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Prof Dominic Swordswww.dominicswords.comProf Dominic Swordswww.dominicswords.com
Prospects for the global constructioneconomyProspects for the global constructioneconomy
From recession to recovery?From recession to recovery?
the timing? the place?the pace?
2011 : tactical plans
1 – 3 years: sustain competitiveness
5 Years + : Megatrends
Stabilise – confidence and sentiment – investment and consumption
From recession to recovery?From recession to recovery?
Fix – asset, credit and stock markets
Grow – momentum - expansion phase
Source: www.niesr.ac.ukSource: www.niesr.ac.uk
Progress out of recessionsProgress out of recessions
Months from start of recession
0 6 12 18 24 30 36 42 48
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
-7.0%
-8.0%
-9.0%
1930-1934 1973-1976 1979-1983 1990-1993 2008
Sentiment improving in the EUSentiment improving in the EU
Baltic Dry Goods Index Baltic Dry Goods Index
... realisic long term level but highly volatile …
The Great Crash
Over-capacity driving volatility
Main economic and financial indicators confirm that that the world has emerged from recession.
But the severity of the crisis points to a very different post-crisis world.
Over the foreseeable future, the resulting economic landscape is likely to be characterized by the combination of problems in a damaged financial system together with a weak recovery in the global economy held back by fiscal restraint.
A German CEO
‘The crisis is over… ‘ ‘The crisis is over… ‘
Construction - the worst collapse …Construction - the worst collapse …
… in decades… in decades
0.70.7
2.22.2
1.61.6
1.11.1
3.93.9
3.33.3
2.12.1
Risk and volatility will be continuing themes in our economies & markets
EU ForecastsEU Forecasts
European Commission Autumn 2010
Improving though gradual
return togrowth
Improving though gradual
return togrowth
At lower level
in mid term
At lower level
in mid term
And continued
significantrisks
And continued
significantrisks
What does this tell us?What does this tell us?
Euro area forecast to
grow 1.5% in 2011
Euro area forecast to
grow 1.5% in 2011
US by 2.1 and Japan by
1.3% this year
US by 2.1 and Japan by
1.3% this year
0.70.7
2.22.2
1.61.6
1.11.1
3.93.9
3.33.3
1.71.7
Risk and volatility will be continuing themes in our economies & markets
EU ForecastsEU Forecasts
European Commission Autumn 2010
Improving though gradual
return togrowth
Improving though gradual
return togrowth
At lower level
in mid term
At lower level
in mid term
And continued
significantrisks
And continued
significantrisks
What does this tell us?What does this tell us?
Euro area forecast to
grow 1.5% in 2011
Euro area forecast to
grow 1.5% in 2011
US by 2.1 and Japan by
1.3% this year
US by 2.1 and Japan by
1.3% this year
China and India still at low relative level …China and India still at low relative level …
But are still much below the West in per capita income… but moving fast… but moving fast
China is setting a new courseChina is setting a new course
- Long term ambitions for moderately prosperous society - xiaokang
- Spread benefits of growth, re-energise agricultural productivity and output, redress urban drift to the East
- Expand domestic market, reduce export dependency, allow yuan to appreciate in due course
- Invest in infrastructure and buildin
- Long term ambitions for moderately prosperous society - xiaokang
- Spread benefits of growth, re-energise agricultural productivity and output, redress urban drift to the East
- Expand domestic market, reduce export dependency, allow yuan to appreciate in due course
- Invest in infrastructure and buildin
The world top 30 in 2050The world top 30 in 2050
Based on Total Shareholder Returns (TSR): includes change in share price and dividends based on calendar year data in local currencySource(s): Thomson Financial Datastream; Morgan Stanley Capital International; BCG analysis
BCG – Global Value CreatorsBCG – Global Value Creators
BCG – Global Value CreatorsBCG – Global Value Creators
… in construction and machinery sector… in construction and machinery sector
Forecast growth …Forecast growth …
… and re-ordering of main markets… and re-ordering of main markets
What’s staring us in the face?What’s staring us in the face?
- A shifting global landscape
- China - Domestic development & international presence
- US - Search for external markets
- EU - Multi speed economies
- How do we capitalise on these developments?
- A shifting global landscape
- China - Domestic development & international presence
- US - Search for external markets
- EU - Multi speed economies
- How do we capitalise on these developments?
… the decade will be mixture of these trends… the decade will be mixture of these trends
So, what?So, what?
Imperative 1
- Financial efficiency
- From operational efficiency to commercial effectiveness
- Streamlined decision making
- Supply chain power
- Margin growth
Imperative 1
- Financial efficiency
- From operational efficiency to commercial effectiveness
- Streamlined decision making
- Supply chain power
- Margin growth
So, what?So, what?
Imperative 2
- Market distinctiveness
- Market leadership in reputation if not in absolute size
- Re-define segments
- Innovation
Imperative 2
- Market distinctiveness
- Market leadership in reputation if not in absolute size
- Re-define segments
- Innovation
So, what?So, what?
Imperative 3
- Selective investment and capacity expansion
- Market entry and investments in new markets (product, service and/or geographies)
- Lay foundations to enable sustained organic value creation
Imperative 3
- Selective investment and capacity expansion
- Market entry and investments in new markets (product, service and/or geographies)
- Lay foundations to enable sustained organic value creation
QuestionsQuestions
Trade winds blowTrade winds blowUS and EU consolidate domestic markets – companies build on local strengths
Exports more balanced – Western businesses find opportunities in high growth geographies
China 1st and India 2nd largest economies – with buoyant domestic markets
Far and Middle Eastern business invest in Western markets – offering local competition o established players
Troubled watersTroubled watersCredit markets slow to gather momentum
Business and consumer confidence slumps
China over-whelmed by internal social and economic stresses
Political instability drives protectionism ….
BecalmedBecalmedFiscal deficits decline while slow uptake by private sector in EU – distracted by worries over internal euro difficulties
USA divided with negative impact on investment and growth
Western businesses slow to identify and react to opportunities and threats
Emerging markets focus on local regions
Three global scenarios – to 2020Three global scenarios – to 2020
Becalmed
Trade winds blow
Troubled waters