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Austria's construction industry is on the skids, with stabilisation not expected until 2003 at the earliest. The Austrian institute for economic research, WIFO, says that the "crisis in the building industry" is the worst for 15 years. At the end of 2001, the institute predicted that a 3% drop in building investment would be followed by a 2% fall this year before starting a feeble upturn of 1% by 2003. Unemployment in the sector stands at 14%, an alarming level for a country that has been used to nearly full employment for decades.

Even before the current downturn, the Austrian building industry was feeling the pinch after the nation's markets were opened to the European Union. German contractors, such as Philip Holzmann, undercut local contractors – by as much as 40% in the case of the Vienna's Europlaza project. "ºÚ¶´ÉçÇø contracting is no longer profitable in Austria," says a British commercial source in Vienna.

Not surprisingly, few British contractors have established a foothold in Austria. An exception to the rule is Keller Ground Engineering, which has a £15m operation specialising in ground anchors and soil remediation. And Balfour Beatty is involved in the Brenner Pass railway tunnel, albeit as consultant.

"Nobody here likes people just coming in for the key job," says the British source. "They want to know you'll still be there tomorrow, so they can establish relationships." He adds that one area of British expertise not yet appreciated by Austrian clients is project management.

What little upturn is predicted for 2003 will be concentrated in civil engineering, boosted by a 30-year national infrastructure programme covering roads and railways, and budgeted at £30m. This is being packaged as a PFI, indicating the alternative sources of funding being promoted by Austria's recently elected conservative government.