Higher cement and steel prices to bankrupt construction companiesPublish date: 27-08-2008
Salary rises and significantly higher construction material prices are likely to lead to deadlocks on the local construction market and even bankrupt some construction companies, according to representatives of the Construction Company Employers Union (PSC).
"Prices for concrete reinforcing bars rose 140-180 percent since the beginning of this year, while that of cement increased some 30 percent, which lead to final construction costs some 30 percent higher. Thus, initially established margins have been exceeded," said PSC's Manager, Adriana Iftime. Contracts are drawn up based on those margins.
"As such, I expect to see contracts cancelled, law suits, work deadlocks and even bankruptcies, as such trends are visible nationwide," she added.
Furthermore, higher labor costs, which make up some 30 percent of a project's costs, will raise difficulties on this segment.
"Overall, personnel costs doubled this year, amid a labor force shortage in this sector, as salaries of specialist workers exceed €1,000. The solution for companies in the field is either to raise salaries or import workers, as is already the case, from China, India or Vietnam," added Iftime.
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