German construction companies - no penchant for bigness

In the German construction industry a fundamental structural change has occurred. After the unification construction boom in the first half of 1990s, the construction industry suffered drastic declines in building demand in the following ten years. In 2005, there was a quarter less (price adjusted) construction investment than ten years before. Construction's share in GDP fell from ten to fourteen percent during the same period. The effects of these extremes - five years of boom followed by 10 years of decline - were drastic. The number of employees in construction shrank by more than half, from 1.434 million in 1995 to 715,000 in 2009. Large construction firms were particularly affected. In 2009 there were only 25 contractors with more than 500 employees compared to 180 in 1991. Also the number of medium-sized companies sank clearly in the same period. In contrast, the number of companies with less than ten employees increased: their number rose between 1995 and 2009 by 15,620 (+38 percent), so that there was slight growth in the total number of construction firms. The changes in construction are most evident when looking at the list of the ten largest enterprises. Of the top ten construction firms in 1990 only two are left in the list for 2008. Three disappeared because of insolvency; five were sold - often indirectly - to companies outside Germany. Currently there are only two German companies (Hochtief AG and Bilfinger Berger AG) in the list of the top 50 construction firms in Europe published by Deloitte LLP. In comparison, 13 of the top 50 firms are headquartered in the UK, seven in the Netherlands and six in Spain. If the Spanish company ACS succeeds in taking over Hochtief AG, there would only be one German construction company left among Europe's top 50.