I never thought I would say this — the banks have saved our industry’s bacon! Last week I was in Florida at a conference on builder management. The situation over there is dire.
It brought home to me the importance of the rigor that our banks (which, incidentally are four of the world’s top 20 banks) have placed on local businesses and, in particular, the construction industry.
Had these measures — sometimes perceived as draconian — not taken place I have no doubt New Zealand would be smothered by a gross over-supply of homes, and we would not have a collective optimistic bone left in our industry’s body.
In New Zealand we have dropped to about 45% from our peak. In comparison, the United States building industry peaked at 2 million homes a year. This year they are predicted to build just 340,000 homes, some 17% of what they were doing.
This is further pronounced in over-supplied areas such as Florida, coming off a peak of just under 30,000 homes to just 150 homes per month.
You do the math. In other words, there are areas in the States that have been decimated.
There was one builder who owed more than $7 million in one development who just stopped payments. He then waited for seven months before the bank called.
I am sure the wait in New Zealand would be only days or even hours. It is this type of efficiency that has saved our bacon, otherwise the public purses would have been called upon, and the losses would have been unthinkable.
Apparently the most popular builder education courses in the US revolve around how to liquidate your company for another day.
We may think it’s tough out there in the market and we may be unsure that the market is coming to a positive position but we, as a country, are in a much better position than many.
I will take this opportunity to thank all those who attended the conference for their support and kind words.
The conference has changed markedly since I first started attending. It is now a lot more relevant to today’s industry needs and should be supported by many more than attended.
In saying that, it was also a lot of fun, and those of us who were there are more than a bit worried about how Ginette McDonald could possibly know what we get up to at shower time! I would like to especially thank the sponsors for their support through this tight time.