Where to for the building industry?

[red750]

With loud cries for "More housing! More housing!, why are so many builders going broke?

 

Now Porter Davis Homes has collapsed into liquidation with construction work halted on 1500 properties across Victoria.

[rgmwa]

Probably caught between by steep cost increases for materials, fixed price contracts and finding enough tradies.

[old man emu]

More likely a result of "bubble" management - letting a business expand beyond the limits of expandability.

 

I wonder how many of these companies have failed because too much focus was placed on getting sales? The salespeople are paid for the number of signatures on the contract. A red hot salesperson can get way more orders than can be supplied. 

 

Obviously the failure of the supply chain is a factor. All over the world, timber in its various forms has become scarce and so the old Supply & Demand rule gets a workout. How much of our fit out material comes from China now? That emphasis on the "bottom line" - minimise costs to maximise profit - has left us without the manufacturing basis to be self-sufficient.

 

You and I know that, but try convincing the politicians, who for the most part are younger than us and haven't lived through the economic history of the 20th Century. The 60-year-old politician was a school kid through the 70's and the 80s was the decade of "business first"

In the United States, The "business-first" attitude of the Reagan administration perhaps led to some of the economic excesses and crises of the 1980s. Deregulation of the financial world (and the lack of enforcement of remaining federal regulations) led to disastrous results on Wall Street. The nation was rocked by a series of scandals marked by insider trading, where financiers use illegally obtained information to gain an unfair advantage over their competitors. In some instances, stockbrokers and investment bankers were breaking into the offices of coworkers and rivals to gain information. When the 1980s came to a close, some of the most successful businesspeople of the decade were proven to be criminals.

 

From 1980, China undertook a massive reappraisal of its place in the World. As a totalitarian State it was able to engage its people in a myriad of ways to drag themselves from being agrarian-reliant to industrially dominant. It played on the West's "bottom line"emphasis by providing manufacturing capacity at miniscule labour costs. The West fell for it and, after providing the modern manufacturing equipment needed to produce the products the West wanted saw the Chinese pull the equipment apart and improve on it, further reducing the cost of products, but widening the range of products made.

[facthunter]

It's considered to be the unrecoverable cost increases after the project is commenced.  This will knock you dead no matter what you do if it keeps happening.  Nev

[old man emu]

Apparently it's the fixed-price contracts. However, the building industry has long been notorious for being the hang out of non-payers. Ask and subby.

[facthunter]

Especially doing it for Lawyers. You can forget the final payment when you get a bad one. They just keep on finding faults till you give up.  Nev

[Jerry_Atrick]

On our reno, have finally engaged a builder. After some of the most horrendously expensive quotes without them doing an even high-level itemisation, IO have agreen and open book time and material basis, where we agreed that I will directly purchase the bigger supplies and he will provide the labour. and smaller supplies. I do trust this guy because if he stuff up, word will spread quickly amongst his client base.

 

At least I have an estimate.

 

 

 

 

Edited March 31, 2023 by Jerry_Atrick

[red750]

Apparently they took a payment of $200,000 from a family only a couple of weeks ago. Now they have to rent. The company would have known they were going down the tube and wouldn't be able to refund,

 

[Jerry_Atrick]

If that is the case, then they may be able to pursue the directors if they were still operating while insolvent or knowing of impending insolvency. But, most company directors aren't stoopid enough to have too many assets in their name that can be grabbed in a claim.

[Old Koreelah]

We old farts are of the lucky generation; I was even luckier to be able to build my own home, after our bank manager said I’d never get a loan on my single income.

Don’t be surprised when the current working generation lose enthusiasm for all the discounts we seniors are currently entitled to.

[Bruce Tuncks]

I agree with oldK. As I am writing this from a shed with house-like interior, I reckon I know well what building can be done by oneself. And much cheaper...

We just built ourselves a holiday house but then sold out in SA and now live here in it.

Sorry to not have more sympathy for those poor clients of the gone bust builders.

A mate of mine got a quote for a carport and when he was not satisfied that the contractor would not go broke, he paid for all the materials himself and then owned them. Everybody, including the contractor, was happy with this deal.

[spacesailor]

SO How do those victims Loose the land , they own , to a contractor , who goes bust with the administrator locking .

" Their house , on Their land  " , from the Lawful owner .

spacesailor