It seems difficult to believe that the global economic turmoil in which we live has now been with us for more than three years.
In fairness, due to various factors providing initial insulation, the local construction industry kept up its pace for another year or so after the original meltdown.
But by October 2009, the signals were clear that the boom had come to an end.
As I prepared my thoughts for this column, I spent some time reviewing the prognostications of my predecessors over the past two years.
While none of us are prophets, it is interesting to look at what we were predicting, and compare those thoughts to what has transpired, and where things are going in the near future.
The headline for October 2009 was ‘New projects on hold as industry slows down’.
Talk of the lack of new construction starts, architects on four-day work weeks and new Government projects on hold, provided a foreboding sense of the difficult decisions to come.
New normal
Most of us were only thinking about the lay-offs and redundancies that would form the human side of our cost-cutting measures.
These thoughts were soon to become the nightmares of our reality.
The April 2010 message to the community tried to put a brave face on the situation by pinning hopes for recovery on the potential for future hotel projects.
Without any real evidence of economic stimuli to support such investment in our economy, this was a bold attempt at optimism and, ultimately, accompanied by an admission that companies were beginning to struggle to find work.
The Construction Association President’s article, in the Fall 2010 supplement, revealed a Department of Statistics report of a 50 per cent decline in work put in place over the previous year.
Once again, in an attempt to shed some positive light on things, this pointed out that the benefits of intense competition for a small pool of work had finally tipped development firmly in favour of the consumer, with long lists of bidders resulting in the tightest margins in a long, long time.
The biggest news in this edition was the prediction, by the then Minister of Works and Engineering, that a WEDCO initiative to build 100 new homes in the west end would break ground by Spring 2011.
At last sighting, the ground clearing has been allowed to reseed and grass over.
By Spring 2011, we had the Government’s full attention on the issue of how to re-stimulate the economy.
An Economic Taskforce was formed by the then Minister of Economy, Trade and Industry, comprising all factions of the local economy.
Their report to the Minister recommended reviews of protectionist property laws, updating Trust laws to improve our global competitiveness, and reviewing Immigration policies to make the island more user-friendly for our foreign currency revenue engine, International Business.
That was a year ago and, in the same supplement, one of my predecessors (former CAB president Alex DeCouto) spoke of the “new normal” for construction businesses.
There was a certain comfort factor in the remark, as we were all looking for signals that the dramatic changes taking place within our businesses were coming to an end, with a return to something resembling normality.
However, the ‘normal’ described was more a picture of cost cutting, lay-offs and substantially less turnover.
Businesses were beginning to face the fact that they could only downsize labour resources so far before they couldn’t produce enough to cover their fixed costs.
High risk
Owners were becoming more hands-on as layers of management disappeared, in an effort to make the business as efficient possible.
And just when some owners thought it couldn’t get tougher, moratoriums on some work permit categories began to be enforced, with a resulting loss of skilled workers, just at the time when we needed them most in order to maximise our efficiency.
And yet, through all the hard business decisions, downsizing, refinancing, reduced margins, Government intervention and stress of the last two years, we’re still here to talk about it; most of us at least.
We’re not necessarily the same companies that we once were but, in a lot of cases, we are stronger for the challenges of restructuring and more efficient.
It’s a wake up call and, some would say, one that was long overdue.
Now, don’t get me wrong, the brutal competition for jobs is making it pretty tough to be profitable, and the new normal is often an objective to at least break-even, keep key employees busy, and stay open for business.
In the high-risk environment of a construction project, operating that close to the line can have heavy consequences.
One of Bermuda’s leading developers over the last decade recently pointed out the difficult current prospects for tourism development.
Investment
His advice alludes to the possible solutions for our re-stimulus: Rethinking the way we do business in Bermuda generally.
This is not only valid for construction businesses, but for all businesses and Government included. We must innovate to survive.
One of my learned predecessors as president of the Construction Association once said: “The role of construction in any economy is to act as an engine for overall economic growth, locally creating thousands of jobs and millions of dollars in tax receipts for Government.
“The fuel feeding that engine is provided through capital investment in the economy... continued capital investment.”
We have all seen the impact of an interruption in capital investment in the last few years.
In time, the fuel will be found by entrepreneurs and, with Government’s cooperation in removing impediments to attraction and securement of this fuel, as well as general public buy-in, we will be able to feed the engine once again.
Right now, many of our engines sit idle.
It is time for all of us to understand the impact of our collective decisions and individual actions, and realize that we all have a part to play, no matter how small, in re-feeding the machine.
• Charles Dunstan is the president of the Construction Association of Bermuda. Contact 202-0633 or go to www.constructionbermuda.com for more information.