction industry supplier respondents also consider ‘access to specific audience

demographics’ to be an important attribute in their marketing vendors. Construction industry products

tend to be oriented towards specific customer groups, and marketing agencies need to be capable of

penetrating every area of the global construction industry to help suppliers increase their business

opportunities. As such, marketing agencies need to possess the ability to design marketing strategies

suitable for reaching specific audience demographics.

The ‘ability to generate leads or setup customer meetings’ is a key attribute as suppliers tend to choose

marketing agencies that can proactively generate leads through customer meetings, seminars and

education. These events can also improve the supplier’s understanding of their customer requirements.

In addition, ‘flexibility in customizing services’ is considered an important attribute in the marketing

vendors of construction equipment and material suppliers, as companies in the global construction

industry tend to source marketing vendors that are flexible enough to customize their services to

various locations across the globe.

As the global construction industry shows signs of improvement, suppliers have set aggressive sales

targets to generate growth. As such, marketing vendors are being pushed to generate leads and

increase the number of meetings with potential clients. In comparison to the construction industry

survey in 2012, the number of respondents who consider ‘low cost’ as an important attribute for

marketing and advertising vendors has increased. This indicates that suppliers are becoming more

concerned about the cost of their sales and marketing activities. This trend also indicates that

construction industry supplier companies are willing to spend on quality delivery at a low cost from

marketing and sales vendors.





Figure 57: Critical Success Factors – Construction Equipment and Materials Suppliers (%),

2009−2013






Figure 58: Critical Success Factors – Other Construction Industry Suppliers (%), 2009−2013






7.4.2 Critical success factors for choosing a marketing agency by region

An analysis of responses by region show minor variations in the important attributes of marketing

vendors. Respondents whose companies operate in North America, Europe and Asia-Pacific consider

the ‘ability to target specific audience niches’ to be important for marketing vendor selection.

Meanwhile, respondents operating in the Europe and Asia-Pacific regions consider a more result-

oriented factor such as the ‘ability to generate leads or setup customer meetings’ to be important.

Notably, 42% of respondents from North America also expect their marketing vendors to provide

services such as ‘access to specific audience demographics’ and ‘low cost’.

Please note that this question received low responses from the Rest of the World region and, as such,

the results cannot be considered representative.

Table 76: Critical Success Factors by Region – Global Construction Industry (%), 2013

Critical Success Factors North

America

Europe Asia-Pacific Rest of the

World

Ability to customize and target ad delivery 17% 17% 38% 20%

Ability to generate leads or setup customer meetings 25% 40% 54% 40%

Ability to integrate and co-ordinate global, national and

local campaigns

8% 11% 23% 40%

Ability to target specific audience niches 42% 54% 69% 40%

Access to specific audience demographics 42% 20% 38% 20%

Flexibility in customizing services 33% 29% 15% 0%

Low cost 42% 31% 15% 20%

Size and breadth of audience 8% 14% 0% 0%

Strategic and tactical consulting 25% 26% 15% 0%

Thorough reporting and analysis 8% 14% 23% 0%

Others 0% 3% 8% 0%








7.4.3 Critical success factors for choosing a marketing agency by company turnover

Regardless of company turnover, respondents consider the ‘ability to target specific audience niches’ to

be an important attribute in marketing vendors. The other important factors vary by company size.

Since most large companies are spread across several different countries, respondents from large

companies expect their marketing campaigns to be unique and consistent across all countries. As such,

31% of respondents from large companies consider the ‘ability to customize and target ad delivery’ and

‘strategic and tactical consulting’ as other important attributes in marketing vendors. Respondents from

small and medium-sized companies consider ‘ability to generate leads or setup customer meetings’ to

be an important attribute in marketing vendors.

Table 77: Critical Success Factors by Turnover – Global Construction Industry Suppliers (%),

2013

Critical Success Factors Less than

US$100 million

US$100 million–

US$1 billion

More than

US$1 billion

Ability to target specific audience niches 59% 50% 46%

Flexibility in customizing services 26% 22% 23%

Ability to integrate and co-ordinate global, national and local

campaigns

18% 17% 8%

Access to specific audience demographics 32% 22% 23%

Ability to customize and target ad delivery 24% 11% 31%

Low cost 29% 39% 15%

Size and breadth of audience 12% 6% 8%

Ability to generate leads or setup customer meetings 41% 50% 23%

Thorough reporting and analysis 15% 17% 8%

Strategic and tactical consulting 21% 17% 31%

Others 0% 0% 15%




APPENDIX




8 Appendix

8.1 Survey Results – Closed Questions

Table 78: Global Construction Industry Survey Results – Closed Questions

Which of the following best describes your company / organization?

Construction contractor or subcontractor 23%

Private sector project sponsor / developer / investor 2%

Public sector project sponsor / developer 2%

Architecture / Design company 21%

Construction equipment supplier 6%

Building merchants or products distributor 2%

Construction materials or building products manufacturer 18%

Furniture, fittings or interior products manufacturer 5%

Planning / surveying / civil engineering company 2%

Other supplier: technology, consultancy & other services 8%

Other supplier: raw materials, logistics, factory equipment 4%

Trade body, academia or industry observer 2%

Government / public sector organization 0%

Others 6%

In which region do you operate?

North America 21%

Europe 51%

Asia-Pacific 20%


What best describes your position in your organization?





Manager 14%

Professional and technical staff (e.g. lawyer, engineer,

architect)

9%

Staff 7%

APPENDIX





What is the total global revenue of your organization in US dollars?

Up to US$20m 45%

US$20m to US$100m 17%

US$100m to US$500m 14%

US$500m to US$1bn 8%

US$1bn to US$5bn 6%

US$5bn to US$10bn 2%

US$10bn or more 7%

Are you more or less optimistic about revenue growth for your company in 2013 compared to 2012?

More optimistic 53%

Neutral 22%

Less optimistic 24%

Don't know 1%

Not applicable 0%

Globally, what are your company's top priorities for 2013–2014?


Expand abroad (please specify country) 38%







Others 6%

Don't know 0%

How do you expect your firm’s capital expenditure to change in 2013–2014?

New product developments

Increase significantly 16%

Increase slightly 48%

Stay unchanged 29%

Reduce slightly 2%

Reduce significantly 3%

Don’t know 1%

APPENDIX





Mergers and acquisitions



Stay unchanged 58%

Reduce slightly 4%


Don’t know 14%

New facility acquisitions



Stay unchanged 51%

Reduce slightly 7%


Don’t know 8%

Machinery and equipment purchases



Stay unchanged 37%

Reduce slightly 9%


Don’t know 2%

IT infrastructure developments



Stay unchanged 39%

Reduce slightly 3%


Don’t know 1%

APPENDIX





What changes do you expect in hiring staff at your organization in 2013–2014?

Large increase – 2%+ of current workforce 18%

Steady increase – Upto 2% of current workforce 37%

No change 28%

Steady decrease – Upto 2% of current workforce 9%

Large decrease – 2%+ of current workforce 6%

Don't know 2%

For the following how do you expect costs to change in 2013–2014?

Raw materials

Increase by 25%+ 1%




No change 17%


Energy

Increase by 25%+ 2%




No change 19%


APPENDIX





Labor costs and salaries

Increase by 25%+ 3%




No change 22%


How will the change in costs impact the price of your products or contract values?

Increase by 25%+ 2%




No Change 22%




Decrease by 25%+ 0%

Not applicable 2%

Which emerging markets do you expect to offer your industry significant growth prospects over 2013–2014?

Russia 25%

China 38%

India 33%

Brazil 30%

Argentina 8%

Indonesia 11%

Mexico 16%

Saudi Arabia 20%

South Africa 7%

Turkey 20%

Vietnam 11%

UAE 31%

Eastern Europe 26%

Others 16%

APPENDIX





For the following developed markets how do you expect demand to change in 2013–2014?

US

Increase 46%

Remain the same 28%

Decrease 9%

Don't know 16%

Canada

Increase 35%

Remain the same 32%

Decrease 4%

Don't know 28%

UK

Increase 29%

Remain the same 35%

Decrease 17%

Don't know 20%

Germany

Increase 21%

Remain the same 45%

Decrease 10%

Don't know 24%

France

Increase 10%

Remain the same 43%

Decrease 22%

Don't know 25%

Italy

Increase 4%

Remain the same 27%

Decrease 42%

Don't know 27%

APPENDIX





Spain

Increase 6%

Remain the same 22%

Decrease 44%

Don't know 28%

Japan

Increase 17%

Remain the same 33%

Decrease 12%

Don't know 38%

South Korea

Increase 24%

Remain the same 30%

Decrease 5%

Don't know 42%

Australia

Increase 30%

Remain the same 31%

Decrease 5%

Don't know 35%

Singapore, Taiwan and Hong Kong

Increase 32%

Remain the same 28%

Decrease 2%

Don't know 39%

What change do you expect to see in the number of mergers and acquisitions in your industry in 2013?

Significant increase 6%

Increase 44%

No change 30%

Decrease 5%

Significant decrease 0%

Don't know 15%

APPENDIX





What are the biggest concerns for your organization in 2013–2014?

Cost containments 56%

Retention or recruitment of skilled staff 45%

Dealing with staff shortages 17%

Regulatory changes 22%

Political interference 21%

Reducing demand for products and services 29%

Debt 14%

Lack of liquidity 18%

Climate change challenges 7%

Responding to pricing pressure 38%

Market uncertainty 55%

Rising competition 42%

Natural hazards 2%

Others 5%

None of these 1%

What are the three most important ways that suppliers can help contractors and developers' business in the current

business climate?

Improve payment terms 31%

Improve customer services 38%

Provide support for generating new businesses 34%

Provide support for offsetting existing business attrition 8%

Reduce prices 34%

Provide other concessions and incentives 10%

Work harder to reduce costs 26%

Innovate products 43%

Offer more flexibility in delivery 15%

Engage in partnerships to optimize working capital and

reduce costs

22%

Sign longer-term agreements 6%

Demonstrate better ROI 8%

Others: 2%

None of these 1%

APPENDIX





How important are each of the following objectives to your company’s marketing strategy over 2013–2014?

Customer retention

Very important 70%

Important 17%

Moderately important 13%

Least important 0%

Don't know 0%

Customer acquisition

Very important 44%

Important 40%


Least important 5%

Don't know 3%

Cross-selling and up-selling

Very important 19%

Important 42%


Least important 5%

Don't know 6%

Brand building and awareness 100%

Very important 38%

Important 45%


Least important 2%

Don't know 0%

Lead generation -

Very important 39%

Important 41%


Least important 3%

Don't know 6%

APPENDIX





Marketing performance measurement -

Very important 14%

Important 52%


Least important 9%

Don't know 3%

Sales and marketing organizational alignment

Very important 32%

Important 41%


Least important 10%

Don't know 2%

Online presence

Very important 38%

Important 28%


Least important 11%

Don't know 0%

Do you expect to increase or decrease in expenditure on the following media in 2013–2014?

Online content sites

Increase 43%

No change 43%

Decrease 5%

Don't know 6%

Not applicable 3%

Online portals

Increase 41%

No change 41%

Decrease 2%

Don't know 6%

Not applicable 10%

APPENDIX





Consumer and business magazines

Increase 29%

No change 49%

Decrease 10%

Don't know 5%

Not applicable 8%

Trade magazines

Increase 33%

No change 52%

Decrease 8%

Don't know 5%

Not applicable 2%

Newspapers

Increase 8%

No change 48%

Decrease 16%

Don't know 5%

Not applicable 23%

Television and video

Increase 5%

No change 44%

Decrease 5%

Don't know 10%

Not applicable 37%

Radio

Increase 2%

No change 44%

Decrease 10%

Don't know 8%

Not applicable 37%

APPENDIX





Direct mail

Increase 22%

No change 41%

Decrease 21%

Don't know 6%

Not applicable 10%

Email and newsletters

Increase 61%

No change 29%

Decrease 3%

Don't know 6%

Not applicable 0%

Search

Increase 28%

No change 51%

Decrease 3%

Don't know 10%

Not applicable 8%

Sponsorship

Increase 5%

No change 57%

Decrease 17%

Don't know 6%

Not applicable 14%

Webcasting

Increase 19%

No change 47%

Decrease 3%

Don't know 10%

Not applicable 21%

APPENDIX





Corporate and brand websites

Increase 51%

No change 37%

Decrease 3%

Don't know 6%

Not applicable 3%

Social media and networking sites

Increase 59%

No change 30%

Decrease 2%

Don't know 8%

Not applicable 2%

Conferences and events

Increase 41%

No change 40%

Decrease 11%

Don't know 3%

Not applicable 5%

Outdoor

Increase 10%

No change 48%

Decrease 6%

Don't know 8%

Not applicable 27%

Telemarketing

Increase 17%

No change 44%

Decrease 5%

Don't know 8%

Not applicable 25%

APPENDIX





Public relations

Increase 37%

No change 48%

Decrease 5%

Don't know 6%

Not applicable 5%

Which of the following marketing and sales solutions do you expect your company to invest in 2013–2014?

CRM systems 51%

ERP solutions 28%

Market intelligence research 46%

Competitor intelligence research 23%

Business performance management solutions 17%

Client acquisition solutions 17%

Customer segmentation solutions 12%

Loyalty solutions 14%

Direct internet distribution systems 14%

None of these 8%

Others 0%

Don't know

What is your company’s global annual marketing and advertising budget in US dollars?

Up to US$50,000 34%

US$50,000–100,000 11%

US$100,000–250,000 14%

US$250,000–500,000 8%

US$500,000–US$1 million 11%

US$1–5 million 8%

US$5–10 million 5%



More than US$50 million 6%

APPENDIX





Which of the following practices will your company seek to adopt in 2013–2014?

Invest in measurable marketing communications 31%

Standardization of marketing approach 29%

Adapt product portfolios and positioning 34%

Reallocate marketing budgets away from new or trial products

to core products

12%

Trial new and innovative products in the market 43%

Focus sales efforts on existing markets 45%

Focus sales efforts on generating new business 66%

Review pricing policies 20%

Re-organize sales efforts 38%

Invest in brand building 51%

Increase advertising 22%

Reduce sales commission rates 0%

None of these 3%

Other s 0%

What are the best uses of new media for increasing business by sales staff in the current business climate?

Networking through social media websites 48%

Email promotions 48%

Email educational messages 29%

Webinars for sales 12%

Web conferencing for sales presentations 14%

White paper downloads 18%

Community and industry online forums 20%

None of these 9%

Other (please specify): 2%

Don't know 14%

What are the three most-important attributes of a marketing and advertising vendor to your company?

Ability to target specific audience niches 54%

Flexibility in customizing services 25%

Ability to integrate and co-ordinate global, national and local

campaigns

15%

Access to specific audience demographics 28%

Ability to customize and target ad delivery 22%

Low cost 29%

Size and breadth of audience 9%

Ability to generate leads or setup customer meetings 40%

Thorough reporting and analysis 14%

Strategic and tactical consulting 22%

None of these 5%

APPENDIX





How important are each of the following factors when promoting your company to key buyers in the industry?

Product quality

Very important 70%

Important 25%


Least important 2%

Don't know 2%

Price

Very important 21%

Important 48%


Least important 6%

Don't know 2%

Innovation

Very important 41%

Important 45%


Least important 2%

Don't know 2%

Speed of delivery

Very important 30%

Important 44%


Least important 2%

Don't know 2%

Level of service

Very important 59%

Important 33%


Least important 0%

Don't know 2%

APPENDIX





Reputation for reliability

Very important 67%

Important 25%


Least important 0%

Don't know 2%

Existing relationship with buyer

Very important 42%

Important 39%


Least important 2%

Don't know 2%

Proximity to buyer operations

Very important 13%

Important 31%


Least important 15%

Don't know 5%

Brand reputation

Very important 51%

Important 33%


Least important

Don't know 2%

Corporate social responsibility reputation

Very important 22%

Important 33%


Least important 8%

Don't know 3%

APPENDIX





Environmental record

Very important 29%

Important 32%


Least important 13%

Don't know 3%

Financial strength and stability of supplier

Very important 27%

Important 44%


Least important 2%

Don't know 2%

Knowledge of buyer's market

Very important 45%

Important 42%


Least important 2%

Don't know 3%

How much do you expect your company to increase or decrease marketing expenditure in 2013–2014?

Increase by 25%+ 10%




No change 23%




Decrease by 25%+ 1%

Not applicable 1%


APPENDIX




8.2 Methodology

Timetric dedicated research and analysis teams consist of experienced professionals with an industry

background in marketing, market research, consulting and advanced statistical expertise.

Timetric adheres to the codes of practice of the Market Research Society (www.mrs.org.uk) and the

Society of Competitive Intelligence Professionals (www.scip.org).

All Timetric databases are continuously updated and revised.

8.3 Contact Us

If you have any queries about this report, or would like any further information, please contact

[email protected]

8.4 About Timetric

Timetric is an independent economic and business research firm providing critical intelligence on

emerging economies and key global industries. The company offers detailed economic and sector

intelligence, business insights and independent and authoritative commentary.

Underpinning all of Timetric’s research services is a belief that data – if gained following the right

technologies and analysis frameworks – can provide unique and powerful economic and business

insights.

Timetric’s economic and industry intelligence centers are premium decision tools providing access to

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Each year, Timetric produces hundreds of high quality research reports across countries, industries and

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For further information, email [email protected]

mailto:[email protected]

APPENDIX




8.5 Disclaimer

All rights reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by

any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission

of the publisher, Timetric.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.

Please note that the findings, conclusions and recommendations that Timetric delivers are based on

information gathered in good faith from both primary and secondary sources, whose accuracy we are

not always in a position to guarantee. As such, Timetric can accept no liability whatsoever for actions

taken based on any information that may subsequently prove to be incorrect.

Market Trends, Marketing Spend and Sales Strategies in the Global Construction Industry

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