The tunnelling industry is resilient to all but the most furious of financial maelstroms. Large-scale, expensive projects can last decades, and outlast several boom bust market cycles.

The modern vision of the Gotthard Base Tunnel, for example, was conceived in the ‘hangover years’ of the early nineties, began construction of access shafts in the heady, economically vibrant period in the late nineties and broke through shortly after the global slump of 2007. Train services will not be available for another six or seven years, financially anything could still happen, yet reactions to any suggestion that this project could be scrapped would be unprintable. And after all, it is the sensible government that builds infrastructure during a downturn.

For all that the industry can shrug off some of the global economic woes, it is not immune to the contagion. The Report on World Economic Situation and Prospects 2011 by the United Nations Conference on Trade and Development notes that on average, GDP of the new EU member States increased by 1.9 per cent in 2010, having shrunk by 3.6 per cent in 2009, while Poland and Slovakia increased output by more than 3.5 per cent. Growth is expected to strengthen to an average of 3.2 per cent across the group in 2011.

The Russian market gives off a similar vibe. “The Russian construction industry has survived its most difficult year for more than a decade,” says Robert Obetkon, senior construction analyst for market data and analysis company, PMR. “The 0.8 per cent reduction recorded by the industry for the first three quarters of 2010 looks remarkably healthy in comparison with the 18.4 per cent slump recorded last year, and construction firms are now much more optimistic about the future than they were just a few months ago.

Government intervention
“The downturn served to emphasise the importance of the government to the construction market. As the flow of private investment into construction activity became markedly weaker, state-funded projects began to account for a more substantial proportion of construction activity,” he adds. This is not surprising or new. Government-led investment has helped other tunnelling economies, notably those in South East Asia and India, as well as Australia.

Austria-based Strabag, the largest construction contractor in Central and Eastern Europe has reported an output volume reduced by around 2 per cent, citing adverse weather conditions causing a decline in transport and infrastructure industries in Germany and Hungary, as well as a drop in output volume for the building and construction section of its business in Germany.

Strabag adds, “In the past financial year, the European construction sector benefited from the state economic stimulus programmes that provided investments for public-sector infrastructure projects such as the construction of roads and educational facilities. As the stimulus programmes were replaced by austerity packages at the end of the year, as was the case in Strabag’s home market of Germany, the building construction and civil engineering segment, which relies mainly on private clients, will be of greater importance in the future.”

The outlook is far from bleak. Strabag makes a point that the construction boom in Poland has particularly helped the transport and infrastructure sector, and has been complemented by expansion in North European markets and the Middle East. Strabag has also begun work on the largest construction project in Austria, the Koralm Tunnel. This is not an exception to a market in decline; a number of large projects are underway with more emerging. Hans Peter Haselsteiner, CEO of Strabag says, “In 2011, we should succeed in raising the output volume by 5 per cent to EUR 13.5bn (USD 18.35bn). For the following years, single-digit growth also remains realistic.”

The articles to follow in this special report explore two Alpine projects from Central Europe – the Ceneri rail tunnel and the Linthal 2015 hydropower revamp project, and also a project from Eastern Europe – the St Petersburg sloping drives. The sloping drives project, rather than being downscaled or otherwise affected by the recession, is actually the recent realisation of a decades-old intention to link unused stations of the St Petersburg metro to the surface.

The impressive 30-degree drives in St Petersburg smash through the difficult ground to reach the famous ‘ghost stations’