TALLINN - Sales of new construction equipment have plummeted in the Baltics, with some Estonian businesses reporting a drop of more than 90 percent in the past year.
In January this year only nine pieces of construction equipment were sold in Estonia. In comparison, 116 machines were sold during a similar period in 2008.
According to leading Estonian construction equipment dealers the sharp decline was almost unprecedented.
"During the last few months the selling of construction equipment has fallen about 70 percent in comparison with the previous year," the chief executive of the Estonian Union of Construction Companies, Indrek Peterson, told The Baltic Times.
"It is very hard to give any predictions but I can say that this year will be the hardest one. We hope that there will be some growth in the building sector from spring next year," he said.
He also added that any improvement in the current situation depended on future government action.
"In summer of 2007 there were about 85,000 employees in the building sector, however, today there are only 70,000 left," Peterson said.
Peterson forecasted that between 30,000 and 35,000 employees will remain in the building sector, all the others will remain unemployed.
The reason for the grim predictions is that the growth of building construction has stopped.
"We really hope that the situation will get better by spring 2010," said Peterson.
At present, sales volumes have fallen 92 percent, reported Estonian news portal postimees.ee on April 5.
At the current sales rate contents in warehouses will suffice for the next 10 years.
COMPANY GROWTH
Despite the dramatic contraction in the construction market 127 new companies registered to obtain a construction license in January this year.
"Everything is simply explained 's the majority of large construction companies reduce managers at the higher and middle levels who, using the communications and knowledge they have [then] decided to start up their own business," Peterson explained in an April 6 press release.
Figures from the Register of Economic Activities show there were 5908 construction companies registered in Estonia in 2008.
According to the latest data there are about 6006 companies now registered in Estonia.
In a survey conducted at construction exhibition "Eesti Ehitab 's 2009" more than 70 percent of respondents believed the industry would see a revival within the next two years.
Only 5 percent of respondents believe the construction industry is likely to show signs of improvement this year.
According to the poll 80 percent welcome intense competition in the construction market of Estonia, and also consider the current crisis necessary for the market in order to separate the strongest and the most experienced companies from the weaker ones.
More than half of the respondents polled think prices for construction materials and labor have changed as a result of the crisis.
Enno Rebane, chief executive of the Estonian Union of Manufacturers of Construction Materials said current changes in the building sector had come quickly.
"One year ago during a similar survey 64 percent of enterprises expected growth and only 10 percent predicted recession. However, many are now adjusting today for the future and the most pleasant thing is that we can feel the positive mood concerning intense competition," Rebane said.
