in Luxembourg The next six months will be “complicated” in construction
LUXEMBOURG – The construction industry is facing rising raw material prices, energy and interest rates. Three companies testify.
“Our order book is still comfortable, but we must not let ourselves be deceived,” says Miguel Carvalho, CEO of Colmar-Berg-based Carvalho Constructions Générales. “We are still taking advantage of COVID-related construction delays,” the manager continues. But real estate developers are currently facing sluggish sales due to rising interest rates. Our business will suffer in the next six months. Leudelange-based CDCL also has a “full” order book. “However, I sense a decrease in the volume of new projects in the market,” says General Manager Max Didier.
Especially since companies in the sector are also faced with increasing raw material prices. The war in Ukraine and the “Zero Covid” strategy in China have therefore disrupted their supply chains. As a result, compared to January 2020, the price of wood increased by an average of 93% and the price of reinforced concrete by 81%, according to Economy Minister Franz Fayot and Middle Class Minister Lex Delles. Florian Placido, head of marketing and communications at Schifflange-based Sopinor (more than 500 employees), said: “For several months, we had great difficulty getting the materials we needed on time, now at extraordinary prices. In order to partially circumvent this trend, we must now take a new stocking reflex, adapt our purchasing strategies and order expectations.” In addition, after Russia’s aggression in Ukraine, energy costs have changed sharply and fuel prices have increased by 92% from January 2020 to July 2022.
“There is still a huge housing shortage”
In 2023, companies will also likely have to deal with two indexation tranches. “It shows that our salary volume should increase by 5%. We will make sure we keep 125 employees, but planning hiring is complicated at the moment,” said Miguel Carvalho. The manager explains that he has to constantly update his prices daily. The company is hard to even predict. “Our offers, which were previously valid for 6 months, are now only valid for 2 months,” explains the manager. Our clients need to make a decision pretty quickly”. CDCL, the company is also a property development activity “This allows us to keep 400 of our workers in construction and call in temporary workers,” says Max Didier, who is “not too optimistic for the industry.”
Miguel Carvalho, on the contrary, thinks that the situation will improve in 2023, given the structural problem of real estate in Luxembourg. “There is still a huge housing shortage,” he recalls.
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