Construction market in 2008: from boom to agony

Most affected by the drop of real estate transactions and blocked investments were companies in the finishing material segments, which lowered their initial sales targets. The thermo insulating carpentry market, which boomed to €1 billion in the past years, stagnated in 2008, though players in the field had expected a growth rate exceeding 15 percent. The paint market was another victim of the crisis, with a five percent growth rate, 10 percentage points below estimates.

The cement market, the main engine of the construction sector in the past years, rose 15 percent, although producers expected a 20-25 percent growth for 2008. The massive demand for cement in the past years, determined the three local producers Lafarge, Holcim and Carpatcement, to invest tens of millions of euro in expanding capacities in the coming two years.

Postponed investments in the construction sector in the past months doubled the number of bankruptcies in the field, to as much as 1,200 companies, compared to 525 in 2007.

The largest 2008 deal in terms of value was the takeover of majority packages of seven companies in the Simcor Oradea group by the Macon Deva construction material producer. The value of this acquisition was €53 million.

A radical change in the construction sector is affecting personnel. While the workforce deficit was estimated at 100,000 people at the end of 2007 and the first half of 2008, and companies had to import workers from China and India, the economic crisis will lead to some 75,000 layoffs by March 2009, according to the Association of Romanian Construction Entrepreneurs (ARACO).