For some time now, public predictions about the outlook for the construction industry have been cautious to say the least - there has been no shortage of those predicting tough times as costs rise and projects are put on hold.
For some time now, public predictions about the outlook for the construction industry have been cautious to say the least - there has been no shortage of those predicting tough times as costs rise and projects are put on hold. However, the most recent data from the Central Statistical Bureau show that in the first and second quarters of 2023, construction output in Latvia increased by 17% and 15% compared to the same periods last year. The data indicate a steady growth.
Lithuania also recorded growth of 16% and 19% in the first and second quarters. Only in Estonia did construction output decrease by 11% and 14% respectively in the same period, but at the same time Estonian construction export increased by almost half. We can therefore say that the growth in the Baltics is there - we just need to be able to jump on the right wave.
In both the Baltics and the Nordic countries, the development of manufacturing plants, the construction of new buildings, the energy efficiency and the generation of alternative energy (solar panels and wind farms) through innovative construction approaches are important areas. We are seeing a significant increase in private investment in the market.
In Latvia, local manufacturers continue to develop their production facilities and build new buildings. We see particular activity in logistics centres and wood processing companies. Buildings are being insulated and energy efficiency projects are significantly larger than predicted. In Latvia, the volume of building construction has increased by 21.7% compared to the same period in 2022. Of course, the ambitious Rail Baltica project, which is bringing large investments to the Baltic region, cannot go without mention. The military sector is also very active. This suggests that construction will continue its upward trend next year.
There is a business in construction, but how to attract it? Today, the companies that win are those that actively innovate and become more efficient. Storent's strategy to generate more than 40% of its revenue from online orders is a testament to this. Digital customer service, easy-to-use platforms, electronic signing of documents - this is gradually becoming the norm, even in the conservative construction industry.
The availability of new, innovative products is also essential. The mission of rental companies, in partnership with new manufacturers, is to bring innovative products from manufacturers that have not been present in the market before. It is true that, by doing so, it is essential to provide training to customers on how to use the new equipment. This also contributes to customer loyalty. For example, cranes that have been used in Finland for some time are starting to appear in Latvia. Similarly, whereas in the past two people could be seen digging on a construction site and five others standing by with shovels in their hands, the industry is now very familiar with Rototilt, which allows one person to do the work of the whole team quickly and efficiently.
Construction technology continues to evolve rapidly around the world. Storent's digitalisation strategy proves that the industry is capable of much. The sooner builders in Latvia and the Baltics get to grips with the opportunities of the 21st century, the faster both the productivity and profitability of the industry will grow.
Author: CEO of Storent Guntis Grinbergs