American contractors, who through overseas business have helped return millions of petrodollars to the United States, are losing the worldwide competition for big Middle East construction jobs.
The latest available data -- coming as more and more dollars are spent abroad for oil -- show that U.S. firms command a steadily decreasing share of the world's construction business -- particularly in the Middle East -- while those from other nations, particularly South Korea, are winning a growing number of large contracts.
McGraw-Hill's Engineering-News Record magazine, in a survey to be published Thursday, reports that since mid-1978 the U.S. share of the lucrative Middle East construction market has dropped from 10.3 percent to 1.6 percent.
Along with the market share, the income of U.S. firms doing business overseas is in a decline that may be measured in billions of dollars.
The exact toll on the U.S. economy is in dispute, however. While American contractors claim their foreign building contracts create thousands of U.S. jobs and millions of dollars in exports, a U.S. Commerce Department official says no one knows to what extent such projects "ripple" through the domestic economy. Foreign construction firms, he said, often buy U.S. components and U.S. contractors may buy foreign materials.
The Commerce official conceded, though, that at a bare minimum, the United States misses out on tax income derived from the profits, fees and salaries paid to the American firms for their work. Accordingly, the drop-off in business leads to reductions in revenue for the U.S. Treasury, which has long counted on the return of dollars spent for overseas oil.
The McGraw-Hill data are likely to feed the feverish campaign the U.S. construction industry has been waging to overturn what it sees as the cause of its decline in the Middle East: recent U.S. laws taxing Americans' income earned overseas; laws forbidding compliance with Arab boycotts and regulating payments to foreign middlemen.
McGraw-Hill's data, generally considered reliable and perhaps the most complete available, show that form June 1975 to April 1978, U.S. construction firms were awarded 10.3 percent of the $86.3 billion in Middle East contracts up for grabs.
From May 1978 through June 1979, only seven Middle East construction jobs -- totalling $346 million, or 1.6 percent of the $21.8 billion in new construction -- went to U.S. contractors. During the same period, South Korean companies won $3.3 billion in Saudi Arabian contracts alone.
McGraw-Hill ranks the Koreans first in contracts won and the United States 12th. The Korean contractors were trained by the U.S. Army Corps of Engineers during the 1950s.
The corps today released documentation on the recently declining number of U.S. construction awards. The corps, which manages military construction projects for the Saudi Arabian government, reported that while U.S. and foreign construction firms have in the past seen a rough parity in contract awards, the year ending Sept. 30 showed a poor performance by American firms.
In the review period, the corps awarded $998,000,000 in 35 contracts for Saudi construction work. U.S. firms got $5.13 million in four contracts, or roughtly 5 percent of the total.
(The value of a contract represents the total cost of building a project, and not just the sum received or profit earned by the contractor. Marketing Co., which publishes "Saudi Report," reports that as recently as 1975 American firms won 9 percent of all civil construction contracts in Saudi Arabia, but that in 1978, U.S. firms won only 3 percent.
The 5 percent U.S. share of corps-let contracts in budget year 1979 represents a drop from 35 percent in 1975, the organization said.
"It's primarily because were too expensive," says Robert M. Gants, vice president of the National Constructors Association. Gants also heads an industry group opposing the taxation of overseas American income and living allowances.
Most other governments do not tax such income, and thus their nationals in host countries can work for less than Americans.
"The only reason a profesional with years of experience is going to leave a comfortable home in Alexandria [va.] for Yanbu [in Saudi Arabi] is for money," says Joseph Volpe, a sentor vice president with Ralph M. Parsons Co., a construction management firm.
Volpe said his company cannot find enough Americans willing to work on a development project in such places as Yambu and this is hampered in competing for other Saudi jobs.
But a second Commerce Department official, who asked not be identified for fear of constructor's wrath, notes that overall exports to Saudi Arabia are up and that regardless of the tax code, one new American office opens in Saudi Arabi each week. In the first nine months of this year, the United States shipped $100 million more in goods to Saudi Arabia than it did in the same period in 1978.
Many business deals, however, are for services, not goods -- and their dollar amounts are not reflected in such trade figures. It is here that U.S. firms are still doing welling and perhaps improving their positions, the Commerce official said.
Others familiar with U.S. construction activity abroad say the American building industry is partly to blame for its plight. It has often not been aggressive, they say, adding that in some repects foreign construction technology is superior. They note also that a number of governments directly assist their contractors in winning jobs, and in some cases take part in overseas enterprises as partners with their countries' private firms.