Demand for cement and investments in construction

The building industry, which alongside the actual building trade also includes upstream and downstream industry sectors such as the building materials industry and the property sector, is of great importance to the German economy. According to a study conducted by the Cologne Institute for Economic Research in 2008, the construction value chain accounts for a total of 11 per cent of the economic output and 12 per cent of insurable employment in Germany.

The use of reinforced concrete – and thus also of its most important constituent, cement – has been continuously increasing over the last 10 years in Germany. According to the German Federal Statistical Office, 14 per cent of the building projects completed in 2015 in the housing sector involved the use of reinforced concrete, which means that the market share of this building material has doubled since 2005. With a figure of 53 per cent (2005: 47 per cent), the number of projects completed in the non-residential building sector was much higher. In addition to more cement-intensive industrial construction, this sector also includes non-housing construction similar to residential buildings (schools, official buildings, office buildings) and agricultural construction.

Building construction is the dominant market sector for the German cement industry. In 2015, around 17.4 million tonnes of cement were used in this sector, which corresponds to a share of 65.0 per cent of overall German cement consumption. Civil engineering accounted for 9.2 million tonnes or 35.0 per cent of cement consumption. Here again, cement and concrete play a major part in the construction of bridges, roads, tunnels, canals and other infrastructure projects.

Being rooted in the domestic economy, investments in construction provide direct momentum in other fields of industry and are thus one of the keys to sustainable growth. According to calculations made by the Rhine-Westphalia Institute for Economic Research (RWI) in 2010, a one-billion euro increase in construction investment generates an overall increase in production of almost 2.4 billion euros and the creation of around 22,000 jobs. In the light of the associated increase in tax revenue and social security contributions it is clear that specific growth impulses are an essential part of any efforts to effectively consolidate public spending budgets.

Investments in material assets are not just positive from the point of view of giving a boost to domestic demand; construction investments in particular can make a valuable contribution towards meeting present-day challenges. For example, an excellent transport and education infrastructure is an essential basis for maintaining Germany's competitiveness as a business location. At the same time, climate protection demands more efficient energy utilisation. Here again the building industry can make a substantial contribution. The energy-efficient modernisation of existing buildings and the construction of energy-efficient new buildings drastically reduce both heating expenses and the emission of greenhouse gas.  

To reinforce the ability of the building industry and the trade as a whole to provide an impetus for growth and employment, there is a need to improve the general political framework. The elimination of legal provisions impeding growth, appropriate investment in the infrastructure and specific incentives for construction investment all help to create tangible value and a foundation for mastering economic, social and ecological challenges.

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Manuel Mohr

Manuel Mohr

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+49-30-2 80 02-100

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+49-30-2 80 02-250