The demolition industry will feel the effects of recession long after it’s officially over.
In the past few weeks, the dark veil of recession has shown signs of lifting. France, Germany and, more recently, China have seen their economies enjoy a sufficiently sustained period of growth, albeit negligible, that has lasted long enough for economists to declare them officially “out of recession”.
Closer to home, mortgage lending is on the rise again at long last and even house builders, among the worst hit by first blows of the credit crunch onslaught, are reporting a slight upturn. Together with some more positive news about consumer spending, these statistics have brought a slight flush to the cheeks of the lifeless corpse that is the world economy.
But we’re not out of the woods yet. In fact, I am concerned that even when we do crawl out of the recessionary chasm that swallowed us some 12 months ago, the struggle is far from over for the demolition industry.
The first hurdle the industry is likely to encounter is a hangover of thinner margins. Main contractors and developers have “enjoyed” a period of intense competition among demolition contractors which has led to some near-suicidal pricing practices. Having grown familiar with that level of cost, these developers and contractors are not suddenly going to accept a post-recession price hike. Indeed, I would personally be amazed if the “value engineering” built into virtually every contract these days does not continue long after we’ve shaken the recessionary monkey off our collective backs.
The second and, perhaps, bigger challenge is in planning. With the notable exception of certain Government-funded departments, new build and its associated planning has all but dried up in recent months. Even when the supposedly wise heads in Government sound the “alert over” sirens and the world returns to some semblance of normality, demolition contractors will find their workload wedged behind a logjam of planning applications held over from the dark days.
Both of these problems are beyond our control and, as usual, we will just have to make the best of a bad job. We’ll have to do the same with equipment fleet renewals, expansions and maintenance programmes that have been undermined by the current recession.
Governments around the world have climbed aboard the stimulus package bandwagon, injecting trillions of tax dollars into comatose economies; but that has failed to change the attitude of most banks and finance houses that would still rather see those dollars on their own bottom lines than on ours. As a result, even those demolition companies that have managed to maintain a good workload through the recession have found themselves blocked at every turn when they set out to buy new or replacement equipment.
And can we all, hand on heart, say that we’ve invested as much on machine maintenance during the recession as we might have during a boom period?
The one area where demolition contractors do control their own destiny however, and the area that may yet prove to be the hardest to fix, is in the field of training and recruitment.
Sadly, and despite the fact that many of us have experienced a recession or two in the past, the industry has largely followed its usual path of knee-jerk cost-cutting. First to go is the marketing budget, followed by the investment in training and then, when all else fails, companies have slashed labour levels. And, as in previous years, these job cuts may have started by slicing thin slivers of fat to help make contractors leaner, but they have continued to slice through the meat and to the very bone of some company’s corporate structures.
In my opinion, this is where our biggest problem will lie.
For one thing, training agencies have also responded to the recession by slashing grant-funding for training, a move that has been particularly keenly felt in the UK. In addition, with the majority of industry training reliant upon either on-the-job tuition or employer-funding, anyone that has found themselves unemployed during the recession will also have found themselves falling behind in their training, unable to keep up-to-date with the latest legislative changes and unable to renew existing qualifications because of the prohibitive cost.
This, I fear, is going to come back to bite us two-fold.
First, many of our most experienced and knowledgeable staff may have been forced to move on into other industry sectors, simply to keep a roof above their heads. As a result, there are now contracts managers and site supervisors stacking shelves at the local Wal-Mart of Tesco, or flipping burgers at McDonalds.
Never mind all this talk of secondary aggregates recycling and materials efficiency. This is a waste of HUMAN resources and one for which the economies of the world should be ashamed and held to account.
The second and equally savage bite will manifest itself in a long and drawn out inability to train newly-recruited staff quickly enough to track the upturn when it does finally arrive.
Many training bodies haven’t just turned off the spending tap; they’ve dismantled the pipe work and sold the water tank for scrap. That’s a problem that will not be fixed instantly and that could easily run for years as the industry stabilises. And even if a contractor refuses to allow a lack of grant funding to stop him training his new staff, will the industry still have the qualified trainers available to do the work? Or will they be salting fries alongside the site supervisor at McD’s?
Before you dismiss this as scaremongering or the cynicism of a bitter old hack, ask yourself this question:
If your workload returned to 2006/07 levels tomorrow, could you cope?
I look forward to hearing your feedback.
Mark Anthony
