Construction output down 11.6% y-o-y August

[_Batty_]

GuinnessMK said:

We have been pretty busy all summer.

However we are struggling to get jobs done. Mainly due to supply chain issues. No-one holds stock any more. Nearly everything other than sheet materails and timber seems to be on special order.

Stock carpets that are now made to order, light fittings and furniture that are all on 4 - 8 weeks delivery.

Yup this is what we're finding.
Bloody annoying, and no amount of complaining seems to matter.
Ill echo the above with regards to bids. Lots of DIY'ers are bidding jobs (how about a re-roof incl new tiles for £1800) with no scaffold, no lead and no idea? Course Mrs Jones thinks the price is great, and goes with it.
Very hard to compete with.

[Digga]

_Batty_ said:

Bloody annoying, and no amount of complaining seems to matter.

You can shout all you want, but that's part of the zombie banks/economy - the credit limits have been slashed and this is the result. Some firms capitualted, others limp along and many simply had to pull their horns in - reducing stock, staff and overheads - to survive.

We have the main UK Caterpillar dealer, Finnings just down the road from us here and I can remember in the mid-nineties how their presentations to our local CMPE branch would always boast about stock availability - the value of parts and the age range (back to 70's D6's) covered - as being a major strong point. Now, apparently, even Finnings won't stock all common wearing parts for recent machines. In part this is due to proliferation and is a price we all pay for greater choice, because no doubt they sell a far more diverse range of kit these days, but it is also a symptom of pressure on inventories - and this from a gobal business which runs Cat dealerships on several continents.

[Gun]

GuinnessMK said:

We have been pretty busy all summer.

However we are struggling to get jobs done. Mainly due to supply chain issues. No-one holds stock any more. Nearly everything other than sheet materails and timber seems to be on special order.

Stock carpets that are now made to order, light fittings and furniture that are all on 4 - 8 weeks delivery.

You're not wrong, we needed a couple of gas valves on the job I'm on, they'd usually be 2 - 3 days delivery but as they didn't keep stock like that any more it was 4 weeks!

[Digga]

Guam said:

Its not just construction, the logistical pipelines in many industries are empty. No one holds stock at any meaningful level any more.

Quite - as I said, this is a direct symptom of the zombie banks. Many businesses that have survived the GFC are, undoubtedly expected to run with less credit and inventory is one of the most common issues.

Our stock is up, but it still amuses me no end what customers expect you to keep 'on the shelf'. In that, I think (certainly in construction) there is a surfeit of planning at many levels. For example, when someone sees plans that dictate a non-standard width footing or utility trench, lead times for the commensurate sized bucket (unless you want to dig wider and piss money down the drain on fill/reinstatement costs) needs to be borne in mind and organised. No one will have this on the shelf, ever.

[Smiler.]

anonymous said:

[redacted]

No, but when you consider the "average" grade that is ejaculated from the mandatory education system these days, coupled with the effect that their role models have had upon them, they have trouble writing their own name.

Having worked in this this industry for 25 years, standards have steadily declined IMO.

The only "improvements" have been in H&S, and that statement is debatable depending on which side of the fence you are on.

[sleep envy]

anonymous said:

[redacted]

Depends on the market - commercial schemes you'll buy very well indeed but high end resi is very over heated, tenders are come back way over the pre-tender estimates.

IME the back end of the programme (stage e onwards) is still in recession, pretty understandable due to the lag on big schemes.

Biggest issue we face is finding decent suppliers, they've become thin on the ground and are struggling to stock.

[crankedup]

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

[crankedup]

Digga said:

_Batty_ said:

Bloody annoying, and no amount of complaining seems to matter.

You can shout all you want, but that's part of the zombie banks/economy - the credit limits have been slashed and this is the result. Some firms capitualted, others limp along and many simply had to pull their horns in - reducing stock, staff and overheads - to survive.

We have the main UK Caterpillar dealer, Finnings just down the road from us here and I can remember in the mid-nineties how their presentations to our local CMPE branch would always boast about stock availability - the value of parts and the age range (back to 70's D6's) covered - as being a major strong point. Now, apparently, even Finnings won't stock all common wearing parts for recent machines. In part this is due to proliferation and is a price we all pay for greater choice, because no doubt they sell a far more diverse range of kit these days, but it is also a symptom of pressure on inventories - and this from a gobal business which runs Cat dealerships on several continents.

Indeed, time and again we hear that Companies are lacking confidence to invest and cash piling.

[chrisga]

vonuber said:

matchmaker said:

I work in construction. We are losing out at the tender stage to companies who are submitting totally unrealistic bids. They are taking work on at a loss - a recipe for disaster in the medium/long term.

We are now working with a profit margin of 1.8%

Same here.

Likewise. We, as a company, try to price projects realistically but are often undercut by someone going suicidally low. The company I work for seems to be quite well liked by our clients because we try our hardest to allow for everything up front and dont hit for lots of extra/overs afterwards. However, even though we point out everything we allow for, this does make us seem expensive compared to the people strategically pricing as little as they can get away with and then going back for extras once they are part way through the contract. Increasingly we are hearing from clients who have awarded the contracts to the companies cheaper than us that they are being hit for more than the difference within the first few weeks of the contract. I guess its hard for their buyers to justify going with a more expensive quote to their bosses. Once the order is placed though, the buyers job is done. They chose the cheapest on paper so saved their company £X thousand pounds and can show everyone how well they have done. I suppose it then moves onto the QS's desk to ensure they get hit for as little else as possible. We have been told by some of the larger construction companies QS's that they have been instructed by their bosses to screw absolutely everything they possibly can out of their subbies and never mind the relationships/reputation.

This undercutting seems to happen on a fairly regular basis but it is always a different company. There are also loads of companies in our sector that go to the wall owing suppliers/subbies huge sums of money having been pricing too cheaply and then seem to start up again straight away with a clean slate. And because there is not much other work out there we find the suppliers just start supplying them again as though nothing has happened. There seems to be no punishment for this and it's making it harder and harder for legit companies trying to do things honourably.

We are lucky in that we have been supplying the majority of car factories for the last couple of years and have been kept busy, though mostly for lousy almost non-existent margins. In that time we have only done a couple of new builds outside of the car plants, whereas before it would have been the other way round.

I may sound a bit dim now, but I'm not sure how construction output is measured on a countrywide basis? Is it in monetary terms? Maybe similar levels of construction work have physically taken place but the prices are just a lot lower this year.

Edited by chrisga on Sunday 21st October 18:58

[sleep envy]

I'd say the client is being short sighted and the QS sounds like they're not pricing the qualifications properly.

How have you be getting on during the post tenders?

[Derek Chevalier]

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

[crankedup]

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

[Derek Chevalier]

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

[crankedup]

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

Yes I'm serious of course. I'm not focused on the debt incurred by the gung ho developers who bit off my then they could chew. Haven't good practice developers enjoyed enormous profits from the past forty years. People still need houses to live in, debt will always be involved its the management of debt thats been the problem. If developers have overpaid for land the they will take a hit whether they hold or sell. Seems to me that immunity from this crisis is limited to the banks only.
Obviously I am not a developer but it seems to me that it is confidence that is shattered in both business and consumer, with both sat on a fence. At some point the Government has to continue in larger scale some underwriting.

[Derek Chevalier]

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

Yes I'm serious of course. I'm not focused on the debt incurred by the gung ho developers who bit off my then they could chew. Haven't good practice developers enjoyed enormous profits from the past forty years. People still need houses to live in, debt will always be involved its the management of debt thats been the problem. If developers have overpaid for land the they will take a hit whether they hold or sell. Seems to me that immunity from this crisis is limited to the banks only.
Obviously I am not a developer but it seems to me that it is confidence that is shattered in both business and consumer, with both sat on a fence. At some point the Government has to continue in larger scale some underwriting.

Why should I pay for developers to get off the hook and load FTBs with more debt? "If you build it (for a reasonable price), they will come" is my belief (with apologies to Field of Dreams). The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

[Digga]

Derek Chevalier said:

The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

This is a massive problem.

There is huge demand for housing, but aside from the lack of a suitable house-price crash, banks are really not lending in the UK. The public think HSBC and the rest are 'British' banks, but we actaully just bailled-out Uk arms of global corporations who - rightly or wrongly - feel the risk/reward for lending out their captial is better deployed elsewhere in the world.

I spoke to someone yesterday who, as an FTB at 40 years old, has been told she needs to stump up a 40% deposit to get a mortgage on a 'starter' home. (About £120k property FWIW.)

Aside from this, I do actually think the industry deserves a bit of a kickstart because, having spoekn to many contractors in the S.E. they have virtually gone bankrupt due to enforced non-working during the Olympics. This, combined with the dire, wet weather has put many out of business and even more into very precarious financial situations.

[Derek Chevalier]

Digga said:

Derek Chevalier said:

The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

This is a massive problem.

There is huge demand for housing, but aside from the lack of a suitable house-price crash, banks are really not lending in the UK. The public think HSBC and the rest are 'British' banks, but we actaully just bailled-out Uk arms of global corporations who - rightly or wrongly - feel the risk/reward for lending out their captial is better deployed elsewhere in the world.

I spoke to someone yesterday who, as an FTB at 40 years old, has been told she needs to stump up a 40% deposit to get a mortgage on a 'starter' home. (About £120k property FWIW.)

Aside from this, I do actually think the industry deserves a bit of a kickstart because, having spoekn to many contractors in the S.E. they have virtually gone bankrupt due to enforced non-working during the Olympics. This, combined with the dire, wet weather has put many out of business and even more into very precarious financial situations.

How do you define "huge demand" for housing? Could the same be said of Ferrari 458s?

Interesting re the FTB - was her application straightforward (on paper), or was she asking for a large multiple of income?

The Government has a choice, either they start slowly raising rates (people have had five years to prepare for this), and we start afresh, or we let this malaise drag on for a couple of decades - neither option is particularly pleasant.

[turbobloke]

Derek Chevalier said:

The Government has a choice, either they start slowly raising rates (people have had five years to prepare for this), and we start afresh, or we let this malaise drag on for a couple of decades - neither option is particularly pleasant.

The link may well have been posted in this thread, if not somewhere else on NP&E, but this summary of when various economists and think tanks predict the rise will occur, suggests we have 5 years to wait. The first thing likely to happen, according to the article from which this extract was taken, will be a base rate cut to 0.25% before 2013.



There just doesn't seem to be any appetite for an interest rate rise in any place where a rise might arise.

[Digga]

Derek Chevalier said:

How do you define "huge demand" for housing? Could the same be said of Ferrari 458s?

Agree with the sentiment, but I think we are entering a new era - affordability in terms of both salary multiples for 'starter' homes and availability (or the deposit requirements of) mortgages have not been this tough for some time - that will alter the economy.

[crankedup]

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Derek Chevalier said:

crankedup said:

Historically UK downturns have been led back into growth through our construction industry. No matter how much some may dislike it, we need to back our construction industries into building again, it would be a start at least.

Resi or commercial?

Certainly in the residential and I also see public sector work on infrastructure still at a comparative standstill. I am not in the construction industry but continue to read/hear of residential developers standing still not wanting to risk building homes they cannot sell(understandable) and a lack of major contracts in the P.S.

Residential? Are you serious? Do you not think they are being backed enough? And what are you really solving - shifting the debt incurred from paying too much for land from developers to FTBs? The kind of thing the Government would do, er, are doing.

Yes I'm serious of course. I'm not focused on the debt incurred by the gung ho developers who bit off my then they could chew. Haven't good practice developers enjoyed enormous profits from the past forty years. People still need houses to live in, debt will always be involved its the management of debt thats been the problem. If developers have overpaid for land the they will take a hit whether they hold or sell. Seems to me that immunity from this crisis is limited to the banks only.
Obviously I am not a developer but it seems to me that it is confidence that is shattered in both business and consumer, with both sat on a fence. At some point the Government has to continue in larger scale some underwriting.

Why should I pay for developers to get off the hook and load FTBs with more debt? "If you build it (for a reasonable price), they will come" is my belief (with apologies to Field of Dreams). The Government subsidising the market is just a fudge, and isn't addressing the issue, which is that the unprecedented housing bubble has not unwound, and the Government know exactly why.

Maybe I have the wrong end of the stick here, I thought that developers had purchased land stocks and were now holding those stocks until such time the market 'frees up'. Standard practice except in the past developers held land stocks helping to increase profit, seems fair business practice. Now the tables have turned and developers are stuck with currently depreciating assets, unwilling to put builds into production owing to a shortage of buyers.