Construction: rising costs put pressure on margins

Workers consult a site plan.

(14.12.2022) Construction continues to be stable in 2022. According to the Swiss Contractors' Association (SCA), industry sales reached CHF 6.2 billion in the third quarter. However, rising costs for materials and personnel are causing profit margins to fall.

Construction companies' revenues remain at a similar level as 2021. However, the increase in building materials and labor costs will lead to a relatively sharp decline in margins, averaging 2 to 3%. This is because construction companies cannot raise their service prices to fully compensate for higher production costs.

Demand for housing construction remains strong, with orders totalling CHF 5.7 billion between January and September 2022. However, the sector as a whole, which includes commercial and industrial buildings as well as offices, recorded a year-on-year decline in orders of 1.5% (CHF 47.7 million) in the first three quarters. In civil engineering, sales declined by more than CHF 91.1 million (-2.9%) in the same period.

New orders fell by 8.4% in the third quarter of 2022 compared with the same period of the previous year. However, civil engineering seems to be doing well with an increase in orders of 18.3%.

While the construction sector currently employs 91,500 people and unemployment remains very low, the SCA calls on companies to consider employee demands for more flexibility in negotiations on the National Agreement (NCA) to retain this skilled workforce in the long term.


Last modification 14.12.2022

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