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economic survey timber construction sector

Growing pessimism in the timber construction sector

Article by Birgit Fingerlos (translated by Eva Guzely) | 27.07.2023 - 13:58

The main concerns of Central European timber construction companies can be summed up as follows: “Building has become much more expensive and prices for raw materials and energy have increased. Interest rates are higher and banks have introduced stricter conditions for granting loans.” All of these factors have an impact on the order situation of timber construction companies which are also increasingly feeling the pressure created by a shortage of skilled workers. Due to the latter, companies even have to reject possible orders.

58% of the timber construction companies which took part in the Holzkurier’s economic survey reported a good order situation in the second quarter, while 31% described it as satisfactory. Expectations for the third quarter are not that high, though. Only 8% of the companies expect their order situation to improve in this quarter. 67% do not think that the situation will change, while 25% expect their order situation to deteriorate. In the single and two-family home segment, the order situation is rather weak. Here, 83% of the timber construction companies expect a negative development in the coming six months. The remodeling/renovation/addition of stories/addition segment should see a slightly more positive development. 37% of the respondents expect an improvement in this segment, while 47% think that there will not be any change.

Regarding timber construction products, 52% of the surveyed companies do not think that prices will change in the third quarter. Meanwhile, 40% expect prices to fall and 8% expect them to rise.

Biggest challenges at the moment*

  • High costs of energy and materials (concrete, PVC, iron, sheet metal, ceramics etc.) and inflation
  • Everything is much too expensive. There are no loans.
  • Customers are not granted loans anymore.
  • Customers don’t receive financing from banks anymore and/or don’t dare to make bigger investments.
  • Very strict conditions for granting loans
  • The subsidy programs, which have been in effect since June 1, 2023, are useless: An annual income of €60,000 or less is not enough to build a house. Yet, customers with a higher income are not eligible to those subsidies.
  • Nobody is buying, nobody is building.
  • Sales of single and two-family homes have decreased massively. We are trying to react to this by changing our sales process, and we plan to downsize our company next year.
  • Framework conditions for subsidies, financing options, improved customer management, webinars, support
  • Making changes to already planned projects while keeping new subsidies and the new financing situation in mind costs time and money.
  • High interest rates; banks not granting loans; too high hurdles for young people. The timber industry, but also sawmills, are to blame for this and have done a lot of damage for us in the timber construction sector ... because they have ripped everyone off in the past two years, making building extremely expensive for young people. In other words: extreme increases in prices of glued timber, solid structural timber, but also of lumber, even though the price of the basic product (log wood) only saw a moderate increase.
  • Price fluctuations and the whims of the timber industry (bulls in a china shop) – those companies don’t act sustainably. Whenever the price is higher somewhere else in the world, they deliver there without having any consideration for domestic wood processing companies. The market reacts to higher wood prices: Brick and concrete are increasingly used for construction. As a small business, you have no influence.
  • Everybody is complaining about inflation even though it is compensated for through higher wages and salaries, but nobody asks us how we could pass it on to customers.
  • Excessive workload (which is good, though); maybe postponing projects until 2024
  • Delays in delivery dates
  • Advertising
  • We will probably have to lay off employees.
  • Not enough work; applying for short-time work as a first step
  • We are receiving numerous inquiries from applicants who want to complete an apprenticeship as their second educational path. So, we have the problem that we can’t hire that many potential prospects.
  • Lack of skilled staff. Actively recruiting new apprentices and the training of skilled staff
  • Lack of skilled workers
  • Due to the lack of skilled workers, we cannot process all requests and accept all possible orders.
  • Lack of skilled workers
  • Staff shortage, economically our times, extreme increases in prices of materials and energy
  • Staff shortage
  • Lack of skilled workers; I will train an apprentice again.
  • Lack of skilled workers
  • Finding staff
  • Staffing
  • Finding employees who are willing to work
  • Staff-related issue: Public and semi-public institutions in particular are enticing trained employees away from us.

* Answers to the question: What are the biggest problems you are currently faced with and how do you address them? (not edited)