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Four construction firms close per day in Portugal

By CHRIS GRAEME [email protected]

Four Portuguese construction companies a day are filing for bankruptcy, with no signs that the numbers are abating according to the president of the Portuguese construction companies association AECOPS.

Ricardo Pedrosa Gomes says that the economic crisis has led to the cancellation of public works projects in the country and that the civil construction industry is on the brink of collapse.

The residential housing market is stagnant, companies are suffering from a lack of liquidity as banks cut off credit supplies, international investment has fallen to just 3% of the total, while those Portuguese companies in the sector that are surviving are doing so because of projects abroad.

Around 15% of Portugal’s unemployed come from the ailing construction and related sectors, according to statistics from the national statistics institute INE.

But AECOPS says that even a reduction in staff and costs does not seem to be enough to redress the situation.

One of Portugal’s leading construction companies, Soares da Costa has announced that it will have to slash its number of workers by over 800 to avoid going out of business.

But since this is not legally possible, the company’s directors have requested a meeting with the finance minister, Vítor Gaspar, to demand exceptional measures to avoid closing its doors.

In a communiqué from its executive board, Soares da Costa says that it is “premature to indicate concrete numbers, but it will have to slash staff numbers to the “minimum required to enable normal operations and sustainable economic development”.

Payment delays

Opway too, which is 100% held by the Espírito Santo Group investment company Rioforte, announced recently that it had to shave 200 staff from its payroll because of falling contracts on mainland Portugal.

Citing contractions in public and private investments in infrastructure, constraints in financing, and ever increasing payment delays from clients, Opway says that it has been “forced to adapt to circumstances”.

“In the short term, the only measures that can offset these effects are the prompt payment of State invoices to the sector, which are estimated to be worth €2 billion,” says the AECOPS president.

The three Portuguese construction companies quoted on the Lisbon stock market Euronext Lisboa – Mota-Engil, Soares da Costa and Teixeira Duarte – had a total debt of around €3.1 billion by the end of the first half of 2011.

On June 30, Mota-Engil was owed €1.17 billion, Teixeira Duarte was owed €1.15 billion and Soares da Costa, €785 million.

If to this sum the debts of some of the other major construction companies are added, such as Somague, Edifer, Opway, Lena and MSF, the amount rises to €4 billion.