creamer media

The myriad construction projects undertaken in South Africa, in preparation for the country’s hosting of the 2010 FIFA World Cup, cushioned the local construction industry against the 2008 global building slump. The increased activity in the sector in the run-up to the event represented somewhat of a construction boom in South Africa.

However, following the completion of World Cup-related projects, activity in the local construction sector began to wane and companies faced adverse trading conditions.

After a bruising few years, some industry participants expected market conditions to improve in 2012, but as the year unfolded, participants in the industry continued to report a slow flow of contracts.

However, there is some optimism that the recovery in the construction sector may soon gain traction.

A key factor that will affect the pace of recovery is the rate at which the South African government rolls out its planned R827-billion infrastructure expenditure, as turnover in the construction industry is highly sensitive to government spending, as government is the industry’s largest client. To date, tenders relating to government’s infrastructure plans have been slow in coming to market.

This report reviews the current business environment in  South Africa, the key participants; local demand; geographic diversification; corporate activity, black economic empowerment and competition activity in the sector, as well as issues relating to skills and the environment.

The report is a summary of information published in Engineering News and Mining Weekly, as well as information available in the public domain and does not purport to provide analysis of market trends.

Table of contents

List of abbreviations 1

Key developments 2

Business environment 3–4

Key participants 5–9

• Aveng 5
• Basil Read 5
• Esorfranki 6
• Group Five 6
• Murray & Roberts 7
• Raubex 7
• Stefanutti Stocks 7
• Wilson Bayly Holmes-Ovcon 8
• Companies in trouble 8

Local demand 10–16

• Energy 12
• Water 13
• Transport 14
• Property 15
• Mining 16

Geographic diversification 17–19

• Activities in the rest of Africa 17
• Australia 18
• The Middle East 19

Corporate activity 20–21

Black economic empowerment 22

• Ownership 22
• Management control and employment equity 23
• Skills development 24
• Preferential procurement, enterprise development and corporate social investment 24
• Ratings 25

Competition 26

Skills 27–28

Environmental considerations 29

Outlook 30

Appendices 31–35

1. Major project announcements in 2011 and 2012 31–32
2. Association contact details 33
3. Company contact details 34–35

Main sources 36–38