Industrial News

Optimism in the construction sector
A survey carried out by PMR for the report entitled “The construction sector in Poland – Development forecasts 2005-2008” indicates that the mood of construction firms is improving. The largest construction firms operating in Poland give a middling assessment of the present situation in the sector, with slightly more positive evaluations than negative. Nonetheless, compared with PMR’s previous survey, conducted in February 2005, a clear improvement is visible. At present 38% of respondents consider the situation in the construction sector to be good, compared with only about a quarter of those responding to the February survey. Forecasts for the future are also positive. Over a half of those surveyed expect an improvement over the next 12 months, with only 9 percent of respondents fearing that the situation will deteriorate.

There will be a rise in construction and assembly sales and in the number of construction permits issued, but prices of building materials will also increase

PMR also asked respondents to predict how the following indicators of the situation in the construction market would change in 2005:
- construction and assembly output
- cement production
- number of construction permits issued
- prices of building materials
- level of employment in construction firms
- level of wages in construction firms.

Respondents forecast improvements in most of the indicators. The largest numbers of respondents expected to see increases in construction and assembly output (65%) and cement production (64%). Only in the case of employment and wage levels in construction firms was the number of respondents not expecting any change higher than the number predicting an increase.

The financial condition of Polish construction firms is constantly improving, orders are on the increase

The results of the survey paint a surprisingly positive picture of the financial situation of the firms surveyed. Only 8% of respondents gave a negative assessment of their firm’s financial condition. For almost a third of respondents the firm’s financial situation is “neither good nor bad”, while 61% consider their firms to be in a good financial position. Over a half of those surveyed also stated that their firms are in a better financial position now than a year ago, while over 60% forecast that the financial situation of their firms would be better at the end of 2005 than in 2004.

Very positive assessments are also given of the number of orders received by Polish construction firms. Almost two-thirds of respondents gave a positive assessment of the current state of their order books, while a further quarter of respondents expressed a neutral view. In addition, almost two-thirds of those surveyed predicted that orders would increase further in the coming 12 months.

Construction firms enjoy benefits from Poland’s EU membership
Poland’s membership of the European Union has proved very beneficial to the country’s construction industry. Only 3% of those surveyed stated that Poland’s entry to the EU had had a negative impact on their firms’ situation, whereas 63% consider it to have been an advantageous move.

There is also a rise in the percentage of Polish firms conducting business outside Poland. Of the firms surveyed by PMR, 57% have operations in other countries, out of which 61% operate only in EU markets, 21% both in the EU and elsewhere, and 18% only in foreign markets outside the EU. By far the largest number of Polish firms do business in Germany.

Market success ensured by lasting relations with customers
We also asked what factors have the greatest influence on market success in the construction sector. The replies indicate the most important success factor to be lasting relations with customers. This was confirmed by as many as 76% of those surveyed. Other important success factors in this market include diversification of operations (mentioned by 48% of respondents) and lasting relations with subcontractors (indicated by 44% of respondents).

High taxes and labour costs the main barriers in the construction market

When asked about the main obstacles to doing business in the Polish construction market, respondents most often cited high taxes and labour costs (59%), payment bottlenecks (56%), and complex and frequently changing laws (46%). The managers of construction firms who responded to our survey believe that the government should first of all take action to improve the situation in those areas. According to 40% of respondents the government ought to lower taxes, while 31% believe that it is necessary to change and stabilize the law as it relates to the construction industry.

You are invited to contact the authors of the report:

Szymon Jungiewicz (author of the report)
Senior construction market analyst
PMR Publications
tel. + 48 12 428 03 60

Tomasz Deluga (author of the research)
Market analyst
PMR Research
tel. +48 12 410 21 11

More information about the report:
Marketing Department
Tel. (+48 12) 428 03 61

About PMR

PMR Ltd (www.pmrcorporate.com) specializes in the delivery of high-quality market information and services to firms with an interest in the markets of Central and Eastern Europe. PMR Ltd’s main areas of activity include business publishing, consulting services and market research. In business for 10 years, and offering one of the most frequently visited information portals, PMR Ltd is one of the largest companies in its field in Central and Eastern Europe.

PMR’s survey was carried out among 110 of the largest Polish construction firms, chosen on the basis of their turnover and size of workforce in 2004. Interviews were conducted by telephone in August 2005. The full results of the survey appear in the report “The construction sector in Poland – Development forecasts 2005–2008”, published in November.

PMR
ul. Supniewskiego 9
31-527 Krakow
tel. (4812) 428 03 60, fax (4812) 413 40 12
www.pmrcorporate.com