In contrast to sectors such as trade, tourism or transport, the construction industry has survived the first phase of the Corona crisis with ease. Iris Ortner, the managing director of IGO Industries, fears that this will not remain the case. This group of companies, built by her father Klaus Ortner, includes Elin, SE-Bau, UBM Development AG and of course Porr AG.

"Wiener Zeitung": At the end of March, Porr AG said that the majority of the approximately 1,000 construction sites that the group operates in Austria had been shut down. How many are currently working on again?

Iris Ortner: Around 98 percent of the Porr construction sites are already working again. The situation was extremely difficult for us in the very first few weeks because it was completely unclear. At the end of March, social partners and the labor inspectorate defined rules of conduct in the construction industry, which worked well. Most of the construction sites have been active again since Easter. This also applies to the area of ​​technical building equipment.

Iris Ortner heads the operational business of the IGO Industries group. The mechanical engineer is also on the supervisory board of ÖBAG and Porr AG, which was brought up by her father. - © Hans Schubert

The construction industry is one of the problem areas when it comes to abuse of short-time work. It is said that the inspectors find what they are looking for on up to a third of the construction sites. With you too?

Two companies in our group, Porr and Elin, have already been audited and there have been no complaints. The regulations on short-time work are, however, extremely complicated, and there is no need for an intention to defraud behind a mistake. However, where there is an intention to defraud, the legislator must act with the utmost rigor.

A survey estimated the loss of sales in the construction industry at the end of April at 1.8 billion euros, but was optimistic that this could be made up for by the effects of the pull-back. Are you also so optimistic?

I am much more skeptical because the construction industry has been hit twice by this crisis. The first time with the construction stop in mid-March, we are now coming out of this phase, and there is actually a pulling effect here. However, the general conditions have also changed, due to distance rules, staggered work start, mask wearing and others, which lead to delays and additional effort, which in turn has an impact on the construction costs. The crisis of 2021 and 2022 will hit us for the second time because we assume that there will be a gap if no decisions and preparations are now made for new construction projects. Just one example of many: The expansion of the terminal at Schwechat Airport is now unlikely to be implemented because the volume of travel is not foreseeable.

What cost increases can be expected: 5, 10, even 15 percent?

We have only been working under the changed corona conditions for six weeks, which is still too short to be able to assess it precisely now. In addition, each construction site has different framework conditions.

And who will have to shell out the additional costs?

Where the Önorm applies 100 percent, cost increases due to force majeure are assigned to the client. In any case, we have to raise the additional costs and reach an agreement between the client and the construction company for each project, because both are dependent on each other. We have no experience here yet.

What drop in sales should the construction industry expect in 2020?

I expect 2020 won't be our biggest problem, I'm more worried about the 2021 and 2022 stop buttons pressed. Not only in the public sector, for example at community level, also in industry. And it is certain that this will cause prices in the industry to drop sharply.

You were just talking about rising costs.

We will have both: Rising costs due to the new requirements on the construction sites and falling prices because all companies will fight for every single order - and this with the already low margins in the industry. The real drama will lie in the decline in margins - and that with low profitability anyway.

What needs to be done to get the construction industry through the crisis?

The prices will drop, so now would be the time for every developer to prepare projects and implement them next year. It would also be important for the government to mobilize available private investment capital through incentives, such as significantly higher depreciation of construction costs in the first few years. In the 1970s, the level was 50 percent in the first year. That would be a cost-effective solution for the state, it is effective, can be easily timed, secures jobs and flows directly into value creation. It would also be central, and not just for the construction industry, to bring important industrial sectors such as pharmaceuticals back to Austria. Investment support in the field of climate protection also has added value. And we basically need to improve the equity base and incentivize

You are also on the supervisory board of ÖBAG. The takeover of systemically relevant businesses in an economic imbalance was discussed. Is there a wave of nationalization?

I perceived this primarily as a media debate. So far, as a member of the supervisory board, I have had no concrete proposal. As an entrepreneur, I'm naturally not a fan of nationalization. However, I think it is very central that Austrian interests are now increasingly being perceived again in companies that safeguard the foundations of the domestic business location and that are also supported by foreign investments.