Construction materials

FDI in building materials in 2019 and 2020

The Covid-19 pandemic has caused a global greenfield foreign direct investment (FDI) the number of projects decreased by 17.4% in 2020. Most sectors were negatively affected, with closures making site selections almost impossible.

Building materials was one of the sectors that suffered from a series of impacts that were triggered by the pandemic, but which also led to supply chain disruptions, inflation and ultimately an increase in prices. costs at all levels.

FDI in construction materials decreased by 17.2% over the two-year period from 2019 to 2020, from a total of 145 in 2019 to 120 in 2020.

The drop is mainly due to a sharp drop in new projects, which fell by 31.3%, from 122 in 2019 to just 77 in 2020.

Expansion plans went in the opposite direction, growing 30% over the period, containing the negative effect on the overall pace.

What are the main destinations of FDI in building materials?

Western Europe maintained its significant lead over other regions in FDI in building materials over the two-year period, attracting a total of 97 projects.

Over the two years, the region secured more than double the projects of the second region, Central and Eastern Europe (CEE) and the Commonwealth of Independent States (CIS), which attracted a total of 43 projects.

North America, Asia-Pacific and Sub-Saharan Africa follow with 32, 28 and 26 projects respectively.

FDI in construction materials appears to have been hardest hit in Asia-Pacific, where the number of projects fell by 60% in 2020 compared to 2019.

South America saw the second largest decline, with a 40% decline in FDI in construction materials over the period, followed by the Middle East and North Africa with 37.5%.

FDI in the sector only seems to have experienced strong growth in central America and the Caribbean, where projects doubled from 6 to 12.

What are the main construction materials activities?

Despite a 27% year-on-year decline, manufacturing remained the top business function for FDI in the building materials sector globally.

This commercial function attracted a total of 164 FDI projects in 2019 and 2020, almost three times more than sales, administration and marketing in second place with 58 projects, an increase of 48% from a year to year.

Other functions followed quite a bit behind, with headquarters coming out in third place with 18 projects and logistics and warehousing in fourth place with 16.

FDI projects in R&D, mining, training operations, construction and contact centers continued to see little interest, all with new projects of three or less.

What are the main sub-sectors for FDI in construction materials?

Construction materials fall into a large number of sub-sector materials that have been exposed to the disruptions caused by the Covid-19 pandemic in different ways.

Our data suggests that ceramic insulators and insulating fittings were the hardest hit, coming in third place with a 71.4% decline, from 14 projects in 2019 to four in 2020.

Cement, lime, plaster, concrete and related items attracted the most FDI, with a total of 96, and saw a healthy growth of 23.3% during the period, while FDI in miscellaneous building materials fell 40% but still came second with 64 projects.

Other sharp declines in FDI levels were seen in stone, granite and slates and refractory products, which fell 63.6% and 62.5%, respectively. Doors and windows saw one of the strongest growths (83.3%), with projects increasing from 6 in 2019 to 11 in 2020.

Where are the main building materials investors located?

Unsurprisingly for a location well known as a manufacturing and engineering hub, Germany remained the world’s largest foreign investor in building materials, although it saw a slight decline of 5.6% in 2020 compared to 2019 figures.

The country contributed to 35 FDI ​​projects in the sector, which is 20% more than the second country, Switzerland, with 24 projects. France and Spain follow with 22 and 21 projects respectively.

The United States came in fifth after seeing a 58.3% year-over-year decline, with local companies dropping from 12 projects in 2019 to five in 2020.

Danish and Turkish companies are the ones that have increased their exposure to the sector the most, with increases of 150% and 125% respectively.

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