A study launched by Flemings Research at a conference on Tuesday warns that medium-sized companies will be squeezed as leading clients enter into long-term partnering deals with fewer contractors. The winning firms will have to be capable of delivering genuine innovations and cost savings through supply-chain management, says the research.
Speaking at the conference, Anders Nyren, vice-president of finance for giant Swedish contractor Skanska, reiterated the report's findings. He predicted that smaller local contractors would become niche businesses acting as subcontractors to "large, full-service solution providers".
Investors in recent times have shunned construction shares, preferring to plough money into high-growth stocks such as telecommunications and Internet companies. The conference was the latest attempt by analysts to convince investors of the merits of investing in leading construction firms.