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The Construction Sector
BY Carole Veitch
South Africa
12 December 2017
R 10 080.00 (ZAR)  
estimated $ 789.26 (USD) *
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The South African Construction Sector


The South African construction industry is a strategic sector that supports the government’s National Development Plan (NDP). During 2016 total nominal expenditure on construction works and related activities totalled approximately R420bn and the sector generated an estimated 1,483,000 employment opportunities across the formal and informal sectors. Infrastructure investment, or Gross Fixed Capital Formation (GFCF), was approximately 19.6% of GDP for 2016, with public sector infrastructure investment contributing 6% to GDP. Government has reiterated its commitment to infrastructure development by earmarking R948bn over the next three years.


Difficult Economic Conditions


Despite this commitment, stakeholders have expressed concern about the sector, especially as 140,000 construction jobs were shed between the first and third quarters of 2017. According to figures released by Statistics South Africa, the construction industry growth rate contracted by 0.8% quarter-on-quarter in Q1 2017 and by 0.5% quarter-on-quarter in Q2 2017. Private sector infrastructure spend, which totalled almost R185.5bn in 2016, is expected to remain muted over the medium-term. As profitability continues to deteriorate, role players report that competition for projects is steadily intensifying.


Report Coverage


The report on the South African construction industry and related activities, which includes scaffolding solutions and structurally insulated panel systems (SIPs), describes current conditions and recent developments. Profiled in the report are 54 companies, including Group Five which recently announced that the group would be disposing of its manufacturing cluster. This forms part of a turnaround strategy to return the company to profitability after the group's core operating profit contracted from R736.5m in 2016 to a year-on-year loss of R659.3m for the financial year ended 30 June 2017. The disposal of Murray & Roberts’ Infrastructure and Buildings businesses was unconditionally concluded and transferred to a consortium led by the Southern Palace Group. The company has since been renamed and re-branded as Concor Construction, which is also profiled in this detailed and informative report.


Page
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Value Chain 4
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 19
4.1. Local 19
4.1.1. Corporate Actions 25
4.1.2. Regulations 27
4.1.3. Enterprise Development and Socio-Economic Development Initiatives 32
4.2. Continental 35
4.3. International 39
5. INFLUENCING FACTORS 41
5.1. Government Interventions 41
5.2. Economic Environment 42
5.3. Rising Input Costs 43
5.4. Labour 44
5.5. Supply and Quality of Building Materials 48
5.6. Health and Safety Concerns 49
5.7. Technology, Research and Development (R&D) and Innovation 50
5.8. Environmental Concerns 54
5.9. Cyclicality 57
5.10. Corruption 57
6. COMPETITION 58
6.1. Barriers to Entry 60
7. SWOT ANALYSIS 61
8. OUTLOOK 62
9. INDUSTRY ASSOCIATIONS 62
10. REFERENCES 63
10.1. Publications 63
10.2. Websites 65
APPENDIX 1 67
The Construction Industry Development Board (CIDB) Grading Designations 67
APPENDIX 2 68
The Global Competitiveness Index 2017-2018: South Africa 68
COMPANY PROFILES 69
AMEC FOSTER WHEELER SOUTH AFRICA (PTY) LTD 69
ARNOTT PANELS (PTY) LTD 71
AVENG LTD 73
B AND E INTERNATIONAL (PTY) LTD 77
BASIL READ HOLDINGS LTD 80
BILFINGER INTERVALVE AFRICA (PTY) LTD 84
BLUHM BURTON ENGINEERING (PTY) LTD 86
BOSCH PROJECTS (PTY) LTD 88
CALGRO M3 HOLDINGS LTD 90
CAPE FORMWORK CONTRACTORS (PTY) LTD 94
CATO RIDGE ELECTRICAL CONSTRUCTION (PTY) LTD 96
COLAS AFRICA HOLDINGS (PTY) LTD 98
CONCOR CONSTRUCTION (PTY) LTD 100
CONCOR PROJECTS (PTY) LTD 103
CONSTRUCTION MAINTENANCE SERVICES (PTY) LTD 105
DIABOR (PTY) LTD 107
ESOR LTD 109
EXR CONSTRUCTION (PTY) LTD 112
FAIRBROTHER GEOTECHNICAL ENGINEERING (PTY) LTD 115
FLUOR SOUTH AFRICA (PTY) LTD 117
GAUTENG PILING (PTY) LTD 120
GEOMECHANICS (PTY) LTD 122
GIURICICH BROS CONSTRUCTION (PTY) LTD 125
GLENKEY CONSTRUCTION (PTY) LTD 127
GROUP FIVE CONSTRUCTION (PTY) LTD 129
HATCH AFRICA (PTY) LTD 137
HAW AND INGLIS CIVIL ENGINEERING (PTY) LTD 139
INTASTOR CONTROLLED ENVIRONMENTS (PTY) LTD 142
ISCMATLA (PTY) LTD 146
ISOWALL SOUTHERN AFRICA (PTY) LTD 148
KAEFER ENERGY PROJECTS (PTY) LTD 150
LIVIERO BUILDING (PTY) LTD 152
MAZOR GROUP LTD 155
MOTHEO CONSTRUCTION GROUP (PTY) LTD 158
MURRAY AND ROBERTS HOLDINGS LTD 160
NMC (PTY) LTD 163
PERI FORMWORK SCAFFOLDING ENGINEERING (PTY) LTD 166
POWER CONSTRUCTION (PTY) LTD 168
RAMUTSA RAIL CC 170
RAUBEX GROUP LTD 172
RO-AL CONSTRUCTION (PTY) LTD 176
ROBOR (PTY) LTD 178
SA SCAFFOLDING CC 181
SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LTD (THE) 183
STEFANUTTI STOCKS HOLDINGS LTD 186
TIBER CONSTRUCTION (PTY) LTD 191
TN MOLEFE CONSTRUCTION (PTY) LTD 194
TOP FIX (PTY) LTD 196
UNI-SPAN FORMWORK AND SCAFFOLDING (PTY) LTD 199
VIVA FORMWORK AND SCAFFOLDING (CAPE TOWN) (PTY) LTD 201
VNA PILING CC 203
WACO AFRICA (PTY) LTD 205
WILSON BAYLY HOLMES-OVCON LTD 209
WK CONSTRUCTION (PTY) LTD 213