Post by Keithr0Post by NoddyPost by Keithr0https://www.news.com.au/finance/business/other-industries/700-jobs-100-stores-to-go-as-tyre-retailer-folds/news-story/f154c0e31e44b4df0e99e0549690e940
It's a worrying time.
The list of long established businesses that have folded in the last
18 months is staggering, With the building trade seemingly being the
most adversely affected with some 1700+ building companies, large and
small, going into recievership over that time. The flow on effects of
these failures are enormous, and combined with the Government's (both
state and federal) continual tax hikes to cover their own ineptitude
it looks very much like we're headed for a world of pain.
Hope people have got some cash squirrelled away....
Building companies have been hit largely because most of their contracts
are fixed price and there has been a major escalation in the cost of
materials.
That's one of the problems but it's far from the only one.
Major issues in the building industry at the moment are not only
material costs but also material shortages. Particularly of things like
Timber in Victoria where a state government moratorium on logging has
virtually brought an end to local timber production which has seen
widespread shortages. There have also been wide reaching changes to
Cultural Heritage regulations where now it is virtually impossible to
carry out any building project without first having obtained a "Cultural
Heritage Permit" which can take up to 12 months to be granted and cost
many thousands of dollars.
Some people have been critical of builders for having "fixed price
contracts" in environments like we see today, but they don't really have
any choice. Unlike your average new car buyer who can sign a "fixed
price" contract which will be full of clauses stating that the dealer is
entitled to change the contract price if the price of the car changes
between the time the contract is signed and the day of delivery,
builders do not have that luxury available to them as the building
contract has to be put before the bank for a mortgage to be taken
against it in the majority of cases, and there isn't a lender in the
country who will approve a mortgage where the contract price could be
out by thousands of dollars by the time the build is complete.
So the best most builders can do is lock the customer in at a fixed
price and hope like hell that the build goes to plan and they don't do
their balls in the mean time.
Sadly though, that plan isn't working out for a great many of them.
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Regards,
Noddy.