Crisis for very small construction businesses: CAPEB warns of soaring energy and material prices

Overwhelmed by what they describe as "the final straw," professionals in very small construction businesses are raising the alarm about their deteriorating economic situation. The organization is calling on the government to urgently implement a rescue plan for the sector and is putting forward several proposals to this effect.

A surge in costs that weakens very small businesses

Small construction businesses in France are facing a rapid and significant rise in energy costs, particularly for fuels and diesel, which are essential to their daily operations. According to a survey of 2.600 tradespeople, 92% report being impacted by rising fuel prices. Furthermore, over 60% of businesses indicate they have received notices of price increases from their suppliers, effective April 1st, with increases of at least 20% depending on the product. The most affected materials remain wood, concrete, copper, PVC, zinc, and certain insulation materials. Plastic and PVC products are experiencing the steepest price hikes, reaching 15% to 20%, or even more in some segments.

Supplies and prices: growing tensions in the construction sector

Feedback from the field confirms that some suppliers are intensifying their stockpiling strategies, leading to strain on supply chains and heightening expectations of price increases. In several cases, construction professionals report very rapid price fluctuations, with prices sometimes guaranteed for only 24 to 48 hours. This instability significantly complicates the creation of reliable and sustainable quotes. It generates a climate of growing uncertainty and poses a real risk of disruption to construction sites.

Immediate impacts on very small businesses in the construction sector

These changes are jeopardizing quotes already signed, as well as current and future projects, with some price increases occurring after contracts have been signed. Small construction businesses report:

• increased pressure on their profit margins,
• of significantly reduced economic visibility,
• and, in some cases, the need to renegotiate quotes in order to preserve the financial balance of the operations.

A new and lasting inflationary crisis for the building trades

After an initial period of high tension linked to the Ukrainian crisis, during which prices had increased by more than 30% without returning to initial levels, artisans now fear a new, lasting inflationary spiral.

In a sector already weakened by two years of declining activity, CAPEB is warning of the economic consequences: slowdown in renovation work, decline in household purchasing power and weakening of craft employment in France.

A call for a national safeguard plan for very small businesses in the construction sector

Faced with this worrying situation, CAPEB calls on the Government to quickly put in place a safeguard plan for the building trades in order to support activity and preserve jobs.

Anticipating a direct impact on household purchasing power, which could lead to the postponement or abandonment of projects, CAPEB is calling for a change in the VAT rate applied to renovation work, with a reduction to 5,5%. This measure is considered strategic, as it would generate €2 billion in revenue for the building trades sector and safeguard 10.000 jobs, while supporting the momentum of energy-efficient renovations in France.

CAPEB also proposes 15 other measures which it considers essential to enable building tradespeople to cope with this new crisis, without aggravating the structural difficulties already present before the outbreak of the war in Iran.

Mental health of artisans: a mobilization in the face of the emergency

In response to the increasing number of accounts from tradespeople expressing their distress, fatigue, and exhaustion, CAPEB launched a dedicated initiative. With the support of PRO BTP, a discussion was organized between volunteer tradespeople and Dr. Laçon, a professor at APHM in Marseille, focusing on the mental health challenges faced by construction company owners.

For Jean-Christophe Repon, president of CAPEB: “Feedback from the field confirms a widespread concern across all regions. The tradespeople we represent primarily express a strong desire for stability, visibility, and clear economic conditions that will allow them to secure their contractual commitments and maintain their businesses over the long term. It is precisely for this reason that CAPEB urges the Government to put in place the conditions essential for their survival and development.”

Illustrative image of the article via Depositphotos.com.