In the economic survey of the fourth quarter of 2023, 51% of timber construction companies reported a good order situation in the previous three months, while 9% described it as bad. In the first quarter of 2024, this assessment was much more negative, with only 31% of the respondents reporting a good business situation and 24% a bad one. The outlook for the next three months is somewhat more optimistic. 24% of the timber construction companies expect the order situation to improve, while 22% think that it will deteriorate. For the first time since the first quarter of 2022, the positive assessments outnumber the negative ones (see chart above).
Renovation and remodeling with potential
Timber construction companies in Austria, Germany and Switzerland rate the single- and two-family home segment in particular as being weak. Only 8% of respondents believe that the order situation in this segment will improve in the next six months. As many as 43% think that the situation will deteriorate. Assessments of multi-story wooden building segment are somewhat more optimistic, with 22% of survey participants expecting an improvement here. The most positive outlook is given for renovations/remodeling/annex segment: 42% think of timber construction companies expect the order situation to improve, while only 9% assume that it will deteriorate. As for prices, 22% think that there will be a further increase in the price of timber construction products, whereas 63% expect prices to remain constant and 15% assume that prices will fall.
Overall, companies still name the shortage of skilled workers as one of the biggest challenges they are faced with. There is also pressure on prices, especially when it comes to bigger construction projects. As one survey participant put it: “The biggest problem for medium-sized companies will be that large construction companies will pounce on small construction sites (such as single-family houses), undercut the price for a longer period of time and destroy the profit prospects for medium-sized companies.”
Biggest challenges at the moment *
- Utilizing plants to capacity
- The interest rate cuts, that are planned for Q3 or Q4, are currently keeping people from placing orders.
- Shortage of skilled workers; enormous non-wage labor costs; massive slump in the single-family and multi-family home segment
- Requirements from building authorities come with high costs for builders and delay the start of construction work.
- Demand extremely high but difficult to manage
- The negative sentiment in the market and the approval of subsidies
- No incentive programs for those who want to build
- Interest policy: pure red-tapeism
- At the moment, we have a slump in orders. We don’t know whether we will be able to keep all of our staff.
- Issues with financing: construction of private homes, purchasing and inflation
- Predictable order situation only over the short-term
- Poor order situation, problems with employees and authorities
- Pressure on prices in bigger construction projects
- Not enough productive work
- Delays in the delivery of building materials and components
- Inquiries are coming in, but customers take a long time to decide whether to confirm or to cancel a project, which makes it difficult to plan ahead.
- In the future, the biggest problem for us medium-sized companies will be the fact that large construction companies will also pounce on small construction sites (such as single-family houses), undercut the price for a longer period of time and destroy the profit prospects for us medium-sized companies.
* Answers to the question: What are the most pressing issues you are currently faced with and how do you handle them? (List not exhaustive)
