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The Swedish Construction SectorThe Swedish Construction Sector
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The Construction Sector TodayThe 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 450 000 employed in the construction /housing sector in total - of which 250 000 employed in ”pure construction”.
• 60 000 companies in the construction sector - 10 000 with employees.
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The Construction Sector TodayThe Construction Sector Today
• A severe recession / depression 1990 – 1993
• A rapid recovery during the last years
• A ”boom market” 2006 - 2007
• 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
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No of employees
Källa: SCB
0 10 000 20 000 30 000 40 000 50 000 60 000
1-4
5-9
10-19
20-49
50-99
100-199
200-499
> 500
Number of EmployeesNumber of Employees in construction companies 2000in construction companies 2000
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Construction investment Construction investment % of GDP% of GDP
0
2
4
6
8
10
12
1985 90 95 00 05
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Källa: SCB, BI
Construction investmentsConstruction investments
Mdkr
Sector 2006
Residential Construction 91,4
Other housing 72,1
Infra structure 62,3
Total Construction Investments
225,9
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Construction as percentage of GDP, 2004
0,00
2,00
4,006,00
8,00
10,00
12,00
14,00
16,00
18,00
20,00
www.bygg.orgwww.bygg.org
No of apartments started 1950-2006No of apartments started 1950-2006
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
100 000
110 000
120 000
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Källa: SCB, BI
www.bygg.orgwww.bygg.org
Regional construction investments in 2005Regional construction investments in 2005SEK mnSEK mn
61012601340141016001720185018601910193022002400250027402770282029603000
34003550388040704210
898010200
26790
0 5000 10000 15000 20000 25000 30000
Gotlands länSjuhärad
KristianstadBlekinge län
Örebro länVästmanlands län
Jämtlands länGävleborgs län
Kalmar länSkaraborg
Dalarnas länKronobergs län
Södermanlands länVärmlands län
FyrbodalVästerbottens län
Norrbottens länÖstergötlands län
Hallands länVästernorrlands
Uppsala länJönköpings län
HelsingborgGöteborg
MalmöStockholms län
Källa: BI
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””Hot” topicsHot” topics
• General perception and knowledge of the sector
• Uncertain playing field
• Labour costs
• Internatialisation
• Industrialisation
• Shortage of labour 10 years ahead?
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In the general debate the picture is…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
www.bygg.orgwww.bygg.org
In reality….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…
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Housing stock by ”vintage” within EUHousing stock by ”vintage” within EU
0%
20%
40%
60%
80%
100%
Irlan
d
Fin
land
Luxe
mbu
rg
Ned
erlä
nder
na
Öst
errik
e
EU
-sni
tt
Spa
nien
Gre
klan
d
Dan
mar
k
Sto
rbrit
anni
en
Sve
rige
Tys
klan
d
Bel
gien
<1919 1919-45 1946-70 1971-80 >1980
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0 500 1000 1500 2000 2500 3000
Greece
Sweden
Netherlands
Germany
France
Spain
EU-avg
Ireland
Finland
Italy
Denmark
UK
EUR/sqm
Construction costs (high quality)for apartment houses in EU 2001
Källa: Gardiner & Theobald
www.bygg.orgwww.bygg.org
Housing costs as % of total consumptioncosts in EU 2004
0 5 10 15 20 25 30
Irland
Grekland
Storbritannien
Italien
Österrike
EU-snitt
Portugal
Frankrike
Finland
Belgien
Nederländerna
Luxemburg
Danmark
Spanien
Sverige
Källa: European Housing Statistics
www.bygg.orgwww.bygg.org
Productivity in the Construction Sector
0
20
40
60
80
100
120
US
A =
Inde
x 10
0
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Sustainable constructionSustainable construction
• Cooperation within ”Byggsektorns kretsloppsråd”
• BASTA – A EU-life co sponsored projekt
• Own projects – chemicals, energy, waste
• Include environment/sustainability in ”everything”
www.bygg.orgwww.bygg.org
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”.
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The Constructions Sector faces tougher international competition and a rapid restructuring process?
Will we succeed?
www.bygg.orgwww.bygg.org
Foreign companies on the Swedish Foreign companies on the Swedish construction marketconstruction market
Igår : En skyddad sektor Yesterday: A sheltered sector
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Tougher competetionTougher 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…
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What have other sectors done?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
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Why should the Swedish construction Why should the Swedish construction sector succeed?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
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To ConcludeTo 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