Who Killed The Construction Industry?
“The construction industry is coming back,” or that’s what they’d like you to believe, but the numbers are not there. Private building has fallen to a twenty year low. Projects just don’t “pencil” unless the clients are in the upper fifteen percent money class.
According to a survey launched by the contractorside.com (contractorside.com), Contractors, Trades Person Survey (https://docs.google.com/forms/d/1JKQfQbX2zGlvXcU-rF5zhfYhm7tWyp0SzB6rlxSVNlI/viewform) trained, experienced craftsmen/women have either left, or are considering leaving, the profession by a statistic of 82%. And this is extrapolated from a gross number of respondents equaling better than high 3,000,000.
An entire class of citizens have all but disappeared from the American workplace, and the statistics grow worse by the day. And no one integrally involved speaks a word, not even those who depended on a decent market for the plying of the skills.
What the hell happened?
It would be convenient, and probably true, to blame the crash of ’08 for the eventual drop in the construction business in the following year. But it is important to recognize that recessions do not happen overnight or over the course of a year or two. Slumps are not batting averages, and while the dips are pictured in graphs as immediate, shortfalls are the result of years of policy that take time to propose and effectuate.
This particular recession was seeded as far back as the Clinton terms when unworkable ideas were propped up by an unforeseen wealth of several economic bubbles, the wild growth of the internet for one. Earlier bubbles were foreign trade, oil, and electronics driven, but all crammed money into an economy that spread well-being indiscriminately. Market corrections were brief, shallow due to Fed policy, but the main thrust was fueled by the enormous wealth and power of the United States’ ability to lead by creation.
Hard on the heels of Clinton, Bush was intent on education infrastructure and creation of an intelligent market. But 9/11 happened and all bets were off. It has gone largely undefined that the WTC event was a financial strike paralleled only by Pearl Harbor. Economists held their peace, but the attack was enormously important in terms of financial devastation. But life went on due to the incredible strength of the American people. However, the stage that had been set during the earlier Presidency was furnished and waiting for its actors.
Along came the crash (and it was a crash perpetrated by very cupiditas people in the financial sector), followed by the election of Barack Obama and his ideological cadre, and the Fates wakened from their slumbers. Alia jacta est.
Years of regulation, begun in the Carter administration, continued in every one since, of banking, building codes, and safety concerns drove prices ever upward. But during those times no one really noticed. Cost creep was an advantage to those whose prices were determined by profit percentages. The money was there, so the numbers averaged in to the delight of all except lower echelons of buyers.
After the fall, banks were frightened. They were re-invigorated with cash infusions from the Fed, but they were loath to lend because of uncertainty as to borrowers’ ability to repay. And there was no leadership provided that reinforced confidence in the marketplace. Politicians were more concerned with institutional funding, less attentive to the real market of everyday people.
Add to the above the acquiescence of small business, the abject refusal to these free enterprise participants to take issue with what they predicted could happen. Whether they didn’t care, were intimidated, or exhausted, the small businesses did little to save a once vibrant part of American life.
One hears that the construction industry is on the upswing, and one might believe it to be so until the facts are told.
Large construction companies either merged or bought others to survive. Lost in the equation were personnel cutbacks to avoid duplication of service. Further, apart from powerhouse corporations with extremely credit worthy clients, fully 83% of all work in the United States is Government building which accounts for 6% of the GDP. An industry that once occupied 24-27% of the GDP in the 90s, now bears only 8% of the GDP, a third of what it was.
The wounds suffered by the construction industry were self-inflicted as if the “Murder On The Orient Express” were a suicide, only it took longer.
The business can be saved, but the salvation will not come from the top. New ideas with cooperation from banks, agencies, and government are the only avenue for the base work force, but with this administration hopes are slim to non-existent.
If the craftsmen/women have any chance, it will necessarily sprout from them, the ultimate in free enterprise. The federal people cannot be trusted with small business careers.
All construction starts from the ground, not the ivory tower.