Anatomy of Construction Industry Competition in the Year 2000

Over the past two decades the U.S. construction industry was lagging in its efforts to maintain its status as the world leader in engineering and construction services. There is an urgent need to examine the situation and devise competitive strategies to arrest and possibly reverse this situation. In this regard, increasing the awareness of the forces that are likely to shape and influence future competitiveness in the global construction marketplace is imperative. A limited amount of useful information is available on the nature and structure of international competitiveness in the construction industry. Therefore, there is a need to generate information on the salient factors that affect international competitiveness: strategies, costs, financing, technology, and management skills.

Objectives

The purpose of this research was to provide broad-based insight into the future state of competitiveness, both domestic and global, by developing scenarios for the state of competition in the construction industry in the year 2000 and beyond. Historical and current trends were systematically analyzed to identify the driving forces that will shape the future of the construction industry. Specific research objectives include an in-depth study of:

• The shaping of corporate capabilities: vertical integration and horizontal expansion, to increase corporate capabilities and market share, including acquisition and mergers by offshore conglomerates and the acquisition of foreign firms by U.S. companies.
• The role of privatization, and build-own-transfer projects and the nature of project financing, in future markets.
• Management, organization, and structure: future management and organizational approaches/structures and techniques, to attract personnel to perform in a global environment.

Conclusions

A number of unprecedented measures need to be adopted in order for the U.S. construction industry to remain competitive in the global marketplace. The first measure is the realization that the methods that many U.S. firms have been using are not necessarily the best methods, or are the only appropriate methods to perform construction services. The imperative to combine and synergize the efforts and endeavors of all the “players” in the construction industry, i.e. owners, government agencies, and engineering and construction firms is evident, if the U.S. is to maintain its dominance in a global environment. This may even involve cooperation and strategic partnering between entities hitherto considered corporate adversaries. The degree to which this cooperation is achieved, to circumvent the problems of decreasing labor supply, falling educational standards, decreasing productivity and loss of the all important technological edge will determine the success of the industry in the year 2000.

To improve the positioning of the entire U.S. construction industry by the year 2000, three major forces must be overpowered by members of the U.S. construction industry during the 1990s: 1) relinquish paradigms that have inhibited progress in the past, 2) establish methods to overcome, or cope with the predicted shortage of qualified human resources, and 3) reestablish the working environment that stimulated the driving forces that allowed the U.S. construction industry to become a world leader in supplying construction services: “U.S. innovation and creativity.”