Infrastructure - Regional - Analyst: Crisis likely to benefit smaller, infrastructure service firms

The global financial crisis might benefit infrastructure service firms, a sector analyst told BNamericas.

While big construction firms will focus their efforts on carrying out development initiatives, they are unlikely to invest in the renewal of equipment unless it is strictly necessary, said the analyst.

Companies are more likely to turn to equipment rental firms to satisfy their needs when carrying out road maintenance or construction projects, the analyst added.

Also, many local governments will turn to smaller firms to carry out works. The credit squeeze and budget cuts due to the crisis will force many local authorities to focus only on maintenance until the financial scenario is clearer, the analyst said.

The crisis might also encourage local governments to establish joint efforts before launching tenders.

In Colombia, President Álvaro Uribe has already called on municipalities to work together to launch tenders in order to obtain more competitive offers. These larger projects are cheaper to carry out than smaller ones due to economies of scale.

Meanwhile, in Chile a number of small equipment and construction firms are starting to meet with local governments.

These efforts are not only due to the new economic conditions, but also to the change some local governments will experience after last week's municipal elections, the analyst said.

The financial aspect is not the only factor municipalities look at when launching tenders. Local governments administered by the political opposition are unlikely to even consider carrying out projects with their pro-government counterparts, the analyst added.

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