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Corporate Economic Distress in the Wood Construction Industry: Current State and Trend After the Economic Crisis
Linnaeus University, Faculty of Technology, Department of Mechanical Engineering. (Industrial engineering)
Linnaeus University, Faculty of Technology, Department of Mechanical Engineering. (Industrial engineering)
2015 (English)In: Pro Ligno, ISSN 1841-4737, E-ISSN 2069-7430, Vol. 11, no 4, 389-396 p.Article in journal (Refereed) Published
Abstract [en]

In order to obstruct housing shortage in Sweden, wood is considered as an alternative material for multi-family applications. Yet, more firms are needed to prefabricate wooden elements, volumes or modules in an industrialised way. These could be found amongst firms producing wooden single-family houses; however, they might suffer from economic distress, since their core market dropped by more than 60 % in the aftermath of the economic crisis. This study investigates corporate economic distress from 2010 to 2013 of 52 Swedish firms producing wooden single-family houses. This, by applying Altman’s Z’-score model, grouping firms into a risk, a grey or a safe zone. Results show that from 2010 to 2013, firms suffering from economic distress decreased from 11.1 % to 3.8 %. The two remaining firms in the risk zone most likely will face bankruptcy, if no radical action will be taken. Firms in the grey zone increased from 31.1 % to 36.5 %. The 19 firms in this zone are dependent on appropriate strategies to positively develop their business. Finally, firms in the safe zone increased from 57.8 % to 59.7 %. These firms are in good economic conditions and can be regarded as potential candidates for investing in a development towards multi-family applications. For the investigated time period, the average Z’-score improvement for the whole industry equals 38 %, with a major upturn from 2012 to 2013.

Place, publisher, year, edition, pages
Brasov, 2015. Vol. 11, no 4, 389-396 p.
Keyword [en]
Wooden single-family houses, wooden multi-family houses, economic distress, Z-score model, multi-storey houses
National Category
Production Engineering, Human Work Science and Ergonomics Economics
Research subject
Technology (byts ev till Engineering), Industrial economy; Economy, Economics; Economy, Ekonomistyrning
Identifiers
URN: urn:nbn:se:lnu:diva-42423OAI: oai:DiVA.org:lnu-42423DiVA: diva2:805503
Conference
WOOD SCIENCE AND ENGINEERING IN THE THIRD MILLENNIUM
Available from: 2015-04-15 Created: 2015-04-15 Last updated: 2017-02-17Bibliographically approved
In thesis
1. Market structure and economic status for firms producing single-family houses in Sweden
Open this publication in new window or tab >>Market structure and economic status for firms producing single-family houses in Sweden
2016 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

The gradually changing behavior of the population, towards urbanization, ledto an increased shortage of available housing. This development has resultedin a serious issue in Sweden, where too few firms are providing solutions formulti-family houses in wood. Potential firms that could fill this increasingdemand are those in the single-family house industry. Yet, these firms mightface considerable problems with productivity, predominately derived fromincreasing production costs and inadequate production development.Developing these firms are associated with long-term investments, whichis investigated by evaluating the industry structure for sellers, highlightingthe financial and market situation within their industry. These factors aregrowing in importance due to the current market concentration, where morefirms are required to focus on product development driven by the demand toprefabricate wooden elements, volumes or modules in an industrialized way.This thesis studies Swedish firms producing wooden single-familyhouses, with the aim to investigate their possibilities to enter the woodenmulti-family house industry in Sweden.Investigations will be conducted by applying Altman’s Z’ value, riskposition model, the Herfindahl-Hirschman index, the Herfindahl-Hirschmannumber equivalent, productivity ratio model for profitability and finally amodel measuring market Concentration Ratio.Results show that the industry tends towards perfect competition with toomany firms involved, i.e. firms mainly have to compete by prices. Further,firms are grouped into three zones; risk, grey or safe zone. The levels withinthese zone show a reduction of firms in the red zone over time. Related to thecurrent risks, many firms have promising positions to invest in productdevelopment towards wooden multi-family houses, in addition to theircurrent products, even though firm productivity has declined during thestudied time frame. The results that the investigated firms have goodpossibilities gaining a competitive advantage by diversifying into thegrowing wooden multi-family house industry.

Place, publisher, year, edition, pages
Växjö: Linnaeus University, 2016. 122 p.
Series
Faculty of Technology : Report, 47
Keyword
Wooden Houses, Wooden single-family houses, Wooden multi- family houses, Financial Performance, Risk Position, Economic distress, Z- score model, Industry Structure, Productivity, Off-site construction, Industry concentration
National Category
Mechanical Engineering
Research subject
Technology (byts ev till Engineering), Mechanical Engineering
Identifiers
urn:nbn:se:lnu:diva-60000 (URN)978-91-88357-52-6 (ISBN)
Available from: 2017-02-17 Created: 2017-01-20 Last updated: 2017-02-17Bibliographically approved

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