The Polish construction industry enters 2023 in relatively good shape, but it will be difficult without new investments starting in the coming months. Therefore, a lot depends on government investments, financed by the National Reconstruction Plan (NRP) or transitional funds, Ferrovial Group director and Budimex supervisory board member Dariusz Blocher assessed.
“The construction sector, which employs one million workers and has 200,000 companies, enters 2023 in relatively good shape. Companies have improved their profitability, have larger cash reserves and mostly full portfolios. The construction industry sees big multi-year investment plans on the horizon, but questions when they will start and whether we have the money secured for them,” Blocher wrote in a commentary for Business Insider Poland.
He noted that the Government’s National Road Construction Program is 294 billion over the next 11 years, the expected National Railway Construction Program is probably 100-150 billion zlotys, two nuclear power plants are 200 billion zlotys, offshore wind another 100 billion zlotys, energy transition 200 billion, CPK with associated infrastructure 150 billion zlotys.
“All this looks fantastic, but it will start in two, maybe three years, and by then the industry has to manage somehow. And without new government, local government and private investment coming into effect in 2023, it will be very difficult to do so,” he pointed out.
According to him, private investors will not build on a large scale, waiting for the situation to stabilize. Housing, which accounts for 15 percent of the market, will see a 50 percent drop in production, local governments will continue to struggle with high contractor costs and the lack of increased contributions on investment.
“All hope, then, is in government investment, financed by the NIP and the new EU perspective. If there is a problem with this, we should look for transitional funds in the state budget and use private companies’ funds for transitional financing or PPP projects,” the manager assessed.
Blocher considers the prospect of rebuilding Ukraine as “new hope.”
“However, the war in Ukraine will end sooner or later, and if the world’s predictions are to be believed, the whole world will participate in the reconstruction of the country. We are talking about a project that our generations have never realized – a new Marshall Plan. However, in order for this to succeed, we must work on it today, so that in three years we can begin the planned and systemic reconstruction of Ukraine. I see a great opportunity for the Polish construction industry, which in cooperation with Ukrainian companies will participate in this process,” he wrote for Business Insider.
According to him, the reconstruction of Ukraine needs to be approached in a businesslike manner, and a central unit should already be established to coordinate activities on the Polish side.
“We need to approach the project in a businesslike manner – the world will give money for reconstruction, but this time it won’t be aid, it will be business, and if we want Poland and our companies to play a key role in this process, we should already today create a central unit to coordinate our activities on the Polish side (the same should be created on the Ukrainian side). We should create a budget of several hundred million euros, financed from state funds, for the preparation by Polish-Ukrainian consortia of reconstruction plans, architectural concepts, conceptual and construction projects. These are not large funds to begin with, but whoever has the projects will control the situation later on, after all, we will not be able to afford the tens of billions of euros that other countries will allocate for such reconstruction,” Blocher wrote.
“If Ukraine really seizes its chance and creates good, partnership and friendly conditions for construction companies to support the reconstruction process in that country, it will probably be a huge competition for materials, human resources, machinery, etc. for the domestic construction industry. If even more companies see that there will be better money to be made on foreign projects, the domestic construction industry will have huge problems,” he concluded.
Source: Business Insider and IBSNews
