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05May94 UK: 'TOP FIRMS SHOULD MERGE TO COMPETE.'

Senior ministers believe Britain's top construction companies should merge so they can compete with their larger French and German rivals.If this does not happen Britain's firms may miss out on major projects worldwide.Whitehall sources told Construction News that some ministers and officials are saying Britain 'is short of two or three world-class construction companies'.To counter this, they argue, the Government and the industry need to co-operate 'to promote the creation of such firms', although they concede that this will happen only if the shareholders of the companies concerned see commercial advantages in the change.Others believe that supporters of the idea risk creating 'industrial dinosaurs'.One opponent said: 'The days of such firms are past. We need smaller flexible companies which can joint-venture when necessary.'But another source added: 'This is very much a live issue. It is a perfectly genuine area for debate.'The debate has emerged as Board of Trade president Michael Heseltine prepares to launch a hard-hitting White Paper on British industry's competitiveness on May 16.The issue of mergers is not mentioned directly in the White Paper.But in it, Mr Heseltine will warn British firms, including contractors, that they must become more competitive if they are to beat the challenge from overseas rivals.We do have world beaters, but there are not enough of them, he says.The White Paper is expected to include detailed recommendations in a number of key areas.It will look at how to boost training standards; increase research and development investment; ensure best management practice; and achieve better support from financial institutions, especially for small firms. CONSTRUCTION NEWS