Tuesday, September 06 2011
Builders reporting drop in profitability and activity
37 per cent of commercial building contractors claim that recent spikes in labour costs have adversely affected their profit margins.
The Master Builders Association of Victoria (MBAV) released its Business Sentiment Survey yesterday (September 5), revealing the pressure felt by tradies across the state.
Growing pessimism and drops in profits are the key concerns contained the report, which aims to capture the collective outlook of the industry.
Most alarmingly, 58 per cent said that they had less than three months work currently on the books.
36 per cent of respondents expected the situation to worsen over the next 12 months.
Executive director Brian Welch says that recent jumps in wages are the leading factor - referring to a recent 27 per cent pay rise in the sector.
"This is an unnecessary obstacle to profitability in a sector that is already being hard hit by tightening access to finance and an imminent carbon tax," he asserts.
37 per cent of contractors consider high labor costs as the number one threat to profits, followed by the carbon tax (17 per cent) and lower government spending (17 per cent).
Tradies who are feeling the pressure may do well to investigate cost-cutting measures that don't affect the quality of their craftsmanship, such as hiring equipment instead of purchasing tools.