Editorial for July 16: Surviving the construction lull

These
aren’t easy times for the construction industry.

There
isn’t enough work to go around and contractors are struggling to survive. Many
construction workers have been laid off, including Caymanians and permanent residents.

Many
foreign construction workers have left the Island after being laid off, adding
to the contraction of Cayman’s population and economy.

Although
there is some optimism that the government’s new initiatives will lead to
renewed construction activities, nothing is certain right now, leaving
contractors with little to do but try to hold on for better times.

It’s
always hard when companies in any industry struggle or go out of business and
have to lay off staff. Many in Cayman’s construction industry probably didn’t
see this severe of a downturn in business coming. After the kind of
construction boom that Cayman experienced from 2005 through 2007, it’s hard to
blame them.

But
the construction industry, like most aspects of the economy, is cyclical and
strong businesses prepare for the inevitable slow times. Those that do and then
ultimately survive will find themselves in a stronger position when the economy
recovers.

It
can probably be argued that Cayman had too many construction companies anyway.
The high demand for builders after Hurricane Ivan in September 2004 led to a
proliferation of construction companies that wasn’t sustainable in the long
term, and the current situation will act to prune away the weaker companies.
These kinds of market adjustments are usually a good thing – at least for an industry
as a whole.

These
kinds of tough times also tend to make the survivors better, more efficient
businesses with better management systems and less waste. This not only has
positive effects for the construction industry, but for consumers as well, who
can benefit from job prices that are based on more efficient operations.

The
current economic downturn can also offer an excellent opportunity for those
bold enough to build now, especially with interest rates as low as they are.

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