When peace eventually comes to Ukraine and enables large-scale reconstruction, it will also be reflected in Finnish construction companies. However, according to a study by the Construction Industry Association RT, the effects are likely to be moderate. Some availability challenges can be expected, which are more related to materials than labor. On the other hand, promising opportunities will also open up for the Finnish construction industry in the Ukrainian market.
The starting point of the study was to identify possible developments in the Ukrainian conflict in the coming years and to analyze these impacts from the perspective of the Finnish construction industry. The variables of the scenarios were the development of the military situation, foreign aid and security guarantees.
The most likely long-term scenario is that after the fighting ends, reconstruction will begin in phases, which will mitigate the severity of the impacts. The initial phase of reconstruction may cause temporary shortages and price increases for materials that are limited in production in Ukraine, such as glass, bitumen and electrical panels.
“If reconstruction begins gradually, it is unlikely to cause significant disruptions in the raw materials market, as production will have time to adapt to growing demand,” said the Director of Construction Development at the Construction Industry Federation of Finland (RT). Antti Aaltonen says.
The impact on the construction labor market in Finland is also expected to be less severe than feared.
"Although we have around 15–20 percent of the workforce on our building construction sites from Ukraine, Estonia or elsewhere in Eastern Europe, it is unlikely that they would move to Ukraine on a large scale. Finland's good salary and security levels make many stay here," says Antti Aaltonen.
Alongside challenges, there are also opportunities
The Finnish construction industry has faced significant challenges due to the outbreak of the war in Ukraine due to general economic uncertainty, weak market development and a sharp increase in costs. Key construction materials, such as steel, bitumen, glass, insulation and concrete, saw a sharp increase in prices after the war. Since then, costs have remained high and demand and profitability have been weak.
At the beginning of the war, the Finnish Construction Industry Association (RT) commissioned a high-level study of the conflict's development scenarios and their potential impacts on the Finnish construction industry. As the war dragged on, RT has now carried out an updated study that covers the key scenarios and their impacts at a more detailed level. RT conducted the study in cooperation with Civitta.
"In the report, we focused on the impact of reconstruction on the value chain of Finnish builders. Reconstruction will also have some positive impact on demand in the Finnish construction sector, but we did not delve deeper into the market prospects of Finnish companies in Ukraine."
Competition from large European and US players will be fierce. First movers will have the advantage by investing in partnerships and local market knowledge even before a ceasefire or full-scale reconstruction.
The Confederation of Finnish Industries (EK) launched the Pro Ukraine project in August, which supports Finnish companies in their first steps in the reconstruction of Ukraine. It offers concrete advice, market mapping services and partner search in both Finland and Ukraine.
“We also encourage construction industry companies, both large and SME operators, to join the Pro Ukraine project and explore their own opportunities in the reconstruction market,” says Antti Aaltonen.
More information
Antti Aaltonen
Director, Construction Development
antti.aaltonen@rt.fi + 358 40 514 3626Confederation of Finnish Construction Industries (CFCI)
Merja Vuoripuro
Director, Communications and Responsibility
merja.vuoripuro@rt.fi + 358 40 587 2642Confederation of Finnish Construction Industries (CFCI)