The Top 225 International Contractors

By Peter Reina, Gary J. Tulacz

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The global construction market has taken its lumps over the past two years, and many large international contractors are scrambling to maintain their size. However, as the slump grows in duration, a few things are becoming clear: The construction recession is not universal, there are regions and market sectors that are doing well, and many international contractors are thriving.

The responses to ENR’s Top 225 International Contractors survey tell an interesting tale. As a group, the ENR Top 225 generated $383.78 billion in revenue from projects outside their home countries in 2009, up 0.4% from $382.44 billion in 2008 (please note, this is a corrected figure from last year’s published results). This increase comes despite the financial turmoil experienced in many markets.

But a closer look at the figures shows that, for the most part, market downturn was regional in nature. Much of the construction recession was tied to the turmoil in the financial sector centered in the U.S. and Europe, which tended to stifle project financing across the board.

This slump is reflected in the numbers from the ENR Top 225. The U.S. market was hit the most severely of all regions, with international contracting revenue dropping 16.5% in 2009 to $34.88 billion, down from $41.60 billion in 2008. Europe also showed a major downturn, falling 11.7% to $100.81 billion in 2009 from $114.11 billion in 2008.

The Canadian market was essentially flat, in part because of fluctuations in oil prices in early 2009. Although Canada seems to have survived the financial meltdown better than many countries, the sudden drop in oil prices last year stalled many oil-sands-related projects, resulting in Top 225 revenue dropping 0.1% in 2009 to $13.38 billion from $13.40 billion.

The Middle East showed a similar lack of movement. Much of the developer-driven market in places like Dubai disappeared overnight, and many petroleum-related projects were put on hold while oil prices stabilized. But many governments in the Middle East continued to invest in infrastructure and industry to diversify their economies. Top 225 revenue from projects in the region rose 0.1% to $77.56 billion in 2009 from $77.46 billion in 2008.

Other regions that were more focused on infrastructure and development showed significant growth. The biggest increases in international contracting revenue came in Africa. Thanks to development and natural resources, international revenue in central and southern Africa for the Top 225 grew 31.7% to $27.52 billion in 2009 from $21.04 billion in 2008. North Africa grew 30.8% among the Top 225 to $29.29 billion from $21.04 billion in 2008.

International contracting revenue from the Top 225 in Latin America rose 14.1% in 2009 to $24.82 billion from 421.76 billion in 2008. International revenue rose 10.3% in the Caribbean to $2.29 billion.

The Asian market also showed strong growth. The Top 225 had $73.18 billion in international revenue in 2009, up 6.75% from $68.56 billion in 2008.

Among market sectors, the lack of project financing was readily apparent from the Top 225 survey responses. International revenue from general building projects dropped 8.5% to $85.99 billion in 2009 from $93.93 billion in 2008.

However, not all financing has dried up. “The slowdown was felt in some of our markets, such as Russia and Ukraine, in particular in commercial projects where clients are using bank financing,” says Erman Ilicak, chairman of Turkey’s Renaissance Construction. However, he says markets such as Libya and Turkmenistan have strong fundamentals. For example, Renaissance is working on Bab Trablous, the largest commercial development project in Tripoli, Libya, says Ilicak.

The global recession and lack of consumer demand resulted in international revenue in the manufacturing sector falling from $6.92 billion in 2008 to $3.81 billion in 2009. On the industrial-process side, international revenue fell 10.4% to $20.60 billion in 2009 from $23.00 billion in 2008. It was a flat market for petroleum in 2009, with revenue from such projects rising only 0.6% for the Top 225 to $91.42 billion from $90.84 billion in 2008.

‘Infrastructuring’

Infrastructure projects gave a boost to international contractors. The Top 225 showed significant increases in 2009 in transportation work (up 10.6% to $112.34 billion in 2009), water projects (up 17.5% to $11.22 billion), and sewer and wastewater work (up 11.6% to $6.29 billion). And revenue from power projects rose 33.6% in 2009 to $35.69 billion for the Top 225.

This active market for infrastructure has helped many international contractors stay strong. “A lot of government money is going into infrastructure all over the world,” says Herbert Lütkestratkötter CEO of Germany’s Hochtief. “I do not share the fear that … the market will dry up.”

The continuing tight economic conditions in many countries have many international contractors worried ...

Peter Reina is Correspondent London, U.K.

Gary J. Tulacz has been, since 1993, senior editor in charge of ENR's Top Lists, which bring structure to the huge global construction industry through annual surveys and market analysis of its key segments and major players. The array of surveys rank companies, based both in the U.S. and outside, which perform general contracting, specialty contracting, engineering, architecture and environmental services, among other specialties.

The rankings, based on annual revenue from work at home and abroad, are further divided into specific market categories. Click here for descriptions and schedules of ENR Top List surveys and access to information on current and past listed firms.

Gary also created the ENR Top 100 Green Contractors and Design Firms rankings and the ENR quarterly Construction Industry Confidence Index that measures firm executives' market outlook.

This survey data is used by industry firms and other businesses, government agencies and academics also to gauge the health of the global construction market.

A graduate of Fordham College in New York City and the Fordham University School of Law, Gary previously wrote extensively on employee relations in such areas as labor and immigration law and employee drug testing.

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