Goal of cutting construction costs by half using wood construction

Goals are high for Lapwall Oy, which began delivering wood elements three years ago in Pyhäntä, the most industrialised municipality in Finland. „Our goal is to cut construction costs and time by half and to be number one in wood construction in Northern Europe,“ Lapwall’s Managing Director Jarmo Pekkarinen says without hesitation.

„We already build at substantially lower cost than the concrete industry. Of course we cannot affect the price of properties or earthworks, but in construction we want to change Finnish building and offer people construction at genuinely reasonable prices. We can currectly build flats for 1,400 euros per square metre.“

The company, which started out with a high-profile marketing and advertising campaign, is looking for business partners among property owners, investors and construction companies. „We are looking for new types of partners, who understand the idea of this new way of operating and do not have preconceptions. We offer a quickly growing story and good profitability. Fortunately pension companies that provide housing financing also have readiness for a new kind of investment operation,“ says Pekkarinen.

Pekkarinen says the company’s fast breakthrough into the wood construction market was a result of recognising the business opportunities in industrial element production. „With wood structures we provided a genuine option to concrete elements. The product-service entirety is absolutely key, and we have succeeded in that.“

Great potential for wood construction in Northern Europe

During the first three years the company has delivered elements for small, multi-storey residential buildings in the Helsinki Metropolitan area and Northern Finland, and has exported elements to Sweden, Norway and Germany for housing estates and multi-storey building sites. The company is also a significant supplier for day-care centres and long-term care homes, as well as for construction of large industrial halls. The company’s turnover will grow this year to 200 million euros, of which a fifth will be generated by exports.

Pekkarinen wants a clear boundary in the building market, which also means clear delineation of responsibilities. „We begin realisation of a project with the customer on the property, and make a cost estimate and proposal together with an architect. We have an existing software platform that enables presenting a cost estimate and schedule to the customer straight away.“

Pekkarinen feels it is crucial to revise the scheme of construction so that Finland, too, could offer more economical flats. „The breakthrough will not come from construction companies, as they are accustomed to working the old way. They have decades of experience with concrete construction, but few have the ability, desire and skills to do something new.“

„New is always linked to risks, which the construction or project manager does not want to take. It is easy to stay with what they know how to do and have always done before,“ says Pekkarinen.

Pekkarinen performed a comprehensive market assessment of wood construction in Northern Europe and came up with a business concept that includes design, production and installation. „The market has huge potential, on which we based our investment decision. We can succeed in the market by making element deliveries to customers easy and fast. This is why we produce only elements we install ourselves.“

Efficiency and a competitive edge through digitalisation and automation

Pekkarinen reiterates that the rate of growth in construction markets will be extremely strong over the next two decades, when an estimated half million people move from the countryside to towns and from provincial areas to the Metropolitan area. „The construction industry will not be able to meet this challenge and growth using traditional means. The key to realisation of an enormous amount of housing stock is a significant decrease in construction costs.“

According to Pekkarinen, the central competitive factors for wood construction are lightness and speed, which create substantial savings in overall costs. „Our residential buildings based on dry-construction are already ready to move into when concrete buildings are just starting to be dried. Wood construction is significantly cheaper and faster than concrete construction. It does not have the indoor-air problems of concrete construction and its life-cycle as an ecological material is many times longer,“ Pekkarinen notes.

Lappwall Oy draws on the vehicle-manufacturing industry for its production model. „Our goal is to bring industrial production fully to construction. Efficiency and a competitive edge come from industrial production, which does not enable tailoring of every element.“

Pekkarinen feels that the largest obstacles to wood construction are attitudes and lack of skill. „Competing materials are working against wood construction. The aim is to create an impression of multi-storey wood buildings as unsafe, poorly soundproofed or wrought with long-term maintenance problems, even though facts indicate otherwise.“

Pekkarinen hopes the government will revise building regulations to make sprinklers in multi-storey residential buildings mandatory for all construction, so buildings constructed of concrete will be fire safe, as well. Pekkarinen feels that municipalities and the state public sector should further wood construction through zoning. „This should be done to enable wood to be used in construction of day-care centres, long-term care buildings and schools. The public sector is such a strong customer that it creates a growing market and skills, which enable exports.“

Pekkarinen sees export of wood construction as possible and profitable despite transport costs. „Profitability comes from the fact that we bring digitalisation, automation and industrial Internet possibilities to construction, when there has been almost no development in that field.“

„We are now facing a big change, and need a completely new way of thinking to change the market and operating methods. Wood construction is a huge market, with room for many suppliers,“ Pekkarinen believes.

Article Service Markku Laukkanen