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Building for Tomorrow: Global Enterprise and the U.S. Construction Industry (1988)
Commission on Engineering and Technical Systems (CETS)

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OCR for page 100
7 Needed: Institutional Structure to Promote Global Enterprise The U.S. construction industry consists of 5.5 million individuals employed in 1.2 million firms, myriad professions and trades, and a variety of organizations representing these individuals. These many participants share common interests and concerns about the general health of the U.S. economy. While only a small fraction of these participants are active in the international construction market, they recognize the implications of U.S. weakness in this market, and they can understand the opportunities that technological leadership offers. The committee has noted the high-level government focus for construction policy and export activity that some countries have established. The committee has noted as well the support for con- struction research and the close public-private partnership that in- dustry in some other countries enjoys. Finally, the committee has noted the needs for the United States to catch up in its research and development, professional training, and pursuit of innovation in construction. ORGANIZED FOCUS O1? DIVERSE INTERESTS The committee concludes that a more effective way is needed to bring together on a continuing basis the many diverse private and public interests in the U.S. construction industry, to resolve inevitable conflicts of opinion among these interests, and thereby 100

OCR for page 101
INSTITUTIONAL STRUCTURE TO PROMOTE GLOBAL ENTERPRISE 101 to give the industry stronger voice in the national policy forum. Professional societies and trade associations, such as the American Institute of Architects, American Society of Civil Engineers, and Association of General Contractors, currently play an important role in representing the interest of their members, but there is no effective means to bridge the differences among groups. A solid institutional focus is needed to provide greater unity within the industry and to facilitate concerns and coordinated action. Existing institutions could be given expanded mandates to play such a role, but new institutions may be needed. The committee has found it difficult to understand why the United States, as a nation, was unable or unwilling to allocate the funds to support its already substantial private investment in the Three Gorges Project, while its much smaller northern neighbor found the allocation to be in its national interest. At $8 million the amount is meagre when compared to government spending on any number of programs to support various other sectors of the U.S. economy. A trade agreement signed with Japan in early 1988 offers pos- sible resolution of the problems already described regarding U.S. construction industry activity in the Japanese market. However, in the heat of long-running negotiations, the United States appears to have lost sight of its main interest: the technically advanced segment of the construction market. Apparent access to a range of smaller projects that are largely labor and materials intensive will not only hold little attraction for U.S. firms, but will then hurt future U.S. prospects by giving the appearance that the nation is not serious about global enterprise. Both sides in the agreement are reported to hold a "show-me" attitude (Engineering News Record, April 7, 1988, pp. 12-13~. While the U.S.-Japanese trade negotiations proceeded, the French government-sponsored consulting firm Aeroports de Paris, which had been hired to evaluate proposed designs for passenger terminals at Kansai International Airport, invested its resources in preparation of its own alternative proposal. Its innovative plan swayed the airport authority's opinion and led to a new design com- petition, creating an opportunity for which French designers (and ultimately, constructors and equipment suppliers as well) now ap- pear to hold a distinct advantage. The committee felt these cases are not unusual, but rather are examples of a pattern of poorly focused attention and seeming lack

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102 BUILDING FOR TOMORROW of interest in U.S. construction within an increasingly global mar- ketplace. Further analysis is needed to define the pattern more clearly and to identify what should be done to correct what is, in the committee's view, a problem that will have increasingly serious consequences for the nation's well-being. Nevertheless, it is readily apparent that the United States lacks the means to bring together public and private groups to offer the best of U.S. construction skills and technology in world markets. The institutional structure is needed to facilitate the cooperation illustrated in the pursuit of China's Three Gorges Project, and then to follow through with the support needed to strengthen the nation's ability to compete or to develop cooperative ventures with international partners. The institutional structure could take any number of forms: . There could be at the apex a federal government agency responsible for supporting international and domestic construction enterprise. This government office could propose policy initiatives for legislative action and coordinate government activity that influences the construction industry. . There could be a quasi-governmental organization that would assemble U.S. construction experts from a variety of firms and gov- ernment to work with counterpart organizations found in other coun- tries. This organization could act to represent U.S. interests in in- ternational competition for major design and construction projects. . There could be a unit associated with government, but not an agency of government, that would monitor the performance of the U.S. construction industry and government policies that influence that performance. This unit would serve as an objective observer and forum for identifying problems and defining options for solving these problems. Perhaps some combination of such organizations is appropri- ate. However, this institutional focus is needed, its exact form must be determined, and the committee recommends that study should proceed. ATTITUDE OF OPPORTUNITY The design and construction industries in Western societies (and in Japan) believe they are faced with declining markets because of stable populations. Other countries have targeted the U.S. market because it is so open and large that it seems a natural way to gain business that will offset their own shrinking volume. However, an

OCR for page 103
INSTITUTIONAL STRUCTURE TO PROMOTE GLOBAL ENTERPRISE 103 international cooperative effort to advance the technology of infra- structure could create whole new markets for urban and interurban systems with higher-performance characteristics. Development of advanced infrastructure is a challenge worthy of cooperative international effort. It will be difficult to structure these developments to match the performance requirements of a society utilizing advanced science and technology, and make more than in- cremental improvements to the present modal technologies. In the developing part of the world, which is experiencing the most rapid urbanization, the challenge is to develop technological applications appropriate to specific-case requirements, rather than to impose so- lutions produced for industrial nations. There are two reasons for the United States to do more toward advancing the technology of infrastructure. The nation would benefit within its own borders from new and higher-performance systems, and it could also enhance the opportunity for marketing its tech- nology on a global basis. This committee recognizes the urgency of maintaining and extending the existing networks of public works that underlie the nation. However, the United States also needs to develop new and higher-performing technologies to enhance our competitive position in the world. The committee recommends that action is needed at a national level to deal with the issues of liability and societal risk aversion that discourage large companies from introducing potentially innovative technologies. Increased government commitment to research and innovation are needed, through programs to apply new technology as well as through financial support of construction research and development. RESEARCH AND DEVELOPMENT AND INNOVATION The degree to which research and development activity will lead directly to innovation in infrastructure or in construction in general may be a subject of debate, but it is apparent to the committee that the United States is currently spending too little on construction research and development. Means must be found to enhance the apparent advantages that private companies can realize from this investment, for example, through changes in tax policy, risk sharing on government-sponsored projects, or modification of procurement procedures to support purchase of innovative design and materials applications.

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104 BUILDING FOR TOMORROW Because infrastructure is built primarily for government clients and in large investment increments, policies to encourage research and development and innovation may most easily be developed in this area. The committee recommends that further work be ander- taken to define and implement these policies. BUILDING FOR TOMORROW The nation is faced with a challenge to build for tomorrow. The strategic and commercial rewards of meeting this challenge will be surpassed only by the rewards of improved quality of life for the citizens of an increasingly global economy. Competitive position is the topic with which this committee started, but it is not the proper end. Technological advance in construction of buildings and infrastructure can bring enhanced pro- ductivity and improved quality of life to all nations, yielding in due course increased business opportunity for foreign firms as well as U.S. industry. This is opportunity on a global scale, and the U.S. construc- tion industry can play a leadership role in the enterprise. Building for the future is the best possible course for U.S. construction in an increasingly global economy.

Representative terms from entire chapter:

institutional structure