Master Builders South Africa warn of consequences of the present downturn in the building industry

The building industry is largely dependent on the amount of money released by banks to consumers for commercial, residential and industrial developments according to Master Builders South Africa, the leading body for the building industry, representing some 4000 contractors, suppliers and manufacturers.

Significant reduced funding from the banks is taking its toll on building activity and many Master Builder companies are being forced into taking drastic measures to ensure survival during the present downturn in building activity. The downturn has never impacted on the industry as rapidly as it has this year. After a few years of stability in the industry which gave rise to increased turnovers, safer profit margins, and more entrants to the industry in terms of new contractors, suppliers, manufacturers and students choosing the industry as a first career choice - the industry is experiencing the most dramatic and quickest downturn experienced in the last 22 years.

Residential projects have come to a virtual standstill with approved plans down to square metre levels not experienced since 1998.  The supply chain to the industry is taking a serious knock. Cement and brick manufacturers are reporting reduced supply levels of up to 40% year on year. Some brick manufacturers - have come to complete standstill by closing their plants. Cement sales are heading towards the same levels as 1962 (ref: MFA). Other manufacturers in the industry are at seriously low levels of production which impacts on the suppliers who get caught in the vicious cycle of downturn.

This downturn results in companies taken drastic survival measures - first of which, is the retrenchment of staff - skilled and unskilled. The impact of this is huge and it only exacerbates the continuing rise in unemployment levels leading to social problems. Should this situation not be arrested soon the future for the industry is bleak, which is a sad indictment on a developing nation.

The new credit act has compounded the problem as banks can be taken to task, even by the borrower, for over lending.

Government stimulus with planned infrastructure building projects and lower interest rates would be a kick-start towards an upturn. The new credit act has compounded the problem as banks can be taken to task, even by the borrower, for over lending. However, Master Builders South Africa urges the banks in particular - to assist the industry by reviewing their present lending policies.

Press Release | Master Builders South Africa