Ohio house demolition contract let for 40% less than value five years ago.
Cast your mind back, if you will, to 2004. The New England Patriots are celebrating the winning of Super Bowl XXXVIII; Madrid has been rocked by coordinated terrorist attacks on its rail network; and Lance Armstrong has just won an unprecedented 6th Tour de France title.
Do you remember thinking to yourself: “Wow, I am making a profit of more than 40% on house demolition. Life is good and I love this business”? No?
Then how do we explain the fact that a contract has just been let that values each house demolition at $2,500 when the same job was valued at $4,300 per house just five years ago? Did we miss a meeting? Was there a radical cut in the cost of labor, insurance, fuel during that time?
I know we’re in the midst of a recession. I know work is scarce and margins are wafer-like. And I know that many contractors are working for peanuts, merely to pay their overheads.
But having set a precedent price of $2,500 for house demolition, how long will it take to wind that price back up again so the industry can actually make a profit?
My guess is five years, minimum. But I’d love to hear what you think; so please use the comments area below.
