Construction output down 11.6% y-o-y August
Discussion
As the title says, output dropped by more than 11%: http://uk.reuters.com/article/2012/10/12/uk-britai...
Pretty alarming stuff. I do know that during the whole olympic period, there was a total ban on utilities works in the areas - no holes to be dug, no overhead calbes or lamp posts to be serviced etc. - as well as blanket bans on most demolition activities, but even so, that's a hefty drop.
Will be interesting to see how it goes, but I do wonder if spade-ready infrastructure should move up the priority list now.
Pretty alarming stuff. I do know that during the whole olympic period, there was a total ban on utilities works in the areas - no holes to be dug, no overhead calbes or lamp posts to be serviced etc. - as well as blanket bans on most demolition activities, but even so, that's a hefty drop.
Will be interesting to see how it goes, but I do wonder if spade-ready infrastructure should move up the priority list now.
PGM said:
It pi55ed down all summer aswell.
Yes, it has really impacted on a lot of jobs.Anything that wasn't 'out of the ground' (i.e. above footings) was on hold until at least late August in many areas.
What is clear from out bi-annual data cleansing is that very significant numbers of firms have gone to the wall in the last two years, having survived the initial part of the GFC. Whilst it is far too early to panic - we need to see Q3 & 4 numbers - I do think there are significant capacity risks for the UK. Inoter words, the ability of the pool of labour, plant machinery and professionals will be insufficient for even moderate recovery.
Machinery is being exported and not replaced with new of CPA figures are anything to go by.
Skills cannot be re-gained in an instant.
ETA to expand short answer. (Had to take a call from a customer who's looking at a major machine refurb, which is a case in point - repairing an ageing machine rather than buying new. Apparently, even in the hallowed reaches of Cheshire (Tattenhill) there is not much work on.)
Machine supply is not easy to expand quickly, certainly not without inflation and it is worth me repreating the fact that nearly all excavators have gained about 20% or more since 2009.
Staff have to meet ever stricter safety regs, so gone are the days of being able to let the tea boy 'have a go'. I remember talking to an old boy who came over from Ireland to join on of the Birmingham Irish Mafia firms. The boss took him out to site and said to him "You see that crane and that building? Get in that care and knock it down." There endeth the induction.
Also, a lot of guys have re-skilled or left these shores permanently and there is certainly no steady supply of willing or able apprentices. It could be Auf Weidersehen Pet in reverse when the recovery (even moderately) beings.
Skills cannot be re-gained in an instant.
ETA to expand short answer. (Had to take a call from a customer who's looking at a major machine refurb, which is a case in point - repairing an ageing machine rather than buying new. Apparently, even in the hallowed reaches of Cheshire (Tattenhill) there is not much work on.)
Machine supply is not easy to expand quickly, certainly not without inflation and it is worth me repreating the fact that nearly all excavators have gained about 20% or more since 2009.
Staff have to meet ever stricter safety regs, so gone are the days of being able to let the tea boy 'have a go'. I remember talking to an old boy who came over from Ireland to join on of the Birmingham Irish Mafia firms. The boss took him out to site and said to him "You see that crane and that building? Get in that care and knock it down." There endeth the induction.
Also, a lot of guys have re-skilled or left these shores permanently and there is certainly no steady supply of willing or able apprentices. It could be Auf Weidersehen Pet in reverse when the recovery (even moderately) beings.
Edited by Digga on Friday 12th October 13:51
I think we also have to look at commercial/industrial from an investor's POV; since the government decided to clobber the sector by charging the (exhorbitant in any case) business rates on places lying empty; it has vastly reduced the numbers of specualtively built places. I think the building next door to us (over 600,000 sq ft) was the last largest spec build in the UK and that was pre GFC.
Medium-term this is horrendous news for UK plc - simply put, where are all the 'supposed' new or growning business going to locate themselves. It has also impacted on activity in the construction sector, no doubt.
Medium-term this is horrendous news for UK plc - simply put, where are all the 'supposed' new or growning business going to locate themselves. It has also impacted on activity in the construction sector, no doubt.
anonymous said:
[redacted]
Truthfully, I don't really know, but there never actually was much 'spare' even in the boom and there seems (AFAIK - anecdoatal warning!) to be even less now.What a lot of people don't grasp is a simple fact though - most businesses need somewhere to 'be'. Fine some firms can start at teh kitchen table or in the garage or shed, but a lot simpy cannot, especially the ones whcih need to do/make stuff that suddenly (post the financial sector being Gordon's new way forward) we realise we do actually need.
_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.
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.
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 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.anonymous said:
[redacted]
Agreed. On the whole, banks have decided that whatever the backroom boys do in the 'casino department' the retail side is resolutely risk-free. This is not how things were and is a major step-change in the system.As we've all discussed on the House Price thread, a good, old-fashoined crash would have sorted the issue, but frankly a lot of banks would actually themselves be wiped out by this, so we're left to drift on this topsy-turvy, becalmed sea of unrealistic prices.
More here: http://www.theconstructionindex.co.uk/news/view/gl...
FWIW though construction is always first into recession and last out. Even I know that.
FWIW though construction is always first into recession and last out. Even I know that.
crankedup said:
following WW2 it was construction of houses that brought us out of the doldrums as it did in more recent history.
Even New Labour managed not to get us blitzed. I guess that's something to do with that anomaly in the 50's.don4l said:
Recession is over, unemployment is down and inflation is falling.
Shouldn't everyone be happy?
Happy? Well I guess there are some hare brained schemes to get LA pensions to keep the property price bubble topped up...Shouldn't everyone be happy?
Edited by Digga on Friday 26th October 16:52
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