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Big Bets & Bigger Numbers: $500B AI Infrastructure, High-Speed Rail, and Industry Shake-ups
59 Plays9 days ago
Join Jason and Carlos for the first episode of 2025 as they explore three major developments shaping the construction and infrastructure industry:
🏗️ California High-Speed Rail's Ongoing Challenges: Dive into the latest analysis of America's most expensive railway project, examining how a $33 billion estimate ballooned to $120 billion, and the complex web of technical, political, and land acquisition challenges that continue to impact its progress.
💻 Project Stargate: A deep dive into the newly announced $500 billion AI infrastructure initiative backed by tech giants including OpenAI, Microsoft, and SoftBank. Explore what this massive investment in data centres means for the construction industry and the potential challenges of delivering this ambitious project in just four years.
🤝 Industry Consolidation: Analysis of two significant industry moves - Strabag's strategic acquisition of Australian contractor Georgiou and Lendlease's sale of its UK division, marking the potential return of the Bovis brand. What does this mean for the future of tier-two contractors and international expansion?
Key Timestamps:
00:30 - Introduction & UK Infrastructure Update
04:42 - California High-Speed Rail Analysis
14:00 - Project Stargate Discussion
28:32 - Contractor Consolidation Trends
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Transcript
00:00:00
Speaker
yeah But if you think about the, even just the engineering challenge, um so looking into the terrain itself, you've got like a couple of mountain ranges as to pass through. yeah One of those mountain ranges is actually located on the San Andreas Fault, so.
Engineering Challenges: Mountain Infrastructure & Earthquake Zones
00:00:13
Speaker
Yep. And I think that contains a 20 mile long tunnel. So putting a tunnel under a mountain, which is super active in terms of earthquakes. Yeah. um
00:00:30
Speaker
ah Welcome back to the Offsite Podcast for 2025. I'm Jason Lancini. I'm joe joined by Carlos Cavallo. Carlos, welcome back, mate. Thank you very much, and welcome to Europe. Oh, yeah. Guten Tag.
00:00:46
Speaker
yeah Jason has moved to Germany, so he's now well and truly living in Europe. So yeah, less of a time burden for yourself trying to run a podcast at 9pm at night. Yes, way better doing a podcast than not at 9pm at night. Absolutely.
UK Economic Boost: Major Infrastructure Projects
00:01:02
Speaker
Well, we'll get with thinking like, what topic do we cover this week? Because there's been no news in construction or infrastructure at all over the last few weeks, so it's hard to find.
00:01:14
Speaker
Yeah, i really struggling. Years worth of news in three weeks. I mean, some of the biggest news was actually yesterday, so I didn't have to go back very far to find something interesting. that Is this going to be UK government announcement news?
00:01:30
Speaker
yeah Yeah. Your definition of biggest news and minus are slightly different, but this is interesting. so Biggest construction related news. But yeah, no, yesterday, the you the new UK Chancellor, Rachel Reeves, had a bit of a speech around boosting the economy.
00:01:46
Speaker
And a huge part of that speech is around major infrastructure schemes that the UK government are going to back to try and boost jobs spend and everything else that comes with it. I mean, there's three major notable sort of schemes. The third one we're at Heathrow, massive scheme. oh but I read a follow on article that suggested construction could start in 2035. So I'm looking forward to that in the 40s or whenever that's thatt's out.
Old Trafford Redevelopment Plans
00:02:10
Speaker
Lower Thames Crossing. ah So I know the teams on that project have been waiting for sort of DCO, which is ultimately the final go ahead to build this scheme. That's been and gone a couple of times through delays, but she's back to it now. So I think there's a date in May that they were looking forward to getting the green lights, which sounds like we will get So that's really good. And then probably the most important is the redevelopment of Old Trafford, which is an area of Manchester and it's the home of Manchester United. oh She gave the go-ahead for the full regen of that area. So it will be flats, shops, schools, the lot.
00:02:49
Speaker
to rebuild everything centered around ah the home of football. say it's like the It's like straight out of the Roman Emperor playbook. right We can't give you a train line in HS2, so what do you do?
California High-Speed Rail Debacle
00:03:00
Speaker
You build a stadium ah to keep yeah keep the people happy. The people want sports. yeah yeah start What was left off the list?
00:03:10
Speaker
The second half of High Speed 2. I don't think that I had a mention. But yeah, obviously, she wasn't just sort of listing project names. um Just wanted to name name a few. So I would expect over the next few weeks, we start to see more and more popping out, um because they do see it as this front and center strategy to boost the economy. So yep.
00:03:33
Speaker
Well, speaking of half-finished railways, that's a perfect segue to topics for this week. So we're going to start off in California, ah where the California high-speed rail scheme is another of the half-finished rails around the world, ah and dive into some recent research pulled together by by the team here at AFEX, which was, I found, super interesting.
00:04:02
Speaker
ah Then
The $500 Billion Stargate Project: Implications & Industry Impact
00:04:03
Speaker
I guess we have to talk about, it doesn't seem like anyone's bringing it up, but there was a big announcement about AI infrastructure spending in the US. that i just So it doesn't seem to have been discussed enough. So the $500 billion dollars Stargate project.
00:04:17
Speaker
and the implications for that in potentially in construction and infrastructure. And then finally, we're going to circle back to some news from late last year around ah some acquisitions or sales of construction businesses. So Lend Lease's UK division, and then Stravag purchasing um an Australian contractor, Giorgio. So we dive in. For anyone that has followed or is aware of this project, they're aware that in In any ah conversation about inefficient ah usually government funded infrastructure, the poster child for that around the world is seems to just get the unlucky title of the California high-speed rail project.
00:05:03
Speaker
Its goal was to connect two major centers in California and it was supposed to be done for something around 30 billion US dollars when it was touted around 2010. Fast-forwarding to today it remains underway partially ah funded partially ah with an estimate of over 100 billion dollars needed to fully pay for it.
00:05:31
Speaker
And it is the most expensive project currently in existence. I think if we exclude NEOM, and I think it is the most expensive railway per mile of rail ever. Not the title you really want to go for.
00:05:48
Speaker
So yeah, where do you want to start, Carlos? There's so much to dive into. I think the research, the I think anyone that's listening to Jeff Lee go and look at the the recent newsletter published on the offsite, it really dives into some super interesting angles of of this project. Yeah, it's ah it's massive. I've done the drive between those two cities and i it is quite a distance. it's great It looks like a lot smaller on a map than it is in reality. But um now I started to sort of dig into, obviously this it's a huge cost overrun. I think the initial estimate was 33 billion and now they're up to something around 120. And to ask you a question on ah how expensive it is, it's something like $200 million dollars per mile, something crazy. So it's yeah huge expense. But I was trying to dig into, I guess the similarities with other schemes and cost overruns to sort of look at, maybe try to dig into a little bit around the why.
Infrastructure Project Challenges: Land, Politics & Environment
00:06:43
Speaker
yeah outside of pure sort of political issues. We saw a similar sort of increase on HS2 before the second section was cancelled so it went from sort of 35 billion to about 100 billion and obviously the UK made the decision to sort of can that but that most of the delays were around like issues of land acquisitions Local opposition there was the environmental impact of sort of habitats and historical sites So there was this sort of critical mass of issues that led to we're not going to spend the money on this scheme But the the overrun was kind of the same thing and I think they kind of got through that That phase of the project to try and get it done rather than sort of can anything The challenges looks to say sorry guys The common pattern is, right? Start to start at 30 billion, blow into 100 billion, cut half the railway scope and then just try and like finish that for something around double the original cost. Yeah. Or something like that. But interestingly, like, you know, HS2 the scope reduced so that you we were sort of still connecting to
00:07:46
Speaker
uh major cities that were in the the goal at the moment so this rail line for those that don't know was supposed to connect san franza la uh and um currently the scope has been reduced to what's called the initial operating section uh which Unfortunately, because the two, I guess, end locations are at either end, um you end up with the bit that they're actually building is just a segment in the middle. So not so sort of the railway to nowhere. Yeah. But if you think about the even just the engineering challenge. um So looking into the terrain itself, you've got like a couple of mountain ranges as to pass through. Yeah. One of those mountain ranges is actually located on the San Andreas fault. So yeah.
00:08:31
Speaker
And I think that contains a 20 mile long tunnel. So putting a tunnel under a mountain which is super active in terms of earthquakes. So you compare the sort of terrain challenges between like that and HS2, it's like night and day. We had to like cross a river to not disturb some ducks and a few sort of badges along the way. They've got earthquakes, mountains.
00:08:53
Speaker
and everything else that comes with it. So you can see why it's a seriously complicated scheme. Yeah, no, the complexity. I think the the pattern you've described some similarities with some other mega projects. I think there's some other, you know, that pattern continues.
Utility Records & Pre-Construction Planning Issues
00:09:06
Speaker
So in the article that um was published, they were talking ah that there were over fifteen hundred change orders or variations or compensation events um that have been. and though And bear in mind, these are the ones that have been um the government has like paid or signed off. So these are the ones that are effective agreed, not the in the background, there's some multiple of these probably that are being back and forth argued. So over 1500 and some of them are ah the biggest single, some of them are hundreds of millions of dollars. So there's a one change order for one section was 200 million, another one 240 million. So there's a lot of change happening post award of contracts. And it goes back to the old story of the um building before designers finished.
00:09:53
Speaker
And when you dive into it, ah there's just so many similarities to how other projects have gone down this path where design's constructed and the route's still changing or the technical design is still being completed while building being built.
00:10:09
Speaker
Yeah, I guess it's just another of the cautionary tales. And a lot of pre-construction. Well, I guess it's not pre-construction, but that that trying to get to a point where you can just build the line, it looks like they've got serious issues with acquiring land. um So I saw a stat from just a few years ago where they had only sort of bought about 20 percent of the land they need for farm farmers and um yeah like retail and commercial.
00:10:37
Speaker
Presumably, that's also made worse by the fact that the route changes, so it's hard to acquire land. Yeah. You think about the land that they did acquire or whatever that is no longer needed. Yeah, 100%. And then also, apparently, there's a huge issue with utility records. So you can imagine leaving cities. The records get slimmer and slimmer in terms of as built. So they've got massive delays because they're trying to divert utilities, and they're probably almost digging and scanning to see what's even there, because there's no strong records um in terms of what was built. So it's kind of ah the classic problems that we for see on projects, but blown up onto this crazy scale. but you've got the that You've got the design and construct, this technical a lot of these technical challenges. and Then you've got the, I guess, the good old-fashioned politics of it all.
00:11:26
Speaker
um ah One of the best parts, I'll i'll even read directly ah from it. So there was a New York Times article pointing to political interference around the route selection of the the project. um And so there was originally proposed this semi-direct route ah from LA to San Fran along the existing kind of interstate or highway corridor.
00:11:53
Speaker
And then in the Times article it wrote, the train's path out of Los Angeles was diverted across a second mountain range to the rapidly growing suburbs of the Mojave Desert, a route whose most salient advantage appears to be that it ran through the district of a powerful l LA county supervisor.
00:12:13
Speaker
ah Originally, the French ah National Railway, SNCF, was working on the project and due to ah political dysfunctionality, that's not the right word, ah they decided to depart the project in 2011 and go build a railway in Morocco instead.
00:12:34
Speaker
ah Which they finished in 2018 fun fact i Yeah, I guess um that theyre they They are horsing on and I can see why they're horsing on I don't know if you've ever it driven in and out of LA the traffic is Unbelievable and these motorways are like eight lanes wide in both directions. So they need to get people off the roads They don't want people trying to fly these super short routes So at the moment like it does make sense that the trains most viable option to ship people in and out cities But serious expense so And I guess they're horsing on because they've, that you know, you get to us you get into a sunk cost ah problem. Yeah. Yeah. Which is like a half the railway. Yeah. Yeah. the Classic how big things get done.
00:13:16
Speaker
yeah Yeah, for sure. um And so the active sections, that initial operating portion, there are a couple of big packages, I think five or so big packages. One of them just finished. I think it was section four, and there's a bunch of them that are currently scheduled to finish in 2026. So a year to a year and a half or two years remaining on that initial operating portion by the looks of it.
00:13:43
Speaker
Which probably leads to ah and now the change in US government is looking at all sorts of costs reduction and expenditure ah review and this probably is like right in the crosshairs. So it would be interesting to see what happens segue to topic number two, which is.
Stargate Project: Global Impact & Tech Comparisons
00:14:04
Speaker
this massive Manhattan project style thing called Stargate as announced 500 billion US dollar initiative led by OpenAI backed by a bunch of tech giants like SoftBank, Oracle, Nvidia, and Microsoft with the goal of setting up a number of advanced data centers across the US and to advance the the capabilities around the development of artificial intelligence.
00:14:31
Speaker
um For those of us in construction and infrastructure, I'd say most people probably have heard this news to some degree. It's been on every news channel across the world ah for the last sort of week. It was announced basically on I think day two or something of the new presidency of the of the circus.
00:14:53
Speaker
And there is some there is some question marks as to how much of it was already is happening was happening has happened and how real the announcement is I guess we can get into that but it'd be interesting to understand and think about what this means for.
00:15:08
Speaker
people in our industry of construction and infrastructure. I think they're forecasting to target something like 20 massive data centers with this investment with 100 billion supposed to happen this year. Yeah, what are your thoughts on the project and what impact it might have to, I guess, us in construction?
00:15:27
Speaker
Yeah, so now the then the the numbers are crazy. The $100 billion immediately isn't that massive considering how big the data is center market is. But the $500 billion they said well they'll spend over just four years. So that's an unbelievable amount of money to sort of announce and and try to deploy immediately.
00:15:45
Speaker
I guess that there'll be a difficult spot for construction because it's quite it's like a rapidly growing market. So are there already resource constraints on the individuals or the labor force with the skills and ability to actually build these data centers? It's already if it's already rapidly growing, you would expect there's no excess of people that have been there done it and have the experience. So will they be able to resource this to be able to do something like that in four years or the one country must be an issue. And then the other side is does the 500 billion because I couldn't get to the bottom of this. I don't think so. It include the building of nuclear power stations something to to to fund these data centers with electricity or to feed I should say.
00:16:30
Speaker
The analysis that I've seen says, yes, that's included. ah They let's use the word juiced up the numbers ah to try and get to the 500 billion. And I think they've included the energy, the, you know, the cost to drive over there to look at the energy, the cost to go. And, ah you know, I think they've included every possible cost that they can think of ah related or semi related to the project in order to juice it the the reporting. So it kind of indicates that there was an initial commitment of 100.
00:17:00
Speaker
There was a challenge from ah Donald Trump to try and get the announcement to 200, and then the consortium, including um SoftBank founder, kind of targeted this 500 number. I think there's everything plus the kitchen sink in this number. Yeah. Because there's an ah interesting part of this podcast called the All-In podcast that JCI listened to, and they were discussing the the so the concept of off-the-grid power,
00:17:26
Speaker
um And what we're ultimately trying to do is pump up the rate that non-corporations are paying for power. So if suddenly they take all the power off the grid and the rate spikes, the public are paying effectively ah this this hiked rate, which is going towards things like data centers, which would be not good. So if they go for this off the grid, like power generations, AKA just generate their own power,
00:17:50
Speaker
The four-year timeline becomes a bit crazy because for that much power, we know how much power they actually need these data centers, and they're trying to build 20 in four years. I don't think they could build the energy infrastructure in four years. that Imagine you asked anyone to build, even as relatively small, wind farm or solar farm in four years. That already sounds punchy considering this is day one. So I wonder how They'll actually manage that. um So for me, the timeline is is is insane. And I don't know how you can start to think about that being achieved. It goes to the question of a little bit of how much of it was already underway. So the ah there was already the first data center of this project ah was is located in Abilene, Texas.
00:18:33
Speaker
ah The project is already under construction um and that foundational planning work had started like in 2022. I think there was reporting that this kind of project and big idea was pitched to the by the administration before and they kind of didn't bite.
00:18:51
Speaker
You know the time frame I think there's a lot of pre-planning going into this and the announcement just happens at some point along along the way when it's kind of like politically expedient and we've seen over the last six months how many announcements and how much effort is going into nuclear and trying to get nuclear co-located with the locations of these ah data centers. I think ultimately from a construction perspective. You know, this we're in an industry in construction that has through the history of time been boom and bust and like feast and famine there becomes a big wave of building some form of infrastructure or whatever and and everyone goes in and and tries to build the work and the cost of building it goes up and then at some point that kind of stops and
00:19:35
Speaker
all of the overhead costs and the expansion of people's wages and the ah the equipment that they've bought all now has to find a home and you end up with these like pretty lean and scarce times in the industry. Often coupled with that is the like, I guess you call it the like profitless boom. So the people trying to build stuff, see the price of stuff go up ah to build it, and then they think the contractors are making a ton of money, but really all the cost cost inputs for the contractor are going up ah in the same scale, the you know the wages that people then they need to pay in order to keep talent, the cost of all the raw materials.
00:20:12
Speaker
So yeah, it becomes like, is is this just another one of the many, many, many, I guess, profitless boom cycles that happens? And then are we, you know, are we left in the future? Or it could it even be sooner we saw this announcement just a couple of days ago, or it actually happened pre Christmas, but it's been in the news a lot around this deep seek model from a Chinese company which looks like it can allegedly although there's a lot of people questioning the validity of this report train a model for a fraction of the cost of ah what ones in the in the US Tech Giants are being trained for and then putting into question the need for all this infrastructure and it's you know at some point it At any point along this pipeline on this journey of we're spending all this money on infrastructure and all these contractors are going in trying to deliver all this work and find all these people and pay them more money. And at some point does a music stop for for any reason and and left their construction contractors with inflated salaries, projects to finish, competing on raw materials.
00:21:18
Speaker
um So yeah, I guess it's a ah the a big old run up to are we basically just going to go into another one of these like profitless boom buff cycles? Yeah, I mean, hopefully, yeah like a ah benefit of the sort of boom cycle is they should be rapidly skilling a workforce. So I guess that's one of the benefits from this is theyre going to generate those skills over the course of however many years because they're going to have to recruit so many people into the street. So like that's a bit of a ah benefit. Yeah, like with the news out of China, the cost, new technologies and the infrastructure behind it rapidly sort of decreases over time. So this project in 10 years will look like probably the worst value for money project at the time because things get cheaper. But then
00:22:05
Speaker
Can you afford to not do it now and sit and wait for the things to become cheaper? Because the only reason they become cheaper is we get better at doing it and it becomes repeatable and we develop technologies off the back. So they're probably stuck in a li bit of limbo of are we going to compete with China? And if we do, we need to do what we think is the right way forward to build the infrastructure, to generate the power, to secure, I guess, yeah your you hold on the AI market.
00:22:29
Speaker
Yeah, but it's like ah it's like a derivative service industry, you know construction. it's it's ah It's responding to other markets that are wanting to build some form of infrastructure. you know We need to build a bunch of wind power, therefore, okay all the contractors go and try and become professional at building wind generation. this is It just seems as though there's ah There's a big opportunity and big amount of of work. There is probably the the risks of you know ah wage explosion, ah not enough labor, not enough materials. And so the contractors could be could be in that kind of profitable scenario. But on top of this whole thing is we need the energy, we need the um infrastructure,
00:23:12
Speaker
because we need to build these AI models in this way. And we need these data centers but ah and because eventually this these AI models will have applications that will pay for all of this capital expenditure. And at any point, if people get nervous that that statement isn't true, you see they just push pause a little bit on the further development.
00:23:35
Speaker
or they cancel a couple and all of the you know that takes that ripples through the whole industry eventually you end up yeah with contractors signing contracts that are to deliver this infrastructure or gearing up their business around a pipeline that's coming there's a bunch of like we're doing this because of this because of this because of this and at every step there's an assumption and it just takes ah someone to go Well, actually, if the Chinese can build a model for this, do we need to spend this
Construction Industry: Boom & Bust Cycles
00:24:03
Speaker
much money? Are we going to be able to charge what we're expecting to charge for this product to pay for this infrastructure? you know Any one of those question marks causes someone who's footing this $500 million alleged bill to go, I might just wait, or I might do 100 and then I'll wait and see. It's tough because there's no like definite outcome. It's not like you build a bridge, you get a bridge. They're all betting on
00:24:27
Speaker
the service that's going to come out of the back ends. But if you're the building contractor, surely it makes more sense to place your bets on, I'm going to focus on the energy production for this big data center project because that's transferable to every other industry. Energy is not going to disappear rather than going through potentially the sort of the niche aside of the technology that currently exists ah within data centers.
00:24:50
Speaker
but It all becomes a supply and demand and I think the argument you're making is that energy probably have some sort of greater latent demand ah that if it all kind of goes paused or pushed out that there's still like this energy demand, which is probably true. There's also because you've also got this kind of energy transition.
00:25:10
Speaker
thing happening in the background so it's probably um true but you know there's a big talk about nuclear and how a lot of this is going to be powered by nuclear and if you kind of gear yourself up to be the nuclear specialist and you get one like nuclear issue yeah there's like a lot there's a lot of things that can cause the the the market that you kind of get up to go after. There's a lot of bats going on across the board really. Big bats. Big bats, big bikies. Big bat, big bikie. Sound the name of the episode.
00:25:41
Speaker
ah There are definitely ones to keep tabs on. I think just seeing some of the, like, what do they expect to be able to do from these data centers is quite interesting, like curing cancer, creating vaccines, like complicated things. But isn't that all just like, but it's fairy dust, you know, it's at some point it all it'll fitll it'll do it' do something that that'll pay for all this stuff. At the moment it writes good emails, so we'll take that. Yeah, it doesn't even do that. It doesn't write that good an email. ah It gives you an email that you can rewrite three times. I think next week we should dive into some of the potential applications that are actually useful for people and and maybe dive into that. Yeah, cool. I think it's very interesting. I think the ultimate ah then coder to this conversation is what is going on in Europe?
00:26:27
Speaker
That's a broad question. Are they going to build any data centers? so you know like does it you know either get to the like I guess in the AI marketplace, there's open AI spending $100 billion and trying to train a model, therefore, anthropic or Amazon needed, therefore, Google needed. It's kind of like you have to spend the money to compete. It does this then with the US saying, we're going to do this, go to Europe. and Does Europe go, my God, we have to pull our finger out to compete? Or you know do they just go, we don't have any money? so ah yeah Yeah, but is it their money? It's still the big the big tech giants, predominantly. so Yeah, I guess the the interesting thing, actually, if you look at the consortium that are behind this ah the Stargate project, there's obviously SoftBank in there, which is a which is a Japanese a company, but a lot of the funding that goes into the into the SoftBank funds is Middle East ah money. yeah And then specifically, there's Yeah. sovereign well And then specifically in the consortium is another company called MGX. ah MGX is effectively a sovereign wealth fund company that invests in AI and infrastructure as well. So even this 500 billion in the US, s ah a whole chunk of it, and even the money that like OpenAI is kicking in. OpenAI has raised a ton of money from Gulf States as well. So it's ah it's a total
00:27:44
Speaker
and not insignificant portion of this alleged 500 million that is. And and the 500 million isn't going to, not to get too technical. It's not likely to come from all equity. So they're not all putting in 500 million dollars to fund this. It's likely they put in, I don't know, a hundred and lever up five times with debt. And then a lot of that debt also comes from Gulf States as well. I tell you what, I'd be sweaty sitting in that board meeting when the money's, when the project starts to go wrong.
00:28:12
Speaker
You should try and see me trying to buy a new iPhone. It's like two grand or something. 500 billion. Well, shit, we need another 200 billion. Big bets, big biggies.
00:28:29
Speaker
I think, yeah, watch this space for sure. Topic
European Construction Expansion: Trends & Acquisitions
00:28:33
Speaker
three, reflecting on some things that we talked about late last year around consolidation of contractors, the need for, you know, these kind of, let's call them for one of a better word, the kind of tier two contractors in different markets in order for them to compete on this increasing trend of mega projects to have ah you know, kind of like a big bank rolled big brother wrap its arms around it and kind of acquire it to to fund the bidding on the to meet the financial requirements to bid for these bigger projects. We talked about that we even predicted that it would be a continued trend after in the UK, I think, Dornan and FM Conway were purchased. ah Well, in
00:29:16
Speaker
Continuing in that fashion, um prior to Christmas, an Australian contractor, Giorgio, which I think is firmly in this kind of tier two space, they do some quite ah large projects in the hundreds, hundreds of millions, but definitely not in the mega project space, often in joint venture though will. That was purchased by the Construction Congolent straw bag.
00:29:39
Speaker
ah which I think is Austrian if I'm remembering correctly. and Then in almost going in the opposite direction, kind of like ships passing in the night, Lend Lease in its continued ah reduction of size and returning capital to investors mode has successfully now sold its UK division to a bunch of investors. and I think they're bringing back the- The name. Yeah. What's the name? Bovis. Mental bike. Bovis. God.
00:30:08
Speaker
Yeah. Thank you. Yeah. So I think it's almost like they're going in different directions. So then lease for those that don't remember sold their US division ah kind of mid to late last year and then, and then announced that their UK one was kind of on, on the market and have successfully ah now exited or are exiting that business as well. Yeah. Thoughts on, on either direction, the kind of the, the contraction at Lend Lease or the international contractor buying local tier two Yeah, so I think ah think the Stryberg case, it makes a lot of sense. Stryberg aren't in Australia. They're grabbing a company that is operating in Australia. So it's good to have a foot in that market. um And as you mentioned there, they do relatively small projects. Stryberg does the biggest projects in Europe. the
00:30:59
Speaker
civil engineer specialists, they do huge tunneling schemes, that's their bread and butter. So they're entering into a new market with a pool of existing projects and it can now presumably bid for the big heavy stuff. So it seems like a sensible acquisition. So yeah, makes a lot of sense. And Stravag, just for anyone listening, think they are massive. They've got like 90,000 staff and they do 20 billion turnover as a group. So they are not small.
00:31:24
Speaker
um and they win significant projects across Europe, a huge company, so it makes a lot of sense. The second is quite interesting. so They've been acquired by a company called Atlas Holdings, which is basically a public equity firm. yeah so They bought the UK arm of Lendlease. Their strategy around bringing back the name Bovis is to try and basically leverage the reputation of that company before it was bought, so that it feels like a familiar brand, something that people recognize.
00:31:53
Speaker
so um Yeah, interesting. I can't think of another example similar. The story of Giorgio is super interesting. So for for people that don't know of the company, it was founded in like 19 late 70s.
00:32:09
Speaker
ah by Spiro Giorgio in Western Australia and has progressively grown, grown, grown. It made an acquisition, I think, in the mid-90s. And the founder led the company until like 1998, and then his son took over as CEO. So it's definitely like a family company that has been built over ah a long ah period of time. Interestingly, ah the the founder, Spiro, passed away at late 23.
00:32:38
Speaker
And i don't know you know I wonder if that was the kind of catalyst for ah then exploring whether from the family business perspective, getting equity to you know the the the family or or or whether that was related. And as you said, Strobag isn't in the market and is one of the you know the big European construction powerhouses and I guess continues the European tradition of exporting construction as as ah as a major service.
00:33:05
Speaker
Yeah, it'll be interesting to see. um I didn't actually see whether they're maintaining the brand name um or anything will be changing from an operational point of view immediately. Yeah, it'd be interesting to see are they going to start winning larger and larger contracts over the next few years. um So yeah, interesting to see how that plays out. I was just also doing some quick searching because I thought I'd read this recently, but out of just ah total coincidence and and really, it's actually worth acknowledging our super unfortunate circumstances. I mentioned that the that Spiro had passed a year or so ago, the founder or the CEO or former CEO from Giorgio.
00:33:44
Speaker
And then in super unfortunate circumstances, the CEO of Strobag actually passed, I think last month in January, like a super young age of 44. Yeah. Worth acknowledging it. Super unfortunate. And I guess thoughts go out to the Strobag team and and the family there. Cool. Any other thoughts on the topic, mate?
00:34:07
Speaker
No, it'll be I think it'd be a good trend to keep track of this year. Are we going to keep seeing this consolidation of smaller firms into the big sort of giants like Stravag, Vinci? I just forgot the name of the Spanish one.
00:34:18
Speaker
The ACS. ACS. So um yeah, it'd be good to keep tabs on that because it seems to be a bit of a trend. We've seen at least three or four over the last 12 months alone. so um In all regions, right? In all regions, that definitely there's continued this expansion of like all of these year big European pay construction contractors.
00:34:38
Speaker
continuing to expand into APAC, into North America. It's interesting as to why that's like a trend. you know like the you know The Swiss have watchmaking or whatever. you know What's the origin of that? But yeah, the it's amazing the network of of ah companies that are ultimately owned by one of the you know top five European contractors.
00:35:00
Speaker
and the amount of exported. Could be as simple as how do these massive companies increase turnover, quick to buy? Yeah, I can see the motivation from from their side because you know especially you've got a Europe that's like not super healthy, and it's a great diversification for them into markets where there's work. you know you know One market is announcing $500 billion in infrastructure spending, and the other one ah you know can't pay for a whatever.
00:35:25
Speaker
um But it's like how can they, why are they so competitive and why are delote what you know why are they how are they able to be so competitive in those markets? Because it's not like they go there and fail, they go there and are very successful. yeah Maybe that's another podcast. Carlos, do you want to read us out?
00:35:43
Speaker
Absolutely. um No, thank you very much everyone for tuning into today's show, the first of a new season. um If you enjoyed today's episode, please do think about liking the video and following us on your chosen podcast platform. We appreciate your support and we'll catch you all next week. Bye bye.