Cost of building repairs rising in spite of recession

Union leader blames "profit taking" by shady companies

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With poor economic times, it should be a buyers’ market for those wanting to commission building repairs: there is plenty of labour available, so prices should be going down, as contractors compete for the little work that is available.
      However, that is not the case. According to a survey by the Finnish Real Estate Management Federation, prices of small repair jobs costing less than EUR 100,000 have risen, and it is difficult to find workers for the jobs.
      Of the nearly 500 building managers responding to the survey, one in seven said that prices of building improvement contracts had risen by more than ten per cent. One in four said that prices had risen “somewhat”.
      The trend is similar in larger repair jobs of over EUR one million. Their prices have also gone up, but it is easier to find contractors for them.
     
“This is certainly a somewhat strange result, with such a large group of building managers saying that prices have gone up, even though there is a slump in the field, and many construction workers are unemployed”, says Tero Heikkilä, chairman of the Real Estate Management Federation.
      One possible explanation for the unexpected situation might be that the state has granted a provision for a 10% subsidy for repairs in apartment buildings. The aim of the subsidy was to promote employment in the construction industry by encouraging repairs in dilapidated buildings.
      The government recently extended the programme, which will now be available through the beginning of March next year.
     
The survey by the Real Estate Management Federation suggests that the impact of the repair subsidies has been cancelled out by higher prices being charged for repairs.
      Heikkilä says that the explanation for the extraordinary situation is that there are simply not enough professionals in the building repair business.
      “Clearly, people do not move from the construction of new buildings into building repairs. They do not know how to do that work”, Heikkilä says.
     
Construction Trade Union Chairman Matti Harjuniemi says that construction workers are capable of both building new structures and repairing old ones.
      “However, for companies, moving from new construction to repairs is not necessarily an easy step. There is not the know-how in controlling the risks that emerge on the repair side. Surprises and losses come easily”, Harjuniemi explains.
      Of the 85,000 members of the Construction Trade Union, 8,600 were out of work at the end of August, which is more than double the amount at the end of last year.
      Harjuniemi says that the problem involves “profit-taking” by small contractors.
      He also charges that many small companies hire mainly foreign workers, and pay them less than labour contracts require.


Previously in HS International Edition:
  Construction of new buildings down by a fifth in early 2009 (26.5.2009)
  One in four construction workers facing unemployment (9.3.2009)

Links:
  The Finnish Construction Trade Union

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