Singing the blues

It’s also been a jagged reminder of just how quickly the pendulum can swing, and how empty all that talk about an end to the business cycle was. City Lofts has became the first big casualty but a great many smaller firms look equally vulnerable. As we report this week, everyone from housebuilders to brickmakers are in more and more pain. Who knows how many boilermakers, carpet fitters and bathroom suppliers can’t see where their next job is coming from? One of the more revealing stories this week was that recruitment agencies were charging professional such as land buyers a fee to look for jobs.

Thank goodness contractors are not suffering the same upheavals as housebuilders, but the sector is feeling the blues as clients look to cancel or retender jobs and squeeze costs. All this while the cost of energy, steel and concrete soars on the back of China’s boom (as we report this week, China is consuming 35% of the world’s steel output). This means that contractors are not benefiting from the deflationary effects of a downturn; rather, prices are rising strongly between the agreeing of the contract sum and the letting of the works packages.

There’s no magic spell for getting the industry out of this hole. That said, suggestions from some in the sector, including David Pretty, who chairs the new homes marketing board, ought to be given consideration. These include waiving stamp duty for first-time buyers on homes worth less than £250,000.

The direness of the situation is underlined by figures compiled by the Home Builders Federation, which show that more reservations are being cancelled than taken up. There is little more housebuilders can do other than hunker down and pray that liquidity returns to the mortgage market before the consumer crisis and job losses get so bad that the only way to shift houses is to give them away with cornflake packets – that is, if the price of food doesn’t keep rising, too …

Figures compiled by the Home Builders Federation show that more reservations are being cancelled than taken up

Improving our public speaking

The proposal to give construction a powerful new voice within the CBI headed by John McDonough has to be welcomed with open arms. The CBI has the government’s ear and there are a great many issues that affect companies in all sectors (the energy crisis is a case in point). What we don’t know is how much the new group will overlap with the Strategic Forum. And what happens to the bodies we have now? We know the Major Contractors Group is to be consolidated with the National Contractors Federation, and we can expect the Construction Confederation to be scaled back. Nothing gets more fur flying than changes in trade bodies, so this is a brave move on the part of James Wates and Stephen Ratcliffe – assuming it leads to a more efficient and effective operation, even if it can’t please all the people all the time.

Denise Chevin, editor