The field of ground engineering and construction often is characterized by unknown conditions, a high level of uncertainty and risk. In the difficult economic conditions we see around the globe today, it seems as if the entire construction industry is on shaky ground, too. As the CEO of Soilmec, a heavy equipment manufacturer in the ground engineering sector based in Italy, I would like to offer my insight into how the European economic crisis is affecting the worldwide construction industry.
In Europe, stronger austerity measures put into place by local governments in late 2011 and early 2012 have led to reductions in infrastructure and private construction spending. As a result, the construction industry in Europe has seen a significant slowdown. Many small projects are under way but are experiencing varying degrees of delay due to financial issues.
The debt exposure and credit crisis in Greece or Spain could rapidly spread to other European countries—and to financial institutions in the U.S. Already, regarding the expected effect on new construction, banks in both Europe and the U.S. have tightened their lending practices. Some doomsday economists are predicting that, if unchecked, the debt crisis could cause a worldwide slowdown even worse than the one in 2008.
Unfortunately, no one really knows the future. At less than 5% of GDP in developed countries and 10% worldwide, the construction industry may not hold any great influence over the world's economic future. The industry will be left to build its own defences against the winds of change.
Is there an upside to all this economic turmoil in Europe and the interconnected global economy? I believe that because conditions in Europe are so challenging, European companies are driving new innovations to compete better in the marketplace and make construction more efficient.
Trouble and Innovation
Over the past 20 years, especially in Europe, the technologies used in the underground construction industry have enjoyed continuous development, driven mainly by the need to reduce construction times, increase safety for site workers and reduce environmental impacts, including minimizing ground movement.
New technologies and new equipment, already widely accepted in Europe and Asia, offer important advantages to contractors in the U.S. Some are particularly suited to building or rebuilding infrastructure and come at a time when infrastructure spending is essential to creating jobs, new opportunities and national competitiveness.
I believe the best multinational companies use their knowledge base for technological innovations that they leverage with applications wherever they work. And the best construction equipment manufacturers collaborate closely with construction firms.