NHO Building Industry fears that falling activity in the construction industry could lead to tens of thousands of man-years disappearing.
Nina Solli, managing director of NHO Byggenæringen, is seriously concerned about the situation in the construction industry. Photo: Nicolas TourrencPublished: Published:
Less than 20 minutes ago
– The forecasts show that the situation is much more serious than what has come to light in the past. We have said before that the worst is ahead of us, which the forecasts also indicate, says Nina Solli, managing director of NHO Building Industry.
New forecasts from NHO Byggenæringen show that the drop in production in the construction industry’s value chain could be up to NOK 60-80 billion from 2022 to 2025. The organization says it will go well beyond capacity when the market picks up again.
This corresponds to a production drop of 25 per cent.
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In 2022, estimated production in the construction contracting market was NOK 271 billion. For 2023, production is expected to be reduced to NOK 254 billion, and down to NOK 221 billion in 2024. Production will then be reduced to NOK 202 billion in 2025, according to the forecast.
If this development takes hold, the industry risks losing 50,000 – 60,000 man-years.
– We are seriously concerned, and this could have major consequences. Now we are about to see a big fall that neither society nor those who work in the construction industry have benefited from, says Solli.
Not normal fluctuations
NHO Byggenæringen points out that the Socio-Economic Analysis has shown that a large drop in production, with consequent loss of labor and expertise, could lead to strong housing price growth and socio-economic losses.
– If we lose up to 60,000 man-years, it will take a long time to rebuild capacity.
– We are not asking for subsidies, but that projects be started or accelerated that society needs in any case, so that the industry is not drained of competence, says Solli, and adds that it takes around six years to build a good skilled worker.
She believes that the current situation is not normal economic fluctuations, but recalls the decline the industry saw during the banking crisis at the end of the 1980s. Then nearly 40,000 man-years disappeared and did not return.
The construction industry feels that the situation has worsened since the downturn began, according to the interest organization NHO Byggenæringen. Illustration picture from Lade in Trondheim. Photo: Gorm Kallestad / NTB
Solli points to the level of interest rates as the main challenge, and that it cannot be intended that one industry should take all the brunt to cool down the economy.
– If the industry loses tens of thousands of man-years, the industry will not have the capacity to meet the demand when the market picks up again and everyone must build on the same. This will go beyond both schools, housing, offices and other socially beneficial construction projects.
Will provide interest compensation
Nina Solli believes there are several measures that can have a quick effect.
– One measure is to increase the funds for the housing quality scheme for the Housing Bank in the revised national budget. There is also a great need to make the building stock more energy efficient, this will free up power for the green shift, and give people and businesses lower electricity bills, she says.
– We are also concerned that they can be given interest compensation to the municipalities, so that they can start projects that are ready to go anyway. Now the municipalities are again holding projects together, Solli continues.
The NHO top also believes that it might be a good idea to adjust the lending regulations, since nothing in the interest rate path indicates that the interest rate should rise by three percent.
– Nevertheless, loan applicants are stress tested for this. New homes and energy efficiency measures that result in low operating costs should be able to get better conditions.
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Major challenges for the industry
The construction industry has been hit hard by the repeated interest rate hikes and an increased cost framework.
Only 12 per cent of NHO Byggenæringen’s members perceive the current market situation as good, and only 14 per cent of member companies believe in an improvement in the next six months, according to the organisation’s own figures.
More than one in three member companies report that they will carry out layoffs in the next three months.
The housing manufacturers called 2023 a crisis year for housing construction, and warned throughout last year that there will be layoffs and bankruptcies in the construction industry. New home sales have been in free fall for the past couple of years.
In January, however, new home sales turned around and increased by 12 per cent compared to January last year. At the same time, the number of new start-ups is down 17 per cent compared to January 2023.
The construction industry experienced a sharp increase in the number of bankruptcies during last year, and several companies have closed their doors so far in 2024.
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2024-03-10 10:49:37
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