German construction crashes after boom years

Germany’s construction industry appears to be suffering even more than in neighbouring countries, amid an overall slowing economy in Europe. However, the current performance must be viewed against the boom that had prevailed for years, which makes the fall even harder.

“For years, construction flourished more than was healthy, and production capacities were massively expanded with investment in machinery,” a manager of a rebar distribution group says. Consequently, suppliers of material now have big problems filling those capacities.

“The benders are vying for orders, and are undercutting one another with prices for jobs,” he tells Kallanish, noting that pricing has become totally unrealistic. He adds this is a problem that no bender would like to admit. “If you ask them, it’s never themselves, they always keep pointing at others,” he says. “I’ve heard that all too often.”

“It is a drama,” a manager at another big company concurs. “It’s really obscene when you see benders selling their processed rebar at below the purchasing price; they work for nothing, and concede losses.” He adds that he does not believe in a major rebound after the summer break, or for the rest of the year for that matter.

He thus echoes Feralpi chief executive Giuseppe Pasini who last week stated that the market for long products, particularly in Italy and Germany, is not sending signals for a rebound in September.

Christian Koehl Germany