2024-07-12

 

• Expected 75% increase in auctions due to business closures this year

• Negative investment climate and competition are the main causes

• 33% of buyers of Dutch construction equipment come from abroad

 

 

The number of auctions in the Dutch construction sector has increased dramatically. This is evident from figures by Troostwijk Auctions, which show that even this year more construction companies are selling their machines and goods due to business closures. Causes such as rising construction costs and strict building regulations are leading to a lack of perspective and underpin many Dutch entrepreneurs’ decisions to stop.

 

Watershed in the Construction Sector

In 2023, 90 Dutch construction companies auctioned their business inventories due to business closures via Troostwijk Auctions’ platform. Auctioning was mainly done by entrepreneurs who decided voluntarily to stop. Thirty companies did so last year due to bankruptcy. Halfway through 2024, the number already stands at 95 construction organizations, matching the record year of 2023. Particularly, the number of companies auctioning due to bankruptcies has increased significantly compared to 2023 (+30%). The total growth of construction entrepreneurs auctioning due to voluntary and involuntary business closures in 2024 is estimated to reach 158, a significant increase of 75 percent compared to 2023.

 

“It is especially becoming harder for SMEs to stay afloat due to competition with large companies within this sector. This is partly due to the declining number of building permits caused by the nitrogen issue,” says Floris Bakels, Account Manager Wood and Construction at Troostwijk. “In construction today, you have to choose: expand to handle large projects or focus on smaller assignments. Medium-sized construction companies are being squeezed out. This leads to an increasing number of construction entrepreneurs ceasing their activities.”

 

More Construction Entrepreneurs Adjusting Equipment Per Project

The negative investment climate is also a challenge for construction companies. CBS forecasts a one-third decline in investments compared to 2023. Bakels: “Due to high interest rates, it is difficult for many entrepreneurs to invest in new machines. We notice that entrepreneurs increasingly buy machines specifically for a project and sell them afterward through so-called consignment auctions. Through these sales, entrepreneurs regain liquid assets to purchase other construction materials needed for new projects.” In 2024, already 109 construction companies have participated in these consignment auctions at Troostwijk, where multiple parties offer lots in one auction.

 

The choice for online auctioning is also driven by the broader market reach the platform offers. “Both the buyer and the seller can tap into a large digital network across Europe,” says Bakels. 33 percent of buyers of construction machines from Dutch entrepreneurs come from abroad. Eighteen percent of those buyers are from Belgium and Germany. Another part goes to Eastern Europe, mainly Romanian and Polish bidders.

 

Noticeable Generational Differences

Troostwijk Auctions also notices generational differences among entrepreneurs regarding machine usage, not only in construction but also in other sectors. “Where younger generations increasingly opt for leasing and renting, older generations preferred purchasing machines,” says Arno Hendrikse, Managing Director at Troostwijk Auctions Netherlands. “When many of these business assets are on the balance sheet, a company becomes less attractive for acquisition. That’s another reason why we increasingly see entrepreneurs choosing to slim down. This is especially noticeable in the construction sector, where the space for medium-sized companies is shrinking between large players and small, specialized SMEs.”