ISSUE 5 - aug/sept 2013

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Are better times ahead?

Small Business survival


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construction recovery


It has been tough in the construction industry for many years, but there are promising signs of a recovery.


In 2008, the global financial crisis took to the Australian construction industry with a baseball bat.
Ongoing negativity from our political mates in Canberra over the last few years have added plenty of jabs and a few uppercuts.
A ridiculously long lead up to the federal election has put the boot in - just for good measure.
On top of that, general consumer confidence is still very low.


It hasn't been easy.

Any time there is a down turn in the construction sector, plumbers who usually work in housing and renovations move into maintenance. That then floods the market and makes it ultra competitive - which often triggers a price and service war - which nobody wins.


There have been some shining lights among these tough times.
If your business has been directly or indirectly connected to the mining industry, you've more than likely done very well. Darwin for example is firing with new, huge oil and gas projects sucking up a lot of trades, which then creates additional work opportunities in housing and maintenance as well.


But for most areas, according to many, it has been as tough as it has been in living memory.


Signs of Recovery

Like all things, the economy and hence the construction industry go around in cycles.
Many of you would remember the boom in the late 90's, where every bloke and his dog was either renovating or knocking down and rebuilding. Credit was easy and money was plentiful - happy days!


While it could be a while before we see buckets of money being thrown around, things are falling into place for a recovery.
After all, it's long overdue!


The Election

For some bizarre reason, whenever an election is called, people stop spending. It doesn't make sense, but it happens every time.
(A note for politicians, if you give a toss about small business - PLEASE have quick elections!!).

No matter who wins the upcoming election, there SHOULD be more stability and consumer confidence.
Home owners hold off rennos and maintenance when times are tight, so when a bit of confidence returns to the economy, people start to get things fixed around the home.


Changes in the Mining Sector

In case you hadn't noticed, there has been an unprecedented mining boom, which has resulted in massive construction projects to set up mines and supporting housing and communities.
But the construction phase is slowing down and entering the production phase.
Additionally, demand for resources in China is slowing a bit, so another sector of the economy needs to pick up the financial slack.

Enter the construction industry!

Heres what BIS Shrapnel (a leading research, analysis and forecasting company) has said:
"The generalised upswing in building activity that the Australian economy needs to rebalance its growth in the wake of the mining investment boom will gather momentum over the next two years".


Lower Interest Rates

The Reserve Bank has also recognised the need to stimulate the construction industry.
“With mining investment down and prospects for non-mining business investment still quite subdued, the RBA is counting on a decent upturn in the housing sector to keep the economy afloat over the next year or so,” says Alistair Walsh of the Property Advisor.
The RBA has cut interest rates to historical lows - and it looks like more cuts could be on the way.



Federal and state governments have their part to play too.
‘Ensuring the construction recovery is sustainable is the key, but that looks unlikely based on current policy settings. There is not enough policy focus on housing reform at a state as well as federal government level,’ said HIA chief economist Harley Dale.

Land releases, infrastructure projects, reductions in 'red tape' (PLEASE!!) and I dare say it, some more positive messages about the economy and the country's future can also contribute to a strong recovery.

And the spin offs from a thriving construction sector are far reaching throughout the rest of the economy, so let's hope that all governments recognise the need for stimulus - and it happens soon!


So don't go out and buy the stretch Hummer just yet.
The signs are good, but it takes time for any economic recovery to build momentum.
In the meantime, business survival is still the key.


Click here to read our article on small business survival tips.


Is construction picking up in your area?

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