Small firms behind 91% of construction bankruptcies

While Sweden’s construction sector saw a modest decline in bankruptcies during the third quarter, smaller contractors continue to bear the brunt, with micro-firms representing the vast majority of failures.

Bankruptcies decreased by seven percent in the construction industry during the third quarter, compared to the same period last year.

But even though the trend is slowly moving in the right direction, there’s one group that’s still struggling significantly.

“It’s primarily the smaller construction companies that are still struggling to make the numbers work,” says Johan Deremar, economist and head of forecasting at Byggföretagen, the Swedish Construction Federation.

Between July and September, 325 construction companies in Sweden went bankrupt. Only one of these had more than 50 employees. And in as many as 91 percent of the bankruptcies, the companies had fewer than ten employees.

“A Pressured Small Business Sector”

A total of 866 employees were affected by a construction bankruptcy during the quarter. That’s a decrease of 36 percent year-on-year.

“That’s why it’s disappointing that the increased ROT deduction won’t be extended beyond the new year. There’s now a risk that activity around renovation and extension projects will decline, in an already pressured small business sector,” says Johan Deremar.

The most positive development can be seen in Norrbotten. There, the number of bankruptcies decreased by a full 63 percent. Halland went in the opposite direction. There, bankruptcies increased to twelve, seven more than the same period last year.

“We’re seeing reduced construction bankruptcies in just over half of the counties,” says Johan Deremar.