Letter from America

In America these days, on a dozen or more television channels, the morning news is good for investors. The stock market may have its share of bad days, but these are only blips. Company after company seems to be enjoying good times; industrialist after industrialist basks in the admiration of the financial journalist conducting the interview.

It is as if nothing could possibly go wrong with the financial markets. Britain’s economy is admirable and Japan’s economy is recovering (the yen has risen in value by 30% in the past six months). America’s economy has never been better; its achievements – most notably the creation of 30 million new jobs in the past 10 years – are almost beyond belief. Having a president whose attention seems to have been on other matters, leaving the economy in the capable hands of Alan Greenspan, chairman of the Federal Reserve, seems to have had a beneficial effect.

When all is well, however, it is human nature to think that there must be something wrong. Of course, something is wrong, and that something is shopping. Some of the great retailers in Britain have been having a dreadful time. In America, it is small retailers that have taken a beating, with 20% of last year’s Christmas trade taken by the Internet. In a country used to shopping by catalogue, the Internet is now becoming a truly formidable force.

The change brought about by the Internet has a speed and grandeur about it that many of us find hard even to imagine, let alone deal with. There will, in the process, be losers and businesses wiped out, just as there are massive winners who have made great fortunes.

The construction industry, however, is one service industry whose product cannot be bought from a catalogue. Nevertheless, it needs to think long and deeply about the changes that are taking place. The speed and ease with which information can now be passed and the almost instantaneous translation of languages have both led to contractors becoming more international. American contractors are already looking to Britain for expansion.

A great deal of work around and few people to send it out to leads to a situation where costs rise and tragedy follows

So, what is it like in America? Is there plenty of work for contractors? America is in many respects like the curate’s egg: good in parts. Las Vegas, for instance, is booming; gamblers with money to spend flock there and tourists with only a few dollars come in their millions to join in the fun. Los Angeles, bitten by a recession in physical shopping, seems quiet. New York, on the other hand, seems to be as busy as ever. In general, there is no shortage of work in America, only a shortage of workers.

A major builder in Los Angeles tells me that finding reliable subcontractors these days is a considerable problem. How often have we heard this same story? A great deal of work around and few people to send it out to leads inextricably to a situation where costs rise and tragedy follows.

Remember though, a market that is booming is not the place for a foreign contractor to look for work. Overseas ventures should be considered in a long-term context and foreign markets entered only when work is short and labour plentiful. This gives contractors time to follow their learning curve, ensuring that they are well-placed to enjoy a boom. Contractors’ mistakes in a soft market are likely to be small, whereas in a red-hot market they have a history of being catastrophic.