New manufacturing is coming: Europe or China will be the new China?

JAPAN-SCIENCE-TECHNOLOGY-ROBOT ELDERLY

Robear is helping to revolutionize the manufacturing industry: do robears prefer China or Europe? (source: HuffingtonPost)

Adidas has announced that it will open its first all-robot factory in Germany, and many will follow in rich countries. Foxconn, the manufacturer of Apple products fired 60,000 employees and employed robots instead of them. It seems this is the beginning of the end.

The way we manufacture products is about to change dramatically in the next decade. There are two intertwined trends that have already started to revolutionize the industry: the digitisation of industry (or the “takeover of robots”) and that global economic growth is less and less energy and machinery-intensive (more and more value added comes from services). None of these are new; however, both of these trends are in front of a new era of growth. Developments in big data and machine learning are increasing the capabilities of robots and global value chains are becoming seamless. Economic growth is coming increasingly from services, as opposed to manufacturing. Moreover, growing concerns about climate change and the ongoing shift away from heavy machinery in state-of-the-art manufacturing are leading to the growing use of lighter materials instead of metals. Continue reading New manufacturing is coming: Europe or China will be the new China?

The Do-It-Yourself guide to success in Central Eastern Europe

Are you a motivated social engineer in CEE? Do you want to change the country you live in? Or you are just interested, what could be the most successful strategy on the periphery of Europe? You are at the right place. Please, welcome the D-I-Y Guide to CEE!

In this post, we first define success in CEE. Second, using the Global Competitiveness Report, we analyze what aspects could help a country achieving that success. And third, we present you the ultimate D-I-Y Success Guide to CEE. Continue reading The Do-It-Yourself guide to success in Central Eastern Europe

EECFA countries in the European Commission (EC) 2016 Spring Macro forecast

The Spring Forecast of the European Commission has been released, and it covers EECFA member countries: Russia, Turkey, Romania, Serbia, Slovenia, Croatia, and Bulgaria, it only lacks Ukraine from the EECFA’s coverage. The EC forecast is intensively used in the EECFA reports for assembling the macro-economic environment, and also as a demand driver in specific segments. For example, consumption leads the demand for commercial buildings in the long run, or office sector’s employment drives the need for office buildings.

In this short note we are presenting the key facts about the EECFA countries in the Commission’s report, looking at how macro forecasts have changed since 2015 Autumn.

GDP

Chart 1 GDP growth forecast of EECFA countries and the EU (average 2015-2016-2017) Source: EC

Chart 1 presents the general economic outlook in the relevant countries – GDP growth from 2015 until 2017. Turkey leads the group with a close to 4% growth, even better prospects than in autumn. Romania and Bulgaria perform better than the EU average. Serbia and Croatia are lagging behind, while Russia is in a serious recession period in the forecast horizon.

In most of the countries of the region, economic outlook has improved since the latest forecast in Autumn 2015. The biggest change in the expectation was in Bulgaria, where forecasted GDP growth increased from 1.7 to 2.5 percent between Autumn 2015 and Spring 2016. Despite the positive outlook of EECFA, we can’t be optimistic regarding Russia where GDP is likely to shrink in the next 2 years; moreover, the rate of decrease has surged since Autumn 2015.

GFCF

Chart 2 The Gross fixed capital formation growth, and if available the building construction growth (average 2015-2016-2017) Source: EC

As it can be seen on chart 2, gross fixed capital formation growth is high in EECFA, which can be explained by the GFCF’s pro-cyclical characteristic. Serbia and Romania have the biggest GFCF growth rate among the examined countries, where GFCF is set to go up between 6.8-7.8 percent. In Turkey and Croatia the estimated growth is between 2.5-3.8 percent; in Slovenia and Bulgaria growth can be between 0-2 percent. The only country where GFCF declines is Russia; the expected shrinkage is near 4 percent.

Written by Aron Horvath, PhD, Head of Research, EECFA, ELTINGA

Q4 2015 Non-residential: permit – completion

viz_test

As almost all Q4 figures were published, we have updated our interactive graphs containing quarterly development of permit and completion in the countries we cover. Beside the residential market, now we have put together a similar one about non-residential buildings. The same 3 data types are provided and you can choose from floor area and number of buildings.

Looking at non-residential permits, a substantial growth is experienced on the Balkan. The only exception is Romania, but, for example in Serbia the permitted floor area is almost 100% above its 2014 level. The biggest countries of EECFA region suffer through, and all this is pretty much supporting the scenarios we have foreshadowed in our reports.

The interactive permit – completion graphs are available here:

1. Residential (number of dwellings)

2. Non-residential (floor area and number of buildings)

While putting together the non-residential figures, I became curious about how the levels are comparable to other European countries. Although some exact matchings have been found, the aim was rather to put the country level market sizes into another context (since we usually contrast them in money terms). The basis of the compilation is permitted non-residential floor area.

permit_comparison_2015

UK is not mentioned in this list, but it is most probable (based on the value of new non-residential construction) that its market in terms of floor area is bigger than that of France. However, permit data is not available in UK. The same is true to Russia, so completion is shown here instead. And one final note to the table is that permit generally refers to newly created spaces and rarely accounts information about renovation-like activity.

 

 

The coming wave of energy efficiency investments

The most energy efficient animal and the wave. Source: FatCatArt

This week’s post is concerned with energy efficiency investments in housing. We wanted to point out the importance of three factors: stable economic growth, further decrease of costs in renewables, and sufficient amount of fundings from the EU. All three factors seem to be fulfilled for the next couple of years, and we think a new wave of energy efficiency investments is likely in the future. Continue reading The coming wave of energy efficiency investments

The oil price decline and the construction market: riding the Saudi bull

the bull After assessing the impact of immigration on the European Union, this week’s post concentrates on another current issue: the oil price decline and its consequences on the construction sector.

This global income redistribution from oil exporters to importers is an opportunity for the construction market: they can ride the falling Saudi bull as cheaper fuel prices, lower costs and stimulated EU economies may generate more demand.

The International Energy Agency is forecasting a lasting low price environment; therefore both short and medium term effects are worth studying. The direct effect of lower fuel prices is a boost both for companies in the construction sector and for most European economies. However, missing petrodollars in the world economy and Russia’s dependence on oil revenues hold an important risk for the future.

Such issues will be discussed at the 80th EUROCONSTRUCT Conference. Continue reading The oil price decline and the construction market: riding the Saudi bull

The housing market’s James Bond: increasing immigration

Our current post is the next in line dealing with migration that has an impact on construction. Such issues will be discussed at the 80th EUROCONSTRUCT Conference.

In our previous post we concluded that lower potential economic growth and an increasing immigration are likely in Europe in the long run. An overall lower economic growth puts pressure on the construction industry as well, however, increasing immigration provides new opportunities for growth. In this post we will first elaborate on possible short-term effects and then we will present our expectation for the long-term. Continue reading The housing market’s James Bond: increasing immigration

Europe at crossroads: Economic decline and the possibilities of increased immigration

There is a series of current issues having an impact on construction that will be discussed at the 80th EUROCONSTRUCT Conference and first, we would like to address a very current issue in Europe: migration. There are many aspects of this phenomenon and it would be hard to present them all. Instead, we will address only one: how immigration can help slowing the ageing of the European Union’s population and thus increase growth prospects. Continue reading Europe at crossroads: Economic decline and the possibilities of increased immigration