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The construction industry in Poland is experiencing a collapse for the third time since the country’s accession to the EU with over 700 companies in the sector declaring bankruptcy so far this year.
This comes in the aftermath of stagnation in all industry segments. In the last two to three years, there has been a huge decrease in the number of tenders for construction work, which has played a major role in the current collapse.
After nine months into 2024, the number of insolvent entities in the construction industry is already 40 percent higher than in the same period of the previous year, and 10 percent higher than in the whole of 2023.
Small companies involved in installation, renovation, and general construction are currently in the most trouble.
This is the aftermath of stagnation in all industry segments — both in private construction, covering mainly apartments and houses, as well as in public projects, such as roads and rail lines. In particular, the last two to three years have recorded a huge decrease in the number of tenders for the reconstruction of railway infrastructure, which was due to a lack of EU funds. The previous conservative government, Law and Justice (PIS) faced a funding freeze over “rule-of-law” issues by the EU, which had knockdown financial effects for many industries.
Marcin Ogulewicz from Coface, indicates that the industry is experiencing a delay in implementing money from the National Reconstruction Plan, permanent collapse in rail investments, protracted and unproductive discussions on the energy transformation, and general inertia resulting from the government review of investment projects. In his opinion, the industry’s goal for the coming months is to survive until the expected funds from public programs are mobilized.
At the same time, there are some potential bright spots. The stagnation seen in the first half of the year has slowed and now construction is picking up. Contracts are being signed, with road construction firms concluding 34 contracts for route sections with a total length of 443 kilometers, and the value of rail construction projects of about PLN 17 billion has already been signed since the beginning of the year.
However, one project which was set to boost the construction industry is currently in limbo. The Central Communication Port (CPK) outside Warsaw, which would involve an airport, rail, and bus lines faces a somewhat uncertain future. The new government under Donald Tusk has scaled down the project significantly and its construction may only begin at the end of 2025.