The biggest construction companies in Europe have shifted positions slightly since last year’s league table, but the names remain the same. So why do Vinci, Bouygues and Hochtief always appear at the top of the pile – and streets ahead of UK firms?
Vinci has overtaken fellow French outfit Bouygues as the biggest construction firm in Europe. 2000/01 was a busy period for construction, with a number of mergers and acquisitions and the prospect of more to come as the biggest continue to get bigger. UK firms will have to spend wisely if they want to keep up.
But is biggest best? The Continent thinks so, and there seems to be no end in sight to the domination of the big four – Vinci, Bouygues, Hochtief and Skanska – which continue to pull away from the pack and the UK’s top companies.
The top three in particular are more than just construction firms, compared with the likes of Amec or Bovis Lend Lease, and this diversity is behind their rapid growth to immense size and turnover. These firms now have diverse businesses, ranging from motorway concessions to digital television companies.
Illustrating just how fragmented the UK construction market is, Amec, the UK’s largest firm, stands in seventh place – but is just a third of the size of Vinci. Marcos Hermandez, construction analyst for Merrill Lynch in Spain, believes UK firms have not been as aggressive as their European competitors in growing their concessions businesses and moving internationally.
Hermandez says UK firms have two options if they want to compete with the likes of Vinci and Bouygues. First, grow abroad faster and bigger than they are currently doing and expand their services businesses into sectors such as water. Second, they must push for more consolidation. UK housebuilders have been doing their bit lately, but contractors are reluctant to team up. “A lot of deals stall because there are always egos involved, and the argument of who will run the new company,” Hermandez says.
British firms make their mark in the middle-sized companies sector. Bovis has moved into the top 10 after its merger with Australia’s Lend Lease, and Balfour Beatty is treading water in 17th position. Also featuring in the top 50 are Carillion, Taylor Woodrow, Laing, Mowlem, Kier and Alfred McAlpine. UK companies making it into the top 100 are Interserve, HBG, Jarvis, Amey, Morgan Sindall, Miller, Morrison, Galliford Try, Mansell, Shepherd, Birse, Wates and Costain.
But Vinci, Bouygues and Hochtief haven’t had it all their way. Each has been hit by the continuing decline of the German construction market. The bad news is that Germany is not expected to recover any time soon, because it is faced with the double whammy of low demand and excess supply. The poor performance of the German economy means that new projects have dried up and housing demand has slumped. This is compounded by too many firms competing for the limited work and pushing down prices.
Meanwhile, Skanska’s ambitious plans for international growth have been reined back. It has been hardest hit in Poland and Eastern Europe, and has had its fair share of troubles in the UK – mainly in joint ventures with Costain. Despite slipping back to fourth place, Skanska is still nearly twice the size of Amec.
Opposite, Building profiles the “big three” and examines their UK presence and, on the following 10 pages, lists the top 300 contractors and 200 materials producers in Europe, ranked by turnover.
Methodology and key for tablesThis ranking was compiled by Building’s French sister publication Le Moniteur with the assistance of Laurence Francqueville (France), Jacqueline McLaurin (UK), Martin Hewes for Building (UK), Marcel Linden (Germany), Brigitte de Wolf (Belgium), Jacques Ramon (Spain), Aldo Norsa (Italy), Catherine Thomas (Portugal), Guy de Faramond (Scandinavia), Costruire (Italy), Ambassades de France (Austria, Swizterland, Greece), Euroconstruct, FIEC, Confédération Construction, Construction Forecasting and Research and the DTLR. Profit and turnover figures have been converted from euros using the most recent available exchange rate: £1 = *1.641. * Subsidiary of company already listed
** Before sale to O’Rourke
*** Combined turnover after merger
† Before merger with Corsan
†† Before merger with Endel