THE MISSION Construction | Panel with Jan-Hendrik Goldbeck, Jörg Kampmeyer and Prof. Dr. Bert Rürup

A special highlight of this round from Mission Construction at the final event. I'm very pleased. Over the next 60 minutes, we'll have a panel where we want to look deep into the construction industry. I have three panelists: Jan-Hendrik Goldbeck, Managing Director of Goldbeck (joining remotely), Jörg Kampmeyer, Managing Partner at Knauf (here on site), and Professor Dr. Bert Rürup, President of the Handelsblatt Research Institute. We'll discuss the challenges from current geopolitical changes, how to deal with the market situation, and sustainable transformation. To start, I'd like to ask you: how do you assess the situation regarding supply chains and the conflict, and what could that mean for the industry?

Of course I have an opinion. What we are experiencing is the black swan – a unique situation. Trend 1: The German construction industry follows the economy; the Ifo indicator dropped dramatically but the economy has recovered. Trend 2: Globalization – Germany is highly exposed (90% trade openness) and hit hard by trade disruptions. The golden age is over. Trend 3: Digitalization – we reduced it to Industry 4.0, missing business model innovation; that handicap is irreversible. Decarbonization is correct but brings green inflation; exiting coal and nuclear simultaneously was a mistake. Demographics will cause trend growth to fall below 1% by 2030, lasting until ~2040.

Let me summarize: golden age over, global trade challenge, digitalization, decarbonization. Jörg, how is your mood? Does it keep you up at night?

Henrik, how do you assess the situation at Goldbeck?

We feel effects with a delay. Current order intake is stable, but price increases of 30-200% have undermined contracts. We can only operate by sight. Globally, golden times aren't over; even in Germany, the archaic industry has huge potential for innovators. Companies that master automation, digitalization, and sustainability will thrive. Short-term dip possible, but the winners will be the good, innovative players.

Picking up on that, Jörg: with demography, is Germany becoming less important for you?

What role for politics? Simple recipes?

Banalities: 16 different building codes. Federal structure is not friendly. Construction will grow due to housing shortage, but office and retail markets are changing. Lower overall growth means the sector can't skyrocket.

Henrik, resources and prices – long-term trend? How do you deal with it?

Prices likely stable or rising. Combined with interest rate hikes, this forces resource efficiency. The era of massive construction is over. Success will come to those who create smart, low-resource products and operate efficiently.

Jörg, how is the industry structurally positioned internationally?

Henrik, do you share that view? Opportunities from fragmentation?

Small, agile players have advantages. Yes, fragmentation hinders scalable transformation, but we are changing it. I don't see that other countries are far ahead – large firms are often internally fragmented. The industry lags behind its potential, no doubt.

Transitioning to sustainable transformation: Henrik, starting with political framework – do you have what you need?

Framework conditions are a big topic, but I won't go into that now. First point...

Now we've briefly mentioned Henry. Now we have a building ministry. Is that the big breakthrough you need? What do you expect from it? Will everything be different now?

Who do you think that from the political level, does it need a hearty grab now, or perhaps loosen the reins a bit again?

Both points. And if it were up to me, I would have only one answer. I once had the opportunity to work in the Chancellery under Helmut Schmidt, and I learned a very important sentence: In politics, every shaping step must be preceded by procuring majorities or a process. That is democratic politics. That is exactly the problem. Because here the small parts are taken. We want the small... Germany, the resistance is all the greater, and that is exactly the problem we have. Perhaps one possibility would be if certain decisions were really delegated upward, then the pressure would not be as great as at the municipal level. That's why one can ask whether building regulations really have to be regionalized. The more regionalized they are, the more difficult it is to organize the required majority beforehand.

Following on from that, let me try to go one level deeper. Henrik, as an entrepreneur, you can influence many things and exert influence on the political and regulatory level. But in the end, you also have to make decisions as an entrepreneur every day. For the short, medium, and long term, what does that mean for you, Goldbeck, concretely in terms of sustainable transformation? What are the two or three most important topics and how do you approach them or look at the topic?

First of all, we really took an anamnesis to see where sustainability affects us and what dimensions it has. In the end, we found ten different verticals, in new German, where we as a company want and must become more sustainable. That is now the right analysis basis to create what we have in each dimension, how we are positioned, where we are now, where we want to go. It is a very meticulous analytical process. Next year, we will be CO2 neutral at the scope 2 level, i.e., company level. We have eliminated and reduced many things, and last but not least, also compensated. Then, excitingly, we also want to be able to present CO2 neutrality at the scope 3 level, including all gray energy, including the complete materiality of the products. But it also has many, many other dimensions. In every area, we are now looking for responsible persons to really integrate that into every area of our processes, our products, and daily life. I would say as a basic hum or as a paradigm, as an action, to integrate into our company. And that only works with a very clear commitment from the top that we want to live that at all levels in all areas. But for that, we first need transparency: what does that mean in all areas? That is difficult analytical work, but yes, we are doing it.

Now you produce the raw materials, building materials, that Goldbeck later needs, also very energy-intensive. Do you have a different view on that, or how do you approach the topic?

I'll come back to what you said at the beginning: the topic of digitalization and a special focus on business models. We also talked about materials and processes. Now we are here today, it's also about innovation and startups. How important is innovation at this point, and the related question: what contribution can startups make, or how do you see that?

Henrik just mentioned the Tesla of the construction industry. You haven't seen it yet, or they have driven past it or crashed into the wall, to stay in a metaphorical image. What would you wish for? What does the construction industry need? Is it not the Tesla? What would be a different analogy?

I think the basic approach of Tesla, if you transfer it in the sense of integrating many value chains, the possibility of modularized upgrades, perhaps even remote software upgrades for buildings, and really optimizing the value chain holistically at the decisive points – that is not entirely wrong. And that is also our endeavor: with a clear yes to an impulse from the attempts, to innovate across value chain stages. What we lack far too much in the German landscape is actually an innovation department. We started a few years ago to shamelessly say, yes, we want to afford people. Meanwhile, depending on how you look at it, 150 to 200 people are dealing with innovations day in, day out. Some of you experienced that live today. That is a topic that we need across the entire industry and in various disciplines. It costs, of course, but only then do we get new topics like generative computational design, automated planning steps to eliminate existing inefficiencies. Materials science is enormously important, as is the clear will to give new materials a chance. Regulatorily, it's a struggle to get approval for a new material; years go by. Here too, we must remove bureaucratic hurdles so that we can try things out faster and put them into practice. That is the big problem of the construction industry: on paper, things look simple, and then the startup, the new material, the new idea is confronted with something very nasty: reality. And reality is different, it's dirty on the construction site. The only thing that helps is to constantly feed the experiences of reality back into the KVP process and into one's own business model. That's why we need more courage for new ideas in reality. Then we will make progress. And the Germans, in the overall planning and digital area, are unfortunately not as far as others. We try here and there in the startup world in the construction tech area, but I see too many people who, if you go back 120 years in the automotive industry, would be people who focus on optimizing the horse – a new saddle, a better rider – but the automobile is the holistic automated performance from planning to construction to operation. That's where the major business model changes and inefficiencies are to be seen.

Before I pass my next question on to Jörg, a note for all of you: we will have time for two, maximum three questions from the audience. Just as an advance notice. Jörg, we have already heard from you, Knauf, a bit about where your journey is going regarding digital platforms that you want to connect to. Berthold said decathlete: you should specialize in the things you are good at. So Jörg, the question to you: in which areas are you already really good, and where do you say startups could perhaps help from the outside? I would like more impulses there.

Since we have the three of you here, we wanted to give the audience a chance – two, maximum three questions to Bert, Jörg, or Hendrik. We have a microphone here that can be passed to you. So feel free to start with what you want to know. Equal opportunity is ensured.

Perfect, thank you very much, Mr. Goldbeck, Mr. Kampmeyer, and Mr. Rürup for the warning but also very motivating discussion. What really concerns me is the very unfavorable ratio between productivity increase rates in the construction industry compared to 1990 – marginal above that level today – in relation to resource consumption and, for example, the generation of global waste, over half of which is attributable to the construction industry. So how do you, Mr. Kampmeyer and Mr. Goldbeck, ensure in the future that in this pioneering position, this ratio compared to other industries is brought back into balance?

I would underline that. It's a bit of a problem that since 2005, anyone who could spell 'construction' could somehow make money with construction. That is not a good long-term state for an industry. And then, at the end of the 2000s, sustainable development came in, the EBM? came a bit, and then it was a bit dead in the sense of certificates you had to have. Then, thanks to the movement around Fridays for Future and the general global awareness regarding climate, there was really a switch where at the decision-maker level, I can really see it in the DAX companies, in the large medium-sized companies – actually DAX is even better than the medium-sized ones, I have to say, but that can't be referenced for everyone. It went from a nice-to-have, permission-to-play to a must-have. Before, it was cool and nice if you were sustainable, then for a while around 2015 it was almost irrelevant, it was all about capacity, and then from 2018/19 it's like: you can do it now or not. That's why people have to change in that direction, and this pressure is extremely positive. At the same time, there are many more technological possibilities today. For example, VR existed 20 years ago, but it didn't matter; the technology wasn't ready. Today, you can do a lot with VR and augmented reality, completely normal in reality. That means it's now applicable: 3D reality capture, computational design, robotics on the construction site – all use cases that are now for the first time really moving from the necessary egghead academia into the real, hard construction site life, still cautiously, but certainly rapidly in the next five years. And one topic that is always important for us: you just have to shed the narrow-mindedness of the construction industry and say, other industries have done it, for example the automotive industry. A huge creativity momentum and productivity momentum was generated through the collaboration between OEMs and suppliers. We have made initial thoughts with Alex Kraus at Knauf on how we defined this wooden exterior wall element with Opitz. We have partnerships with Hugo and many others where we say, okay, this is our application situation, and we ask our suppliers: let's think together how we can further develop this in our interest. And these are topics – we were completely sequential: someone planned something next to someone else, then it was awarded in bits and pieces. That is simply a system error in the construction and planning process, and it will change because it has to change.

That directly connects to Edmond. Thank you, Henrik. We have only about one minute left, so we won't manage a second question. I hope we were able to touch on most of the topics and trends mentioned. I know in depth it's difficult given the complexity of decarbonization, digitalization, demography, but at least we were able to give you here and all digital viewers an impression and some insights, on the one hand from Bert – thank you for being here on the panel – Jörg from Knauf, thank you, it was exciting to learn how you look at it and what it means for you, and Henrik, of course, thank you for joining us and for preparing the stage for the pitch that will follow immediately with your fulminant perfect closing statement. Thank you all three for being here. It was really fun.