KPMG Takes a Look at the Construction Sector

Financial services group KPMG has just published its annual survey on the global construction industry. ZA Confidential caught up with KPMG’s Africa Construction Leader Gavin Maile to find out how the sector is performing….

ZAC: How would you summarise the current state of the construction sector in ZA, and how does it compare to the global picture?
GM: It looks like we are past the low point and the majority expect improvements in both order books and margins. SA margins were lower than those globally for the past year, but are in line going forward.

ZAC: What about the outlook, locally and globally?
GM: A real turnaround is expected in 2 – 5 years – both local & global – except in the Americas, where the turnaround is strongly in progress

Q: Are there particular customer sectors which offer favourable prospects for our construction firms?
GM: Power & Energy are expected to make most impact

ZAC: The ZA government’s infrastructure programme is obviously going to be of great importance, given its scale. Do you see more spending coming through the pipeline, because a persistent criticism has been the State’s failure to implement its spending plans?
GM: There does appear to be more traction and progress happening.

ZAC: The admitted collusion among some local construction firms, and the high fines which have been levied, have tainted the image of the sector. Do you think the worst is now over for the companies involved, or will the calls continue for civil suits and heads to roll among executives?
GM: Most CEO’s have already rotated – but I expect there will be further distractions to business as normal.

ZAC: When he attended your launch, the Minister of Public Enterprises Malusi Gigaba called for the industry itself to take a more positive stance and work with government on issues like skills development and empowerment. Is there much of an appetite for this.
GM: I believe so, as industry needs these skills as well to sustain themselves

ZAC: We hear a lot about the opportunities in Africa, but some local firms have had poor experiences elsewhere in the Continent. What is the outlook in the short and medium term for activities by ZA firms in the rest of Africa?
GM: Very positive – especially where they follow their local clients into Africa – specifically in mining.

ZAC: Finally, the recent strike in the sector was settled. Do you expect a period of relative calm in terms of labour relations in the construction industry?
GM: Sorry – no idea.

Tweets of the Day:
Funny Tweets (@iQuoteComedy): i’m only a morning person on december 25th

Puns (@omgthatspunny): I was struggling to figure out how lightning works then it struck me.

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