Construction ‘growth’ not being felt by local companies
GOVERNMENT officials have seen some level of growth in the construction industry and have projected better days ahead for the struggling sector in the near term. But local companies paint a different picture.
The Planning Institute of Jamaica (PIOJ) recently estimated a two per cent growth in construction over the first quarter of 2013. The PIOJ estimated building construction to have increased, with housing starts and completions up 11.1 per cent and 793.2 per cent respectively. The institute stated that “other construction” activities grew, reflecting higher capital expenditure by the National Works Agency, up 145.3 per cent to $2.2 billion; Jamaica Public Service, up 62.6 per cent to $1.6 billion, and National Water Commission, up 272.0 per cent to $4.7 billion.
According to the PIOJ, increased capital outlay on major infrastructure development works should fuel further growth for the sector during the April to June quarter.
But, reacting to the PIOJ’s assessment, the president of the Incorporated Masterbuilders Association of Jamaica (IMAJ) said the positive out-turn on paper has generally not been felt by local players.
“I really don’t know what the source of that growth is,” said Carvel Stewart. “We haven’t seen the growth.”
Stewart’s sentiments were echoed by Surrey Paving and Aggregate Company project director Michael Archer, and Jamaica Pre-Mix managing director John Valentine.
While there is an anticipated uptick in construction, Archer noted that the major impact will be around the North-South link of Highway 2000, which is contracted to China Harbour Engineering Company. But this will not have much spill-over effect on local interests in the sector, he said.
“As far as I am aware, the Chinese are bringing in a significant amount of resources and will rely in a very limited way (on locals),” Archer said.
“They bring in everything, including trucks, concrete blocks, asphalt plant, etc,” he noted.
Valentine argued that, of the current dollar value of construction, maybe 15 to 20 per cent reaches down to locals.
“It might provide a little bit of employment, but the activities don’t flow to local suppliers that much because the Chinese tend to be very vertically integrated in their operations, down to labour,” he said.
Although indicators suggest that there will be more construction activity in the near term, including projects by Gore Developments, West Indies Home Contractors, Housing Agency of Jamaica and National Water Commission, Archer said that the industry has a long way to go in order to rebound from many years of decline — the construction sector has recorded annual growth only once (2011) over the last five years as it struggles to recover from the global financial meltdown.
“There is an anticipated uptick, but given the doldrums that we are in, it will take more than we anticipate to turn the sector around in the way that we would like to,” Archer said.
What’s worse is that there are signs that solutions from the National Housing Trust (NHT) has already been impacted by Government’s plan to draw down close to $45 billion from its coffers over the next four years.
“There are some things in the pipeline that we anticipated would start in the first quarter but they have not,” said Archer, a sentiment that was echoed by Stewart.
Against that background, the industry players will have to just “wait and see”, added the IMAJ president.
“We are waiting to see what will happen. We haven’t seen in concrete ways what the proposed developments are in the public sector,” Stewart said.
The gloomy picture painted by construction industry insiders follows another sluggish year for the sector in 2012, including a slowdown in activity among both residential and non-residential projects compared to the previous year, when the industry primarily benefited from higher levels of activity on road improvement works under the Jamaica Development Infrastructure Programme, the Palisadoes Shoreline Protection Programme, and the South Coast leg of Highway 2000.
With little business, contractors just tried to weather out the year with the hope that there would be an uptick in 2013. They got their wish on paper, but not in reality, they say.