We have faced many ups and downs in the building industry over the past 50 years and while many builders have succumbed to the pressures over the years, we have never seen such serious circumstances that we are experiencing and face today.
Never have we seen a pandemic such as COVID 19 that has impacted on every aspect of our daily lives with lockdowns, restrictions, and impacts we never thought possible. We have seen businesses impacted on to such an extent that many have failed and while governments have propped up many professions including ours the impacts have been wide reaching to the detriment of so many. Even today the effect of isolation is impacting on all businesses and while some believe the Covid 19 pandemic is over our respected health officials believe we are adapting to live with it and the daily figures of infection together with the deaths support their views, but it is difficult to accept the loss of life.
Never have we seen such a heated building industry as there is work everywhere but much of it comes at a price. You would expect the contract prices to be through the roof and builders are doing very well but that is not the case in so many cases as the cost of materials, labor, and delays, come first and profit or potential profit for builders trail last. So, the pressure to meet a budget which may have been established prior to many of the reasons for increases we now see impacts only on the builder’s margin as most consumers will not compromise their building and see the builder and his margins as the target to meet the budget. For most builders this is the time of a profitless boom
Never have we seen such a shortage of skilled trades and most builders are suffering from this aspect as the skills to teach new apprentices are not being provided by the traditional family units as they have been over the decades as more recently it has been by the text book which can be fine to an extent but will never provide the experience of being taught by a parent who may have some 40 of 50 years of practical experience. So we teach the basics but the practical experience is nonexistent in many cases and we put our young out there as qualified but there is more to building than a piece of paper and the ability to use a nail gun to put a frame together.
Never have we seen the overall supply chain impacted on to what we are experiencing of recent times with framing timber being the most difficult to obtain and without this timber a house cannot be started, and the only alternate is steel, and we are seeing many blue steel frames appear on building sites while many concrete slabs sit waiting for the framing timber.
Never have we seen cost escalation such as we have experienced over the last twelve months with massive increases in some areas such as steel that has increased by more than 50% as has framing timber and the overall impact to industry is an ongoing escalation to the cost of materials to the building industry.
Never have we seen such downward pressure placed on builder’s contracts and while this has always been in play as most consumers believe builders make a fortune, but the reality is that some trades without any risk make more out of a project than the builder who even has his house on the line if something goes wrong. In the meantime, the builder’s contract is always the target to meet the consumers/architect’s budget.
A tsunami of issues
While our industry has over the years suffered downturns but never in our history have, we faced the multitude of issues at the one time that the past couple of years have produced.
What does the future hold for our industry?
Some say it’s all fine, but nothing has been resolved including COVID 19, manufacturing, skill sets, supply chain, the Russian war, costs escalation, profitability, and consumer protection together with Builders Warranty Insurance.
We are in unprecedented times and the impacts will continue and escalate such as insurance that will impact this year together with interest rates increasing that will impact across all aspects of the supply chain and create a situation that we have not seen for the past 3 decades. We feel years end could see the beginning of a recession.
The monetary situation is one that no one will have control of as inflation bites as we have never experienced in the past and historical low interest rates will become history as the banks ramp up the rates across the board which has now started.
One of the major issues facing all builders whether large or small is staff with appropriate skill sets from top management down to the laborer who keeps a site clean, and it is those companies who have staff with the appropriate skill sets that are always capable of surviving.
However, most builders and suppliers have the same complaint at this time which is the fact they cannot get staff and when they do they find their skillsets are left wanting and they become a hindrance rather than an asset.
It was pleasing to see the rumors surrounding Metricon are just that and they will continue trading as our biggest builder but even they have issues with the supply chain and delivering contracts on time.
Both Builders and Consumers need to be more than aware of the dreadful circumstances facing both sides of a building contract at this time as there is never a winner under the prevailing circumstances and the legal position of these contracts do not allow for these unprecedented circumstances contrary to any Lawyer speak that may suggest otherwise. The very best advice to both sides from our experience is to be fair to each other and use every effort to ensure the completion of the contract by being fair without lawyers as their intervention will not produce an acceptable result, and only use funds that are better used on being fair to each other.
2022/3 will produce difficult times for the building industry and its registered builders.
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