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Construction sector: a gradual and much-anticipated recovery

 

For almost two months, the construction and public works sector, heavily impacted by the health crisis linked to Covid-19, has been one of the most seriously affected sectors in Île-de-France and Normandy. In fact, INSEE estimated that 79% of activity was lost due to health measures introduced within the context of the pandemic. 

Different impacts for different sectors :

  • Construction and recycling materials industries: natural aggregate production and recycling sites, ready-to-use concrete production units, grinding stations and construction waste storage and recycling sites, although in limited operation, remained operational during this period to meet demand.
  • Building: recovery is underway. In the Île-de-France region, an estimated 61% of companies were shut down in the second half of April, compared to 67% in the previous fortnight. With this in mind, the Federation of Île-de-France Real Estate Developers announced at the end of April that 30% of the real estate development projects had resumed work.
    However, in early May, the proportion of construction sites back in operation was 61% in Normandy and 28% in Île-de-France. Normandy therefore appears to be less affected than the Île-de-France region, whose work in dense urban areas has been more constrained, thus reflecting a more complex resumption of works.
  • Public works: This sector has been the most affected with more than 90% of companies declared shut down according to the flash survey conducted by the National Public Works Federation during the week of 8-16 April.
    However, in connection with the resumption of large-scale construction sites in Île-de-France (extending from RER E to the west, construction of the 15 South line station in Vitry-sur-Seine and Pont de Sèvres station), there has been notable use of the river route for the removal of construction waste.
    In continuation of this, the reconstruction work on Notre-Dame Cathedral in Paris has been restarted: a second transformer needs to be transported by river from the port of Bonneuil-sur-Marne to Île de la Cité.

A significant impact on maritime and river transport

This disruption within the construction and public works sector impacted port traffic in March and April.

  • Maritime traffic: most players in marine aggregate and solid rock have seen their tonnage decrease.
    In addition, as grinders have received hardly any ships, clinker/slag flows have declined by about 35%. 
  • River traffic: deliveries have also fallen according to Voies Navigables de France. In April, they accounted for 25% of the tonnages achieved in the same period in 2019 for aggregates. Shipments of spoil by barges/self-propelled vessels have also halted. In this context, some soil-processing companies have been forced to resort to partial unemployment due to lack of activity.

Towards a resumption of activity in June?

Following this relatively difficult period for stakeholders, quarry workers and cement producers are planning a return to normal from June - or even before - as evidenced by the following examples: 

  • Resumption of deliveries to construction concrete plants along the waterway;
  • Siemens plant aggregate supply market starts in mid-July (400 ktonnes of aggregates 12 months);
  • Return to normal in the pace of bulk cement deliveries.

On the other hand, no soil reclamation operator has communicated its short-term flows (apart from those in Greater Paris). However, professionals remain confident in the medium-term prospects of this sector, given the challenges of brownfield site clean-up.

Professionals push for a revival plan

Despite the resumption of major infrastructure projects in Île-de-France, as mentioned above, and the gradual reopening of construction sites, companies are being forced to reassess their 2020 budget downwards.

In addition, the professional federations are alerting the public authorities to the fragile financial health of construction companies, the extra costs generated by the application of physical protection measures to combat Covid-19, and the slowdowns felt for more than two months in the granting of planning permissions.
A return to normal that’s much anticipated when we recognise the importance of this sector in terms of jobs and its "ripple effect" on the rest of the economy.

 

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