Below is a transcript of a recent Interview with Josef Kurzmann, executive director of the Doka Group.
When you unfold your newspaper first thing in the morning, do you dread seeing the latest horror stories from the international business press?
No doubt about it, business conditions are very different now from what they were only a few months ago. After years of vigorous growth, many areas of the real economy have now been hit by the credit crunch. The world economic crisis has not passed us by either, of course, but nobody ever solved a problem by sitting down and moaning about it. We see crises as opportunities and are looking ahead with realistic optimism. Doka is a rock-solid, well prepared company with highly committed staff, a cost-effective product line and a global distribution network. We have a tightly structured organization and are confident that together with our customers, we shall make a good job of dealing with the challenges.
The company has caused quite a stir in recent years with high double-digit revenue growth and many spectacular construction projects to its name. Did this trend continue in 2008 as well?
In 2008 we generated the highest revenues in the entire 50-year history of our company, and posted a good result. With double-digit growth rates worldwide, the first three quarters of last year went very well indeed for the company. In the fourth quarter, however, we started to feel the first serious effects of the incipient world economic crisis on our sales figures.
Where do you see the biggest problems currently faced by the construction sector?
One very serious problem is the reluctance of banks to make bridging loans. We hear this again and again from our customers and from the official construction-industry advocacy organizations, with all of whom we are in close contact. This is an issue where more political pressure must be brought to bear, so as to ensure that construction firms can pre-finance their projects on realistic terms. Construction companies are affected by a mood of uncertainty, making them cautious when it comes to investing in new formwork equipment. This is where our superbly well-serviced rental park comes in, enabling us to offer construction firms all over the world an alternative to purchasing their formwork. We are looking to the economic stimulus packages and the resultant investment in infrastructure build-out. This should make it possible to at least partially offset the downturn in the building construction segment.
Are all markets being affected by the world economic crisis in the same way?
If the forecasts issued by Euroconstruct are to be believed, the European construction sector is going to have to brace itself for a pronounced downturn in building industry demand. In particular, the downtrend in residential construction is expected to continue throughout 2009. Some grounds for hope are provided by the civil engineering segment, for which growth of around three percent is forecast. In the medium term, construction industry growth is likely to continue in Eastern Europe, although much less vigorously than in the past. Here too, however, several countries are likely to be hit by sharply contracting construction output and currency turbulence, entailing steep falls in revenues and other risks. The construction sector in the Middle East is not being affected by the world economic crisis to the same extent as it is in Europe. The forecasts for Latin America are cautiously optimistic. In the United States, a severe decline in construction output must be expected for at least 2009 and 2010. Again, it is the building construction segment that has been hardest hit. Investment in infrastructure has remained stable, despite the economic crisis. As you can see, the economic crisis has worked its way through to the construction industry with varying intensities and in many different ways.
What steps have you taken to counteract the effects of the world economic crisis?
As in previous years, we are always working very hard on continuously improving our performance and the quality of our relationships with our customers, and have set ourselves the ambitious goal of gaining further market share even under today's difficult conditions. To do this, it is absolutely imperative for us to seize every single market opportunity that presents itself, and not let go of it. We have focused our energies and will be enhancing our proximity to the customer and our service offerings still further. Over the past few years, we have made intensive efforts to optimize our costs and our business processes. This means we now have an even more effective organizational structure, modern technologies and a highly cost-saving product range that gives our customers measurable benefit — more relevant than ever in the present economic climate. This is the basis from which we shall tackle today's tough challenges.
Doka has a very dense worldwide distribution network. Will you be making any cutbacks in this distribution network in the light of declining construction industry demand?
