Norway's construction sector faces a deepening crisis as another traditional firm collapses, leaving skilled workers like carpenter Liudas Auksorius abruptly jobless. On New Year's, Auksorius and 100 colleagues at the 40-year-old family firm Markhus in Bergen received a blunt email: the company was filing for bankruptcy. Activity at the Totland construction site halted immediately. 'We just had to pack our things and go home,' Auksorius said. His experience is not isolated. Approximately 5,000 construction companies have gone bankrupt over the last three years, with sector activity plummeting by 67 billion kroner, according to the Confederation of Norwegian Enterprise (NHO).
A Sector Under Severe Pressure
Nina Solli, Managing Director of NHO Byggenæringen, confirms the bleak outlook. 'There is a crisis atmosphere in large parts of the construction industry,' Solli said. She noted that three major companies have already fallen in 2026, and the industry organization believes the sector will hit its lowest point in the autumn of 2026. 'People are losing their jobs, and good, traditional companies are going under,' Solli stated. The bankruptcy of Markhus is a stark example. The Bergen-based firm had actually managed to save itself from an earlier bankruptcy through reconstruction and fresh capital, explained the estate administrator, lawyer Bjørn Åge Hamre. The owning family had taken out private loans in a rescue attempt. However, an old VAT claim from the Norwegian Tax Administration triggered new and unexpected financial problems, leading to the final collapse.
The Human and Economic Toll
For employees, the sudden end is a profound shock. 'For many, it is naturally a shock. These are employees who have long tenures and a strong loyalty to their workplace,' Hamre said. He is now fielding inquiries from other struggling companies. The root causes are clear to industry leaders: a sharp drop in demand and high costs, particularly in the private market. 'Housing construction and larger housing projects have stopped,' Hamre explained. This downturn creates a vicious cycle. Skilled workers scatter, and specialized expertise built over decades within family-owned firms dissipates, weakening the entire industry's infrastructure. The loss of 5,000 firms represents not just statistical failure but the erosion of a critical part of Norway's small and medium-sized enterprise backbone, which has long been a stable employer in regions outside major corporate hubs.
Policy Goals Versus Market Reality
Both displaced workers and industry representatives point to a critical shortfall in housing construction as a core issue. The government has set a target of building 130,000 new homes, a goal NHO's Solli supports in principle but finds lacking in execution. 'It is a good goal, but they must come up with policy instruments so we can get started with building,' Solli demanded, calling for 'more political force.' The disconnect between national housing targets and the on-the-ground reality of frozen projects and bankrupt builders highlights a significant policy implementation gap. Without effective measures to stimulate demand and ensure viable project economics, even sound political ambitions fail to translate into active construction sites and paychecks for tradespeople.
Expert Analysis: A Perfect Storm
Industry analysts identify a confluence of factors creating this 'perfect storm.' The rapid rise in interest rates over recent years has dramatically cooled the private housing market, a traditional pillar of construction activity. Concurrently, high inflation has driven up the costs of materials, labor, and financing, squeezing profit margins to breaking point. This financial strain is exacerbated by legacy issues, as seen with Markhus's old tax claim, which can deliver a fatal blow to already weakened companies. Lawyer Bjørn Åge Hamre's experience with multiple struggling firms suggests the current wave of bankruptcies may be exposing deeper, systemic vulnerabilities within the sector's financial structures, particularly among smaller, family-owned businesses that lack the vast capital reserves of larger conglomerates.
The Road Ahead and Regional Implications
The predicted 'bottom' in autumn 2026 offers little solace to those affected now. For workers like Liudas Auksorius, the immediate future involves searching for new contracts in a shrunken market. The crisis also has distinct regional dimensions. The collapse of a firm like Markhus, embedded in the Bergen community for 40 years, impacts local supply chains and reduces regional competition, potentially leading to higher costs and less flexibility for future projects in the area. The concentration of bankruptcies could lead to a less diverse and more centralized construction industry, which may challenge Norway's long-term capacity for efficient housing development and infrastructure maintenance across its varied geography.
Norway's construction crisis is more than a cyclical downturn, it is a stress test for the industry's structure and for political pledges. As another generation of tradespeople faces uncertainty, the question remains whether policy instruments can be deployed with sufficient speed and precision to rebuild not just homes, but confidence in a foundational sector of the Norwegian economy. The coming months will test the resilience of both the remaining firms and the political frameworks designed to support them.