The construction industry is plunging into an increasingly deeper crisis, with smaller firms going out of business

Prague - Construction companies in the Czech Republic are being destroyed by a four-year crisis in the industry. Many smaller firms, which do not have financial reserves, are closing down. Others are forced to lay off employees. According to representatives of some companies, the current situation is caused by low prices and the fact that contracts are won by companies that work for less than their actual costs. There is also a shortage of state contracts. Large companies are trying to counter the crisis by strengthening their activities abroad.
    According to the head of the Plzeň branch of the Czech Union of Construction Entrepreneurs, Jan Muzika, performances in transport construction have fallen by 30 percent across the Czech Republic and in the Plzeň region over the past four years, while in building construction it has decreased by up to 20 percent. Furthermore, hundreds of employees are leaving the construction sector, making them hard to find, and fewer young people are enrolling in schools. In the past four years, a quarter of companies with more than 50 employees have ceased to exist in the Czech Republic and in the Plzeň region; there are no figures for smaller companies. Companies often operate at a loss just to keep at least some employees. However, the lack of funds is leading to a decline in quality.
    Many business owners claim that today, only price is considered in tenders. "We offer a price of six million, the company that wins offers it for four million. Meanwhile, it is a demanding house. The company has been around for a year, has no references, and is registered under a twenty-year-old girl, nevertheless, the investor chooses her, and our references do not help us," said Ondřej Tomeček, managing director of the Frýdek-Místek company Tomeček Bau, to ČTK. According to many, the winning companies have only two options with their offered low price - to perform the work poorly or not to pay their suppliers.
    Companies across the Czech Republic are fighting for survival. For example, in the Liberec region, two dozen construction companies with more than 50 employees completed contracts worth 3.279 billion crowns last year, a decline of more than 40 percent compared to 2009. In the Central Bohemia region, companies have to settle for smaller contracts instead of large development projects. In many regions, builders see the lack of state contracts as a major problem.
    Some companies, particularly the larger ones, are trying to combat the crisis by strengthening their exports and activities abroad. The Otrokovice group PSG, which is one of the largest construction companies in the country, especially benefited from projects in Russia, increasing its turnover by about two billion crowns last year despite the crisis in construction. Cidem, a manufacturer of construction materials from Hranice, has reported lower sales in the first months of this year, but last year it was still able to slightly increase its revenues, mainly due to growth in sales in Austria and Poland.
    The fifth-largest construction company in the country, OHL ŽS from Brno, expects a revenue increase of about 30 percent to 12 billion crowns this year. One reason is the contracts obtained abroad. Large companies from the Vysočina region also want to strengthen their foreign activities. For example, the PSJ group, which employs nearly 800 people, obtains a significant portion of its contracts abroad; in recent years mainly in Russia, Slovakia, Southeast Asia, and Arab countries. One of the largest Czech manufacturers of interior doors and frames, Sapeli Center, is trying to establish itself in Slovakia and Austria.