Consider this a selfish cleansing post if you will.
I have very close ties to the home building/renovation industry in town. People are hurting. It has only just begun. I've heard anecdotal stories of small-scale businesses closing their shops on Friday afternoon and suggesting their employees "not wait for the call-back."
I know of larger scale operations that have work that are running five crews on a job where six months ago they'd have one. No one there is getting laid off. Yet. The work will get done five times as fast and then all five crews will be laid off together, unless the contractors secure more work, which is doubtful.
I've heard stories of frustrated estimators walking away from job bidding processes proclaiming that the winner "will lose money. They have to buy the same materials as we do and there is no way they are even covering their material costs adequately." And that's if they actually get invited to bid. Many are not. In a town of who you know, the who and the know just got exponentially smaller.
Government sent out a memo to all employees this past week to let them know that further announcements were coming. They attempted to dispel the "myth" that there is a hiring freeze right now, which is the first confirmation that there basically is a de facto hiring freeze. There won't be replacements for positions lost to attrition. Twenty percent of deputy ministers and assistant deputy ministers will lose their jobs. Most ministries have ended contractor relationships and frozen any further contracting out. After the budget on February 17th, more details about what the Public Service Agency is going to do will surface (read cut-backs to budgets and auxillary employees contracts terminated).
Real estate bubble bloggers have been targeted with all kinds of rediculous slander over the years: personally I've been called a bitter renter, an angry arguer, a negative nelly... and those are just the nice things. Lately I've seen comments suggesting that we bears who choose to sit and watch from the sidelines are heartless cheerleaders of destruction.
I'm feeling the fear and the frustration of the people I know and trust who are hurting right now. These are good people. They did their jobs: building people's new homes and helping people fix-up their old ones. They were honest and charged fair value for good work. And now the work is drying up fast.
It was reported today that housing starts dropped 47 per cent. That means there is 47 per cent less work for everyone in the construction industry in Victoria. Today. Trades-related employment grew so fast over the past three years, with so many young people entering into the field instead of going to university, that the long-time people I know were astonished. They'd seen it all before. The cycles. The downturns. But the kids haven't. Until now.
Some of them will leave the industry and go to university. Some of them will chase work elsewhere (but with the oil & gas industry basically shutdown in BC and Alberta and housing starts down a whopping 66 per cent in Calgary, there won't be much work to be had).
The people I know are family people. They are long-term Victorians who own properties here. They have bills to pay and mouths to feed. Sure they could sell their houses if it came to that. Most of them will be OK for the short-term. But if this dramatic drop speeds up and falls as far as some of us think it will, I shudder to think of the consequences. And most of the people I know in the construction business are telling me this is nothing like what they saw in the 80s and 90s.
During the party on the way up, we bears were called all kinds of nasty things for having the foresight to be concerned about the events we are starting to see today. Now as the economy shrinks and the wave-effects crash into our little worlds, we bears are smeared with similarly negative statements for having the "gall" to observe the local real estate economy with a healthy dose of analytical education and truth-based commentary, glass half-empty opinions or not.
When I hear about the good people hurting, I feel like I've been punched in the stomach.
If you or anyone you know is in need of some construction related tradespeople, please send me an e-mail and let me know how to put good local people back to work.