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Photo by Judita Grigelytė (VŽ).
Construction companies say they have avoided the effects of the first wave of the coronavirus pandemic, but are concerned about a possible second wave. I hope they associate it with public procurement, but they see a price war looming there and costs are not falling, and this could lead to rising unemployment, which would become an additional burden on the state.
During the quarantine, the construction sector, unlike other areas, did not stop and there was no shortage of work: previous projects were carried out. However, the relative calm in the field of builders seems to be coming to an end: there is uncertainty about the future. According to VŽ, the Lithuanian Builders Association (LSA) surveyed 52 companies in the construction sector in July. 40% of them say that orders have dropped to a fifth and 24% of their order flow has remained stable. Feeling such sentiment from customers, 64% of companies surveyed expect revenue to drop by as much as a third.
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“If a more serious (and financial) wave comes, really significant things will happen. Until now we are in ignorance, the situation is very misleading. We understand that it will not be the same as before, but no one can be a prophet, how bad it will be”, says Arūnas Šlenys, CEO and co-owner of UAB Naresta.
Construction companies are hopeful about public procurement, but fear a price war that has started here. This means that there is a significant reduction in order prices due to orders. Žilvinas Žilinskis, UAB „A. The manager of Žilinskis ir ko and one of the shareholders claim that, at the same time, the competitors were “completely crazy”: they beat prices by tens of percent. Now the interlocutor says that he notices a reduction of up to 10%, he said, the spiral has already turned and he will not stop it so fast. It will depend on the second wave; if it does, the price war will continue.
Companies surveyed by LSA identify the risk of competitors in lowering prices and some of their obscure and non-transparent activities as one of the biggest challenges. It is extremely difficult for companies that pay taxes fairly to compete with them. The price war is not without losses, because costs do not decrease accordingly, so some workers have to be laid off. Although construction was not prohibited during the quarantine, workers in the sector were severely affected. In the first quarter of this year, the unemployment rate in construction reached 12%, while in Lithuania it was 7.1%. In January-June of this year, compared to the same period last year, the labor supply in the construction sector grew by 7.6%, while the demand decreased by 9.6%.
During the 6 months of this year, 11,100 unemployed applied to the Employment Service, whose last job was a construction company. “If another 10% of employees lost their jobs in the second half of this year, then 10,000-12,000 people would become an additional burden on the state at the end of the year,” says Dalius Gedvilas, president of LSA. So builders are looking forward to the state’s plans to speed up infrastructure projects, as companies running out of orders may start to falter.
The scope of the work will also largely depend on whether the government releases the brakes before investing millions of euros in construction. Economists believe that the government does not need to give up lending and extra spending from left to right. It is even worth reviewing the DNA Plan for the Economy of the Future and reducing unnecessary costs, especially to beautify unnecessary infrastructure.
The construction industry welcomes the plan, but in VŽ’s view, its true “face” will only be revealed through its implementation. Therefore, it is worth listening to the voice of companies, who say that it is important that the implementation of the plan does not sink into the mud of bureaucracy, so that the projects financed are of high quality and generate added value. If public institutions behave with courage, transparency and determination, private capital will also plan investments with more courage.
essay, often responding to events, facts, trends. Small characteristic, often the same for all
publication volume for editorial articles, concise presentation of ideas, argumentation of the nature of theses, used in journalistic rhetoric
elements. It is common to present conclusions, summaries that reflect editorial provisions. / Encyclopedia of Journalism /
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