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Construction sector in crisis

by CHRIS GRAEME [email protected]

If the Portuguese construction sector goes down, it will take the banking sector and employment with it.

This was the stark warning from representatives of the associations representing a sector which employs 770,000.

The construction sector in Portugal represents 20% of the country’s GDP but without a concerted national investment plan, unemployment will soar to 20% in Portugal and many banks owed money from the sector will go under.

“If we join the construction companies to those that produce building materials and the real estate sector, it is easy to see that the three areas are the biggest employers in Portugal after the State sector,” said the President of the CPCI (Portuguese Construction and Real Estate Confederation), Reis Campos.

“If the construction sector goes under, one thing is certain, the country will not be able to recover its GDP growth and the collapse will take the banking sector with it because it is exposed by 67% to the sector,” he warned.

According to the latest report from the CPCI, on average five companies a day are filing for bankruptcy in the sector and 160 employees lose their jobs.

And according to another construction federation (Fepicop – Federação da Construção), business owners in the sector are “more pessimistic than ever”.

Since 2002, the industry’s fortunes have seen a gradual decline: accumulated falls in production of 40% and the number of jobs lost in the past nine years soaring to 236,000.

According to the same entity, its members only have projects on their order books for the next eight months.

CPCI president Reis Campos admitted that the sector had already “begun to collapse” and warned that “if we don’t seriously begin a plan of public works and urban regeneration, another 140,000 jobs will be lost and unemployment will rise to 20%”.

“In one way or another, all building companies are trying to do something to avoid going under,” says Fepicop president Ricardo Gomes.

“There isn’t a single company in the sector that isn’t looking at their structure to see how they can slim down and cut costs.”

This goes as much for the larger companies in the sector that have a multi-million euro turnover, like Mota-Engil and Soares da Costa, the latter which is undergoing a major restructuring programme and could shed 900 jobs, as it does for the medium-sized ones like MonteAdriano which in 2009 turned over €340 million but which is now already having problems paying salaries on time.