The construction sector was in the past and is now and will also be in the future an important part of the world economy. There is always a necessity to build new structures, to implement new techniques and materials or to renovate existing buildings. Like elsewhere there is also in Germany always an up and down in the building sector. The building sector means: Domestic buildings, infrastructure and industrial buildings. The changes in building investments depend on the Gross Domestic Product GDP. If the GDP is rising, the number of building investments is also rising. This is also effective the other way round. The following graph demonstrates this relationship.
Table of Contents
1 Introduction
1.1 Development of the building industry in Germany
1.2 Present situation in Germany
2 Legal basis
2.1 Introduction of legal basis
2.2 Employment of employees from states of Central and Eastern Europe and from Turkey
2.3 Employment of employees from EU member states
2.4 The Employee Sending-Law (AEntG)
2.5 The EU Sending-Guideline
2.6 The Law on Temporary Employment (Arbeitnehmerüberlassungsgesetz AÜG)
2.7 Construction Rules for Award of Public Works Contract (VOB)
2.8 Basis under fiscal law
3 Analysis of the German building sector based on foreign subcontractors
3.1 General information
3.2 Wage costs and non-wage labour costs
3.3 The general contractor
3.4 Pros and contras of foreign subcontractors
3.4.1 Competitive advantages
3.4.2 The financial risks for the main contractor
3.4.3 Communications problems
3.4.4 Culture problems
3.4.5 Quality of work and labour
3.4.6 The administrative regulations
3.5 The experiences of the building company Krämmel
3.5.1 Short description of the building company Krämmel
3.5.2 The experiences based on foreign subcontractors
3.6 The situation of small companies
3.7 The experiences of Czech building companies
3.7.1 General information about Czech subcontractors in Germany
3.7.2 The experiences of the Czech building company Metrostav
4 Comparison between the Danish and the German building industry
4.1 Development of the Danish building industry
4.2 Analysis of the Danish building sector based on foreign subcontractors
4.2.1 General law basis
4.2.1.1 Building Regulations
4.2.1.2 General Conditions
4.2.2 The integration of subcontractors in the building process
4.2.2.1 Forms of construction regulations
4.2.2.2 The traditional contract
4.2.2.3 The main contract
4.2.2.4 The design and build contract
4.2.2.5 The main forms of relations in Germany
4.2.3 Foreign subcontractors in Denmark
4.3 The experiences of the building company Pihl
4.3.1 Development of the company Pihl in Denmark
4.3.2 The experiences based on foreign subcontractors
5 The effects of the enlarging European Union
5.1 History of the European Union
5.2 Enlarging of the European Union
5.3 Reasons for the enlarging of the European Union
5.4 The negative sites in the enlarging European Union
5.5 Temporary regulations for the European Union extension
5.6 The effects on the Danish economy
6 General recommendations for stabilizing the German building market
6.1 Recommendations for companies
6.1.1 The selection of subcontractors
6.1.2 Safeguard possibilities
6.1.3 The handling of culture differences
6.1.4 Orientation of the home organisation
6.2 Recommendations for the German government
6.3 Possible exit strategies
Objectives & Core Topics
The main objective of this study is to examine the impact of foreign subcontractors on the German building industry, specifically addressing the competitive challenges and legal environment in an era of EU enlargement. The work aims to identify strategies for German firms to remain competitive while navigating complex regulatory frameworks and managing the integration of foreign labor.
- Legal requirements and frameworks for cross-border labor in the construction sector.
- Competitive advantages and risks associated with employing foreign subcontractors.
- Comparative analysis of German and Danish construction industry practices.
- Effects of EU enlargement on labor markets and building economy stability.
- Strategic recommendations for companies and government entities to stabilize the German building market.
Excerpt from the Book
3.4.1 Competitive advantages
The goal of the employment of foreign subcontractors is to save the competitive advantage. The first construction companies that started to take foreign subcontractors had a grate competitive advantage due to they could offer a cheaper price for the building work. Nowadays the medium-sized companies and more and more the small companies employ foreign subcontractors only for this reason because it is a possibility to be stable in the face of strong competition. Therefore the whole building sector has to take this opportunity. This leads to the fact that the competitive advantage is disappearing. Nowadays it is hard for the building companies to make profit because they have to offer a price that is cheaper than the offers from other companies.
A further necessity to be competitive is to work far away from the head office if there are no profitable orders available close-by. Then the advantage of a foreign subcontractor is the flexibility to stay away from home for a longer time than the German workers who want to go home at least for the weekends. The employer has to pay for the travel cost of the own workers. By taking subcontractors the company save this money. The foreign workers stay normally at the building site till their work is done and therefore they can work more hours a day and, if it is necessary, they work also in the weekends. Furthermore, the cheapest possibility for the accommodation on a building site is to accommodate the workers in shanties or containers. The foreign team makes less demand on accommodation than the German workers.
Another reason to take foreign subcontractors is that they are more specialised. Often foreign subcontractors have a high knowledge and experiences in a special field of building work in which they are better than some German workers. Using the skills of the foreign workers can be therefore a competitive advantage.
Summary of Chapters
1 Introduction: Provides an overview of the development of the German building industry and the current economic situation.
2 Legal basis: Outlines the regulatory framework, including the Employee Sending-Law (AEntG) and EU guidelines regarding cross-border employment.
3 Analysis of the German building sector based on foreign subcontractors: Examines the operational reality of using foreign labor, covering cost structures, risks, and specific experiences of companies like Krämmel and Metrostav.
4 Comparison between the Danish and the German building industry: Compares construction practices, contract types, and approaches to labor in Germany and Denmark.
5 The effects of the enlarging European Union: Discusses the implications of EU expansion on the German construction sector and potential future economic impacts.
6 General recommendations for stabilizing the German building market: Offers actionable strategies for companies and the government to address market instability and improve competitive positioning.
Keywords
Foreign Subcontractors, German Building Industry, Construction Management, Labour Costs, EU Enlargement, Legal Basis, Competitive Advantage, AEntG, Subcontracting Risks, Market Stability, Danish Construction Sector, Economic Crisis, Labour Market, Infrastructure, Business Strategy.
Frequently Asked Questions
What is the primary focus of this work?
The work explores the impact and integration of foreign subcontractors within the German building industry, analyzing how their employment affects market competition and local labor.
What are the key thematic areas?
The analysis covers legal frameworks, economic cost structures, competitive strategies, comparative studies with the Danish model, and the broader effects of European Union enlargement.
What is the main objective of the research?
The primary objective is to evaluate the influence of foreign subcontractors on the stability of the German building market and to offer recommendations for adapting to these economic changes.
Which methodology is applied in this study?
The research uses a descriptive analytical approach, incorporating legislative data, economic statistics, and qualitative case study evidence from specific companies in Germany, Denmark, and the Czech Republic.
What does the main body of the work address?
The main body details the legal foundations (AEntG, VOB), examines the financial and communication risks of working with foreign subcontractors, and explores business strategies for maintaining competitiveness.
Which keywords characterize the work?
The research is characterized by terms such as foreign subcontractors, competitive advantage, EU enlargement, labour costs, and construction market stabilization.
How do German and Danish construction regulations differ regarding subcontractors?
The work notes that while both nations have structured frameworks, the Danish system is perceived as more transparent and easier to follow, with fewer exceptions than the German VOB regulations.
What specifically does the study suggest for the German government?
The study recommends lowering labor costs by adjusting social security contributions and creating more flexible regulatory conditions to better prepare the industry for the competitive pressures of the European market.
- Citar trabajo
- Sabrina Rixler (Autor), 2003, The effect of foreign subcontractors on the german building industry, Múnich, GRIN Verlag, https://www.grin.com/document/112637
