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Civil Engineering Industry Outlook SAFCEC; July 2010

Civil Engineering Industry Outlook SAFCEC; July 2010. ECONOMIC CRISIS ????. General Economic situation: where in the world are we? The “Long view” on Construction The “Short view” on Construction Structure or Cycle? The Future?. SA Economy ‘Overheated’. The ‘world came tumbling down’.

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Civil Engineering Industry Outlook SAFCEC; July 2010

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  1. Civil Engineering Industry Outlook SAFCEC; July 2010

  2. ECONOMIC CRISIS ???? • General Economic situation: where in the world are we? • The “Long view” on Construction • The “Short view” on Construction • Structure or Cycle? • The Future?

  3. SA Economy ‘Overheated’

  4. The ‘world came tumbling down’

  5. Impact & consequences by Client • Immediate impact: Liquidity constraints and decline in demand • Transnet: Re-scoping • Eskom – Nuclear delay, hydro delay, coal 3 wait and see, Kusile delayed roll-out. • Private Sector development slowed down • Less income at various tiers of Government. • Companies increase exposure to Public Sector Work.

  6. Election ‘Paralysis’

  7. Postponement of Tenders

  8. So we came down with the flu!!

  9. General Economic Optimism

  10. Construction Confidence are “a’comin”

  11. “Demography is Destiny”

  12. Long Term: The “Think Tool”

  13. The “Long View”: Economic Infrastructure Investment

  14. The Long View: Social Infrastructure

  15. WHAT DO WE KNOW? • The economy is recovering • Current economic infrastructure is not sufficient to facilitate 6% growth; spending inevitable. • Water & Sanitation spending starting • Road infrastructure spending accelerating • Current power infrastructure will be reaching the end of its efficient life cycle by 2020-2025. • Government is committed to infrastructure spending. • Institutional problems delay execution • First & Second Economic crisis – created uncertainty

  16. Short Term Outlook Pessimistic

  17. New Tenders: Opinions

  18. New Tenders: Numbers

  19. Contract Awards

  20. Turnover vs Long Term Trends

  21. Contract Awards: Structure or Cycle?

  22. Awards : Turnover relationship

  23. Civil Engineering Turnover

  24. Future: 2010 & 2011

  25. SUMMARY • Pre-crisis order books unwinding • Short term decline due to spending delays • 2009 – -10% • 2010 – -39% • 2011 – 1,2% • Long-term: sector fundamentally well positioned

  26. Turnover vs Long Term Trends 2010 Stadia GFIP Gautrain Transnet Pipeline Medupi /Kusile King Shaka Durban Harbour Ingula Mining TCTA SANRAL roads (nT) Coal 3 N1/N2 Nuclear 1 GFIP Phase 2 SAPREF Refinery N2 Wild Coast SASOL Expansions

  27. THANK YOU Henk Langenhoven hpl@safcec.org.za

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