Focus on economic foundations required

Monday, 26 January 2004 02:00

Building and construction 2004

Outlook for 2004

Monday, 17 November 2003 02:00

Engineers alarmed at shortage of skills

Consulting engineers have voiced serious concerns about the shortage of skills in the profession

Wednesday, 12 November 2003 02:00

Toll road objections

The Cape Town Regional Chamber of Commerce and Industry has written to the Minster of Environmental Affairs and Tourism to register its strong objections to plans to turn sections of the N1 and N2 into toll roads

Thursday, 14 August 2003 02:00

Lack of skills hits building sector.

WHILE construction companies have hit hard times mainly because of the rand's strength this year, there is growing concern that the industry will not be able to meet demand in a few years. 

Construction Industry"The industry will need to double its capacity in about 10 years if government meets its 5% to 6% gross domestic product growth target," says the Construction Industry Development Board's CEO, Spencer Hodgson. 

The board is a statutory body aimed at enhancing the sector.

Economic growth at these levels would require construction growing significantly faster than 5% or 6% a year, says Hodgson.

The problem is that the construction industry is not retaining or attracting skills, he says. 

The board's deputy chairman Pepi Silinga has said there was "an urgent need to address the distressing capacity deficit" in the industry.

The small and shrinking portion of matriculants that have mathematics and science as subjects are opting for "lifestyle" careers, and no longer the construction sector, Hodgson says.

Henk Langenhoven, head of the South African Federation of Civil Engineering Contractors, agreed that the decline in SA's output of construction skills was worrying.

However, Langenhoven said that concern over industry's ability to cope with growth was invalid. He could not foresee economic growth of 5% to 6% materialising.

"This is because we need more gross fixed capital investment before we can reach these economic growth levels," said Langenhoven. "And the public sector does not have the capacity to spend this kind of money," he said.

He suggested the concern should rather be greater about government's inability to deliver.

He said several companies in the sector were, in fact, now considering cutting skilled jobs such as engineers, because the industry was in a poor state.

The strong rand, which had taken the steam out of mining projects, together with lack of government spending were the main culprits, said Langenhoven.

"There is virtually nothing coming out of the government departments at the moment," he said.

Langenhoven said there was a massive lag between the announcement of the budget in February and actual spending, which was not yet taking place.

The proposed Skuifraam dam in the water-short Western Cape illustrated government's inability to deliver projects, said Langenhoven. "This project has been on the cards for eight to nine years," he said.

Meanwhile, government's concern over the ability of the construction industry as the creators of infrastructure to cope with future demand, has prompted it to investigate several initiatives.

A construction industry week has been mooted by the public works department to raise the profile of the sector and awareness around it.

The concern over capacity is also one of the issues on a draft agenda for a construction sector summit expected to take place early next year.

Black empowerment and possibly an empowerment charter for the sector will be discussed.       

 

Monday, 14 July 2003 02:00

Business slows in the building sector.

BUSINESS conditions in the building sector have deteriorated in the second quarter as high interest rates take a bite out of residential property demand, a survey from the University of Stellenbosch's Bureau of Economic Research shows. 

Construction IndustryThe bureau's business confidence index for the building industry slipped to 54 last quarter from 58 in the first quarter as economic growth slowed. The delayed effect of last year's four interest rate hikes "have now left a mark on the industry", the bureau said.

Residential property was worst hit by the high interest rates and a slowdown in gross domestic product growth, with building contractors' profit margins coming under pressure in the second quarter, resulting in job losses. 

Domestic demand has been fairly resilient in the first quarter, with the construction sector benefiting from capital expenditure projects in both the public and private sector, according to last month's Reserve Bank quarterly bulletin.

However, the survey results signal much weaker conditions in the second quarter.

"Growth is slowing down in the building sector, which has hurt business confidence. Retrenchments have increased, especially in the residential sector, as business conditions have deteriorated," said the bureau's senior economist Charles Martin.

Civil engineers, typically involved in large government infrastructural projects, experienced far better business activity in the second quarter compared to other sectors of the construction sector.

Civil engineering firms said competition for tenders was intense and profit margins were under pressure, according to the bureau.

"The majority of contractors polled expect the market to weaken somewhat in the third quarter," said Martin. A lower interest rate this year was likely to boost the industry's prospects, but this would materialise only next year.

"Conditions are weaker, but this is not a recession. We will see a gradual pick-up in business confidence by the fourth quarter, but a full turnaround is only likely next year," said Martin.

The confidence index has a tendency to lead the official building figures released by Statistics SA by at least two quarters.

Stats SA's April release of building figures shows an 8,4% year on year drop in actual building plans passed, with less building plans passed in Gauteng, Eastern Cape, Mpumalanga and Northern Cape this year compared to last year.

The real value of buildings completed in April increased by 2,7% year on year, mainly due to a sharp rise in non residential buildings, according to Stats SA's figures.

The survey shows building costs have remained high, despite the strong rand reducing the price of imported inputs.

However, costs are likely to moderate during the year, with the bureau forecasting building costs to grow 8% this year.      

Wednesday, 28 May 2003 02:00

Hub will promote innovation

Gauteng's Innovation Hub, an initiative intended to enhance the province's innovative capacity and economic development, is set to take transfer of a site for southern Africa's first internationally benchmarked Science Park.

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