STRABAG Group adopted a sustainable development strategy. Interview with Mr. Wojciech Trojanowski, member of STRABAG Management Board
You have been working for STRABAG since 1996. What can you say about infrastructure and construction development in Poland over the years?
These are very incomparable periods and I think that if we look at the last 25 years, we can see how much the Polish investment landscape has changed, looking from the perspective of infrastructure and construction development. We have made huge progress in Poland in terms of the development of a modern road network, modernization of railroad lines or expansion of ports. There is a huge progress in general construction. Please see how our cities have changed, how many new commercial buildings have been constructed. The construction industry itself has grown during this time. We have made incredible progress primarily due to investments from EU funds, as well as domestic funds. There has been progress on investments in environmental protection. There were also social changes, the mobility of Poles increased. Besides, the regions have developed. Investors appeared, who see their future in the regions and create new jobs there. After 25 years Poland is a completely different country.
The construction industry is considered one of the industries least affected by the COVID-19 pandemic, however, at some point there have been problems with the availability and pricing of construction materials. How has this affected and will it affect the construction industry?
I would not want to compete with any industry on whether the construction industry is more or less affected by COVID or not. Obviously, looking at the administrative restrictions on doing business that have been put in place across the country, one could say that the construction industry is fortunate that there have been no lockdown restrictions on doing construction business in Poland, and that is certainly something to be happy about. However, the COVID epidemic has obviously affected the construction industry. The pandemic is not over yet. We are continuing to take steps to protect our employees. Our priority is to take care of the health and lives of our teams, to apply all the rules of occupational health and safety. We have introduced a new organization of work on our construction sites. We counteract, as much as we can, to limit the creation of virus outbreaks. We have changed the rules regarding accommodation and commuting to work and the use of common areas of offices. The risk of infection is still high. In addition, this generates costs that we have been incurring in this area for nearly two years to ensure continuity of production. COVID has also interrupted some supply chains. There have been shortages in terms of construction materials, as well as spare parts for machinery and equipment. On the other hand, what has certainly surprised us all in 2021 is the dramatic increase in prices and the progressive inflation. We observe it, not only by paying for everyday purchases. This process, in the construction industry, started much earlier. Since the beginning of the year, steel prices have been rising in an unprecedented way. The continuing rise in oil prices has had an impact on rising asphalt prices. In addition, we have very high pressure on wages. These cost issues are the biggest challenge for the industry. The valorization clauses, which are as low as 5% in long-term infrastructure contracts, do not fully capture the cost increases. This will certainly be the biggest challenge for the industry in the coming years as well, because all macroeconomic forecasts predict that this inflation will stay with us for longer, so the cost increases will be even greater.
The construction industry is considered a barometer of the economy. What are the forecasts for the coming years?
Construction and assembly production has increased. In our opinion, in the coming years, we can expect that the industry will continue to develop. Of course, the biggest danger for the industry will be the growing inflation, which may result in organic implementation of some projects. Investors will be forced to change their budgets, however, it may turn out that due to the limitation of financial possibilities, some projects will not be implemented further. It is the rising inflation that may cause the construction market to shrink in the future. Of course, the public and private investment sectors should be separated. In medium-term forecasts, we assume that Poland will be a full beneficiary of all EU funds earmarked for infrastructure, whether in the form of non-refundable or loan financing. Financing of central and local government investments, based on these funds, will be able to be maintained . We also assume that the national funds will be used to continue the national road modernization program. This also concerns local investments financed by Bank Gospodarstwa Krajowego. We also count on large investments in health care announced by the government. Of course, only part of the funds will be directed to equip health care facilities. The announced funds will also result in high demand for construction and modernization of health care facilities. In recent years, other sectors which generate demand in the construction industry have accelerated – I am thinking here of industrial construction, or projects carried out in the field of warehouses and logistics centers – here we are also an active player in this market.
Another important problem, which has a huge impact on the development of the construction industry are limitations in the availability of workers. Fewer and fewer people want to work on construction sites, and it is becoming increasingly difficult to recruit new employees from abroad. The pandemic has reduced the mobility of workers from outside the country and it is unclear what the future years will look like. Another concern is the availability of materials. Supply chains related to supply and ensuring continuity of the construction process will play an increasingly important role. We are all competing for the same resources in Europe. Let’s remember that not only Poland will be a big construction site. Also other countries will take advantage of the European programs to improve, among others, communication infrastructure, health care, investments in digital infrastructure or improving access to the Internet. All this generates construction demand, consumption of construction materials and energy, which may cause an increase in costs. Therefore, the better the planned investments, the more consistently all plans will be implemented. At the same time, care should be taken that they are spread over the years, so as not to lead to the development of an investment bubble and not to increase inflation. I believe, however, that in the medium term, the construction industry in Poland has a chance to grow. This growth will continue, provided that the continuity of investments is maintained.
In your opinion, is the construction industry in Poland ready to introduce innovative solutions in the spirit of ecology?
The construction industry has been introducing innovative solutions in the spirit of ecology for years. Here are some examples – the continuous development of asphalt technologies, including those with the addition of rubber granules, which on the one hand manage waste in the form of used tires, and on the other hand reduce the consumption of raw materials in production. We are also working on lowering the temperature of mixes. For years, the construction industry has been demanding an increase in the share of local materials used in the construction of road and railroad infrastructure in order to reduce logistic costs and the burden on the environment caused by the heavy transport of materials over long distances. We offer our private clients investing in commercial buildings a lot of interesting energy-efficient solutions in terms of passive buildings, innovative facades or installations and management solutions. Roughly half of the carbon footprint is said to occur during construction and the other half during the life cycle and operation of a building. Therefore, solutions are being offered that reduce the energy intensity of a building during its operation. There also needs to be an awareness on the part of public investors of how important this topic is. The construction industry should be more motivated to offer such solutions, which should be taken into account when choosing offers. We have a lot of people involved in pro-environmental projects, such as the BIM methodology, which optimizes planning and reduces wastage on construction sites, unnecessary collisions or repairing defects. We are able, together with our investors, to discuss and propose many interesting solutions.
One of STRABAG’s values is “sustainable development”. What are STRABAG’s activities in this area? What do you think sustainable investment means?
STRABAG Group has adopted a sustainable development strategy, which assumes that by the end of 2040 we will be a zero-emission company. I know that it is difficult to imagine it today. It is not supported by the rather traditional approach of the industry to this issue, and especially by the hitherto approach to the issue of consumption of natural resources or fossil fuels. In STRABAG we are working on it in many aspects, including powering our machines, so that eventually most of them will be electrically powered. We are developing an electric fleet, we have an ambitious plan of zero-emission office by 2025. Based on digital technologies, we want to make our administrative processes zero-emission. This is one of the most important strategic agents for the entire STRABAG Group. All managers are responsible for this and have certain tasks to complete as part of their local sustainability strategies. Elements of the strategy have to be developed locally, because something different can be introduced in road construction, something different in volume construction. We rely here on our collective wisdom, on the ideas of hundreds of our young and committed employees, who often have a different, more open outlook on environmental issues. I believe that we will be able to implement a great many ideas that contribute to our zero-carbon status. The goals we are setting ourselves as a whole, which are in line with those of the European Union, we will be able to achieve over the next several years.
What challenges does STRABAG still face? What are the company’s further development plans?
We are one of the market leaders in all segments of the Polish construction industry, and we want to remain so. We want to be profitable in all construction sectors in which we operate and we will achieve it. We are one of the best employers in the construction industry and we will continue to develop this. In the coming years, we will strengthen our position on the market so as to play an even greater role in all segments of the construction industry. Besides, we are and will be, above all, a reliable partner for our investors and all market participants.
The last nearly two years we have all spent in the shadow of the COVID-19 epidemic, but despite the difficulties we have managed to come through this time very well. For several years we have had the largest portfolios of orders exceeding PLN 7 billion. We realize productions at least at the same level as in the previous year, that is about 5 billion PLN. We have a record number of employees in the entire capital group – there are already over 6.5 thousand of them. We run our business processes professionally, taking into account all our strategic objectives, including those related to sustainable development and digitalization of construction processes. The challenges we face are the same for the entire industry. I’ve mentioned them before – they include high inflation, material shortages, disrupted supply chains and global instability. The future of the construction industry is closely linked to the development of the entire national economy. We must meet these challenges. This is what our strategic actions on digitalization and sustainable development serve.
What are the most interesting projects that STRABAG can boast about?
For me all STRABAG projects are equally interesting and important. All of the nearly 600 projects we realize every year, where our people and machines work, where we can present ourselves to the investor, regardless of the size – whether it’s a local road or a freeway, whether it’s an impressive office building or another public utility building. I appreciate the work and commitment of our teams everywhere. STRABAG’s motto is Teams work, which means that our teams work together for the benefit of the project, offering the best solutions, cooperating with the investor and all the participants of the construction process. Every year we manage to execute many interesting projects. We know that each project is approached responsibly – whether it involves the reconstruction of a small municipality road, known only to the local community, or an important section of a freeway or expressway, awaited by all drivers passing through Poland. I keep my fingers crossed for our projects implemented in all areas of STRABAG activity. We are very proud of each of them.
Mr. Wojciech Trojanowski, member of STRABAG Management Board
Since 2013, he has been co-founding the two-person management board managing STRABAG Group’s operations in Poland. Master’s degree in economics, graduate of the Warsaw School of Economics and scholarship holder at the University of Vienna, majoring in business economics. He started his professional career at STRABAG headquarters in Austria in 1996. From 2001 to 2006, he was Managing Director and Member of the Management Board of BRVZ Sp. z o.o., a company in the financial services sector belonging to the STRABAG capital group.
Member of the Management Board of Strabag sp. z o.o. since 2007. He was responsible for the Infrastructure Construction segment. Currently he manages all construction areas of STRABAG in Poland. During his tenure, regional structures were expanded and revenues and employment more than doubled. The company became the leading construction entity in the country.
Wojciech Trojanowski is the President of Construction Platform and Vice-President of Employers of Poland, member of the Board of the Polish-German Chamber of Industry and Commerce. He is a laureate of numerous industry awards.