Construction business is in many ways a volatile business because it is entirely based on investments: somebody is investing to build something. If it is residential, somebody has to invest in houses. If it is hospital, government is investing in public health. If it is new factory, somebody is investing in new production. It is investment related business. And in many parts of southern Europe we see that nobody is investing – not people, not government, not companies.
Peikko has had in one European country a very good customer for almost a decade. This precaster has been technologically advanced, open for new solutions and looking for new ideas to develop the industry. It has been run by a family which has acted modestly, putting money into business and not on fancy cars. The factories have been running efficiently. The sales and marketing has been effective and well-managed. And yet, this company is about to be closing down now.
Why? If e.g. the cement consumption of this given country is this year of 2012 in the level of 1967, something is fundamentally wrong - there is just no commercial activity in this sector. And one single company just cannot do anything for it. Period.
What could be the message to the owners of this company? You have done a good job, but fighting against windmills is impossible. Remember to have an American view, bankruptcy is merely an opportunity to learn for the future. Let´s not act in a “normal” European way where failure in business is making a bad mark for the persons involved rest of their lifes.
To see companies to bust without any reason of their own makes me angry. But this is the life of construction in certain countries in Europe at the moment.