LONDON, England – To look at the skyline behind our live shot position in the city of London you could be forgiven for thinking that the credit crunch has left the construction industry unscathed. There appear to be more cranes than tall buildings on the horizon.
But a quick straw poll of contacts, friends and family working in the sector suggests that Britain's constructors are actually finding the going pretty tough. Hardly an exhaustive scientific survey I know, but I thought you'd be interested to read what they had to say.
The chief executive of a publicly listed, national builder told me recently that while he was confident his company was well placed to take advantage of any recovery, the next 18 to 24 months were going to be painful. The rising cost of raw materials had already hit the bottom line and the severe slowdown, some might say almost complete standstill in new home construction was particularly worrying. Under his stewardship the company has built enough of a cushion to weather the most severe economic downturn, but what pains him most, he told me, is the very real possibility that he will have to let go of some of his loyal, longstanding workforce if there's no light at the end of the tunnel within the next year. He also worries that the employees of long standing suppliers would face a similar fate if he was unable to continue putting orders their way.
My good friend Jonathan Rubins, a director at Stephen Howard Homes, a medium sized regional house builder says that concern over the availability of mortgages and the fact that people are worried for their jobs has led to a significant stagnation in sales to the general public. However, the rental market, he says, is enjoying considerable growth. Thus while ‘buy to let' mortgages have become more difficult to obtain for smaller investors, landlords looking to build a property portfolio are finding that mortgages are still available at good loan to value ratios and are bringing custom his way. This, he says, is a regional phenomenon. If his company were based anywhere other that the South East, he fears his outlook would be far less positive.
My brother in law, Jonathan helps to run Taylor and Stapleton Engineering, a medium-sized family firm specialising in heating and ventilation. The good news is that there has been no noticeable slowdown in business orders for him ... yet. He is by no means complacent. He says that the commercial sector of the industry in the south east of England is being helped along at the moment by the construction of the 2012 Olympic venues. He is braced for a slowdown if and when it arrives but is confident in the company's specialist expertise. Even if new build orders slow there should always be a market in refurbishments, which need to be completed regardless of economic circumstances. Jonathan has however noticed pressure in terms of wage demands as employees struggle to cope with the increased cost of living with food, fuel and especially utility prices rising fast.
Francis Biro is one of those rare finds - a local builder who is so good at what he does that he seldom needs to advertise his services. Word of mouth and recommendation are what brought him to our attention and that of many other local families. Francis says that while he's not short of work yet, he is concerned about the lack of new enquiries. Not long ago he was getting at least one a week and always had drawings on his desk, the next job lined up and ready to go. Now he finds himself getting to the end of one project with no new work in sight. Fortunately, he hasn't yet found himself idle but worries that it's only a matter of time before he encounters gaps between jobs.
Francis hopes that as the housing market slows and people find it harder to move home, they will instead turn to people like him to extend their current property. The problem there is of course that loans for such projects will in all probability be harder to come by and perhaps prohibitively expensive.
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