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economic survey

Timber construction sector still under pressure

Article by Martina Nöstler (translated by Eva Guzely) | 03.08.2022 - 14:04

In the survey, 91% of Austrian and German timber construction companies described their order situation in the past quarter as good. 5% reported a satisfactory order situation and 4% described it as bad. Thus, there has been an improvement in the sector. In the last economic survey, which was carried out in the first quarter of 2022, 71% reported a good order situation in the previous quarter and 24% described it as satisfactory.

Little change expected

As for the coming three months, 79% of the timber construction companies do not expect any changes in their order situation. 16% project a deterioration and only 5% think that the order situation will improve.

Slight easing in prices

In the previous survey, 78% of the respondents expected prices to increase in the second quarter. It seems that the peak has been reached now. In the second quarter, only 9% think that prices will rise in the next three months. 58% expect them to remain constant and 28% assume that prices will fall. When timber construction companies were asked what their most urgent problems are at the moment, many of them gave pricing as answer. Uncertainty about the future development of costs is a challenge for many companies. One respondent fears that timber construction products might become too expensive and that timber constructions might lose market shares as a result.

In light of increasing prices and probably also because of the rise in interest rates, among other things, timber construction companies expect a decrease in orders for single-family and two-family homes in the next six months. 75% of the respondents assume that the order situation will deteriorate in this segment. Compared to the survey three months ago, there is more pessimism. At the time, 42% of timber construction companies assumed that the situation will deteriorate. As for the next six months, 21% do not think that the situation will change, while only 4% expect an improvement. A similar trend can be observed when it comes to expectations about orders for multi-story wooden buildings. 40% of the companies project a deterioration and 55% do not expect any changes.

As for renovations, the construction of annexes or the addition of stories, companies are more optimistic. 26% of the respondents expect an improvement of the order situation in this segment in the coming six months, while 59% do not think that the situation will change.

Biggest challenges at the moment*

  • conflicting schedules on construction sites, partial postponement of orders
  • Wood products (glulam, solid structural timber, lumber) are becoming too expensive. The timber construction sector might lose market shares as a result of pricing.
  • Materials suppliers don’t offer fixed prices.
  • availability of material – compensating for it through high storage costs and pre-financing
  • pricing based on unknown price increases which are still to be expected
  • Still no price stability on the part of suppliers! Price differences of more than 50% between various trading and timber companies!
  • cost of procurement
  • shortage of skilled workers – flexible working hours, maybe four-day working week
  • We have too few orders coming in. We only have one shift at the moment. Sometimes, we add one hour to the shift, which is more than enough. Builders cancel orders because of cancelled subsidies and higher interest rates.
  • price development and procurement of material
  • high material prices, uncertain delivery dates, lack of skilled workers
  • strong demand, insufficient internal and external resources; long delivery times, quality of execution of craftsmen
  • lack of personnel/skilled workers (multiple)
  • procurement of material, raising stock levels
  • development of material prices; uncertainty about changes in material, interest rates and subsidies leads to caution
  • delivery times of materials, increase in freight and material costs
  • Prices of some construction products, such as mineral or stone wool as well as adhesive tape and foils, not to mention roof tiles. Costs are undoubtedly increasing and they have to be apportioned. The problem is the greed for profit of some.
  • rising material costs, bank guarantees – equity
  • shortage of skilled workers, high electricity and fuel prices, constant price increases in all sectors and segments, delivery problems
  • material prices and procurement; passing on of price increases and earlier placing of order, if possible
  • no price stability – no offers with fixed prices; availability of materials – no guarantee on dates
  • We do carpentry work, roofing and tinsmithing. The biggest problems are pricing, the predictability of projects in terms of procurement of materials, and calculating in general. We are operating and planning very cautiously. Our warehouse is full and we have to pre-finance a lot.
  • Passing material prices on to the end customer; the material surcharge is sometimes 0.
  • Material is much too expensive and difficult to procure because many products are out of stock.

*Answers to the question “What are the most urgent problems at the moment and how do you deal with them?” which was asked as part of the economic survey among timber construction companies (not edited)