A round of calls to construction company managers provides answers to the current economic outlook that we already know: “It’s quiet.” There are major regional differences in work situations in the construction industry. In some parts of Finland, projects are tight, while in others, there is already a noticeable pick-up.
""This is where we have to start pursuing projects."
"There's no light at the end of the tunnel," he blurts out. Antti Lipsanen, CEO of Rakennusliike U. Lipsanen Oy, which is celebrating its 75th anniversary this year.
"Our company's market area is so broad that there is always something happening there. Yet the number of requests for tenders and competitions is very high.”
The long history of the construction company, which focuses on the construction of public spaces, commercial and industrial premises, has its headquarters in Naarajärvi, Pieksämäki, and operates nationwide, gives perspective to the outlook. According to Lipsanen, there has never been a similar time in its history. However, it has always managed.
The feelings are the same in Joensuu. “North Karelia is much quieter than during the recession of the 90s,” said the Chairman of the Board of Rakennustoimisto Eero Reijonen Oy. Eero Reijonen knows, based on 40 years of experience.
""The contracts are behind the work," he admits. The builder, which mainly focuses on contracting for new construction and renovation projects in Eastern Finland, has, like many other construction operators, had to resort to layoffs. "If you want to maintain even a little bit of turnover, you have to go after the projects from here, wherever there is work available. There are no alternatives."
""Not all families go south. However, management and trusted employees of the company must be involved on their own behalf."
""Glimpses of light"
There are major regional differences in the construction industry's employment situation. Growth centers seem to have enough traction. There has been a pulse on the west coast of Finland, and sparks of hope in Kainuu too. But Eastern Finland is just sleeping.
“There are hardly any renovations or new construction. The housing market is not doing well and housing construction is at zero,” Eero Reijonen lists. “Patriotism is also a bit missing,” Reijonen chides the country’s decision-makers, the municipal sector and the financial sector. “Now is the time to wake up, to do something.” He demands a sense of responsibility from decision-makers. “After all, during the recession of the 90s, rental terraced houses were still being built.”
While working in Southern Finland, Reijonen has noticed a slight pick-up: "Very little movement," he says, and expects the same in Eastern Finland, albeit in the form of green transition projects, data centers, or wind power and electricity grid projects.
Pasi Pitkänen, Chairman of the Board of Directors of KUMONI Oy, has, like Reijonen, recognized signs of the end of the downturn: “Something small is budding.”
""Housing construction has been in such bad shape that has there ever been a situation this bad?" Pitkänen wonders. "Instead, there has been a reasonable amount of work in renovation construction all the time."
Is construction picking up?
Lujatalo Oy has noticed a slight pick-up in the sale of second-hand apartments. “This is a prerequisite for the sale of new apartments and the construction of high-value new apartment projects to get underway,” said Lujatalo Oy’s division director. Heikki Jalkanen states. “There are very faint signs in the air that construction is picking up.”
General uncertainty in world politics and the economy is holding back the recovery of housing construction. Buying a new home requires confidence in the future. “The decline in interest rates is a lever for that,” Jalkanen says.
The construction industry's plunge into a recession is the combined effect of many different variables. Funds have turned off their money taps. Investors have shied away from the market. Right-of-occupancy properties are on hold. Ara's authority to grant loans to rental housing properties has fallen significantly, cutting construction starts. Housing subsidies for special groups have also been cut sharply.
And not all housing companies are doing well either. Their plans for line renovation or energy renovation are at a standstill due to negative financing decisions. “The handbrake is also on in welfare areas,” Jalkanen adds.
But there is also something positive. The trade sector receives an honorable mention from Lujatalo Oy's division director Heikki Jalkanen: "There are a lot of investments there that are gratifying. They have given work to builders." Recent news about investment decisions in industry also receives praise from Jalkanen.
What happens when all the locks that have prevented economic development are opened?
The CEO of Rakennusliike U. Lipsanen Oy ponders the meaning of events in the construction industry: “Why are Ara-financed projects being built during the peak season? Wouldn’t it be the right time for that right now?” Antti Lipsanen regrets that during a weak economic cycle, the capacity released from housing production is directed towards the public construction segment. “Competition is getting even tougher.”
Cities, municipalities and the state have accumulated investment needs. Projects have been put aside to wait for better times. “Now would be the time for them. It would be worth building now, when there is a low economic cycle,” Lipsanen says. “This time is favorable for their implementation. It is much more cost-effective to build now than, for example, three or four years ago.”
Pasi Pitkänen and Eero Reijonen completely agree. “Indeed. Now is the opportunity,” Pitkänen tells Lipsa. “If ever there was a time, now would be the time. That also applies to renovating your own home or buying a new one.”
Eero Reijonen sees that it would be possible to influence the economic development through various means of recovery. “There is pent-up demand. When construction gets going at some point, the prices of supplies and production inputs will rise. It would be better to have a steady pace.”
“When all the restrictions that have been holding back the economy are lifted, it will get investments going,” Pitkänen says. “That’s when the crazy response will begin.”
Text: Heikki Luukkonen