The Swedish Construction Sector

The Construction Sector Today Total market size - ca 325 bn SEK – 10 per cent of GDP. Investments ca 225 mdr – ca 8 per cent of GDP. Over employed in the construction /housing sector in total - of which employed in pure construction companies in the construction sector with employees.

The Construction Sector Today A severe recession / depression 1990 – 1993 A rapid recovery during the last years A boom market Low construction investments relative to EU - average Dominated by a small number of large companies, but it is the SME´s that are growing Internationally reknown and relatively efficient

No of employees Källa: SCB Number of Employees in construction companies 2000

Construction investment % of GDP

Källa: SCB, BI Construction investments

No of apartments started Källa: SCB, BI

Regional construction investments in 2005 SEK mn Källa: BI

Hot topics General perception and knowledge of the sector Uncertain playing field Labour costs Internatialisation Industrialisation Shortage of labour 10 years ahead?

In the general debate the picture is… Construction investments in Sweden are high Housing standards are high – houses are modern Constructions costs have risen extremely fast The Swedish construction sector is ineffecient and expensive But the truth is quite different

In reality…. Construction costs in Sweden are relatively low – but housing costs/living costs are high Existing cost statistics are unreliable … but the most rapidly rising costs are land prices and local fees Productivity growth in Sweden relatively good in an international comparison. Productivity levels high in Sweden. Construction investments in Sweden are low.. The housing vintage is relatively old…

Housing stock by vintage within EU

Construction costs (high quality) for apartment houses in EU 2001 Källa: Gardiner & Theobald

Housing costs as % of total consumption costs in EU 2004 Källa: European Housing Statistics

Sustainable construction Cooperation within Byggsektorns kretsloppsråd BASTA – A EU-life co sponsored projekt Own projects – chemicals, energy, waste Include environment/sustainability in everything

The Ecocycle Council Unique form of Cooperation The Ecocycle Council is an association of around 30 organizations within the Swedish building and real estate sector. The aim of the organization is that the building sector, through voluntary efforts, on market grounds and in close co-operation with authorities and legislation, succeeds in conducting credible, effective, co-ordinated and systematic environmental work that results in permanent environmental improvements.

The Constructions Sector faces tougher international competition and a rapid restructuring process? Will we succeed?

Foreign companies on the Swedish construction market Igår : En skyddad sektor Yesterday: A sheltered sector

Tougher competetion… Tougher competetion on the household market (primarily in the major cities) – Swedish blacks are losing ground Tougher competetion on large infra structure projects Tougher competetion for UE:s All other subsectors will follow…

What have other sectors done? Increasing imports – lower costs Restructure the supplier system Focus on core activities Focus on the customer Partnership with suppliers and customers Make use of foreign R&D DO not compete with low prices, but with qulaity, innovations and customer satisfaction Protect and take care of your brand name Improve productivity

Why should the Swedish construction sector succeed? Efficient and low costs Good recruitment – popular to choose a construction education Top level in health and safety Gone through more of restructuring than most other old EU-countries Rapidly growing markets very close by (Poland, Russia and the Baltics) No big excess labour supply anywhere

To Conclude Good Market Prospects in the coming Years A rapid restructuring of the Swedish business sector and tougher environmental standards improves and affects construction market prospects Repair and Maintenance a growing Subsector Tougher Competition and Restructuring