Is It True That Construction Productivity In Europe Is Ahead Of The USA?

Construction productivity has been declining over the past few decades, as is well known, but what is striking is how differently the US and EU have responded to this trend. 

Both regions are facing labour shortages and cost increases, but the European construction industry is holding up better, consistently beating the US in terms of worker productivity.

What would be the reasons for this discrepancy and what the industry may learn from Europe’s strategy? There is a significant lesson for everyone involved in the construction and equipment industry.

Fall of Europe Was More flexible despite of long dip

Since 2000, productivity in the construction industry has decreased, but the magnitude of the drop is striking. 

According to ING Research, which cites Oxford Economics and Eurostat, the EU’s construction productivity has decreased by 15% during the previous 25 years. 

It has been far steeper, a 25% drop, in the US.

Although that seems depressing on both sides, it’s crucial to remember that manufacturing productivity increased throughout that time, doubling in the US and increasing by almost 60% in the EU. 

Construction has obviously fallen behind, but European construction companies have managed better during the storm.

European region kept the better investment plans

Investment strategy is one area where the discrepancies are most noticeable. About 11% of the value created by EU construction enterprises has continuously been reinvested in capital expenditures. 

In comparison, just roughly 6% of US companies are investing. This disparity in spending, especially on heavy equipment machinery, efficiency improvements, and innovation, may be a key factor contributing to the growing productivity gap.

Spending more is not the only goal, it’s also about spending more wisely. 

Instead of just adding more effort to the problem, this reinvestment helps EU businesses embrace digital workflows, adopt current tools, and increase long-term output.

Both regions faced labour shortages and price hikes

More than 30% of EU construction enterprises said that they were unable to meet demand by March 2024 because of a lack of staff. 

There is a significant backlog there. However, according to ING, a mere 20% increase in efficiency may eliminate the requirement for around 2.5 million additional employees. 

Without requiring a significant increase in labor, that kind of development would assist fulfill growing housing and infrastructure demands while also relieving hiring pressures.

In terms of cost, building expenses have increased significantly in both areas. While output prices have increased by about 35%, overall building costs in the US have more than tripled over the past 25 years. 

Although the burden has been substantially less, EU clients have also seen increases, nearly 250%.

Smart construction is a way to lead

Europe has difficulties notwithstanding its advantage. Construction is still project-driven and dispersed, which makes standardization challenging, according to ING. 

The rate at which innovations can scale is forced by various regulations and site factors. 

However, the EU is demonstrating that even within these constraints, judicious investments in digital tools, prefabrication, and off-site construction techniques, such as the use of pre-built timber components, can gradually change the situation.

Bottom line

The EU is ahead of the US for a reason, even though it may not have figured out the building productivity puzzle. 

Europe is leading the way with more steady capital investment, a more aggressive approach to labor issues, and a more acute emphasis on efficiency. The message is clear, North American contractors must adjust or risk falling further behind.

For companies and fleet managers that want to remain competitive, now is the moment to reconsider how you outfit your teams. Not just with workers, but with more intelligent tools and processes that make a difference.

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