The construction industry has fallen upon hard times. The mushrooming buildings, houses and projects that once dotted the T&T landscape no longer exist. On the flip side, people are awaiting the 2012 budget to be presented by Finance Minister Winston Dookeran on October 10, to determine whether there would be the long-awaited and much-anticipated stimulus. The construction industry operates at a capacity of billions of dollars, generates employment and contributes to the Gross Domestic Product.
President of the Sub Contractors Association of Trinidad and Tobago (Satt), Labib Najjar estimates the construction industry at about $7 billion and employing about 80,000 people for 2010. In a previous interview (November 2010), Najjar said: "Before the downturn, the industry employed about 300,000 people. Now it employs about 80,000. The construction industry is the first to feel the blow if there is a downturn. It is the first that will pick up if the economy is on the upturn. Construction workers spend money which goes back into the economy."
Sagewan-Alli: Construction has contracted
Executive director of the Caribbean Competitiveness Centre/economist Indera Sagewan-Alli says the "construction sector is not even at a standstill. It has contracted." Without mincing words, Sagewan-Alli said: "There has been large scale unemployment and economic activity has ground to a grinding halt." Contractors are looking forward to government expenditure when the budget is presented to stimulate or revive the dormant sector.
Sagewan-Alli added: "To a large extent, we have seen a shortfall in a large number of projects. We saw a shortfall in government expenditure through the Public Sector Investment Programme." She said the (PSIP) was the programme through which the government spent monies on infrastructural development that is largely construction based.
Real estate contraction
To compound it, Sagewan-Alli said: "We have seen a significant contraction in the real estate market." "Therefore, we are not seeing any new construction projects in housing because prices have fallen significantly for the private investor who wishes to invest in this market." The recipe lent itself to disaster.
"When you add both factors, there is a grinding halt in the construction sector. It is waiting for something to happen."
Sagewan-Alli said the industry was looking forward to the 2012 budget to be presented. She said: "We will be looking forward to the next fiscal budget. He (Finance Minister) has indicated it would be a stimulus." Recently, Dookeran went to Parliament and raised the debt ceiling. "We will see a ramp up in government expenditure which will hopefully redound to the benefit of the construction sector." Previously, Sagewan-Alli said there was massive expenditure in mega projects like road construction to the extent where there was a labour shortage.
"We had to look to the importation of labour from China. We are not seeing any real signs of those projects. We need an injection to stimulate the construction sector." Sagewan-Alli said the depreciation in the construction sector resulted "in an almost 30 per cent contraction in employment generation." She said: "Let's assume it contributes about 3 per cent that is the volume of economic activity by which the economy would have contracted. You would have pulled out that economic contributor from the system." Sagewan-Alli maintained the evidence lay along the highways where equipment was lying idle.
She said: "Contractors have told me it is as if the sector has been put on hold. "They have been told construction activities were put on hold. They are waiting for next month's budget to kick start the construction sector." Sagewan-Alli sounded a warning knell: "If we do not find ways to generate revenue, we will be increasing the country's national debt without having a clear perspective of how we will repay it." She said it was even more crucial that Government not create a liability for taxpayers. She cited an example.
"If we are talking about highway construction, it has to go hand in hand with an economic plan. There would be a direct stimulus to construction. There would be a longer impetus to creating new employment opportunities that the economy needs at this time." She said: "In fairness to the Government, they inherited a large debt. A lot of time was spent in terms of determining what was the true liability. Notwithstanding, Government has to provide direction and engender growth in the economy."
Saunders: Initial decline; now, an upturn
Richard Saunders, president of the Trinidad and Tobago Group of Professionals' Association, says the construction industry "initially, experienced a decline but there is now an upturn." He attributed the setback to the removal of the Patrick Manning administration which was replaced by the People's Partnership led by Kamla Persad-Bissessar. Saunders said: "Most of the other projects were stopped for review. The government had to review Alutrint and Tamana that engaged quite a number of professionals and labour." He said another reason for the construction delay was the failure of state enterprises to implement their boards.
Saunders added: "Again, they had to review what's on the table before they moved forward. We had some decline because they were writing new projects. We were seeing evidence of new projects coming from the state enterprises. They required a major driver." During the last period, Saunders described the construction industry as "overheated." It meant it was difficult for a homeowner to procure the services of a mason or plumber. He said: "Everybody had a job. If you wanted to get a mason it was difficult. If you wanted a painter, it was tough." He said: "You could now negotiate with contractors for work. You could start new construction because of the situation.
Since there are no big projects, it is creating another kind of economy. It has modulated the "overheating" in the cost of labour." Meanwhile, Saunders predicted the industry was going to continue to depend on the Government and government related projects. He said: "It is important to pick the right kinds of projects which could generate the job creation and economic transformation." Taking a snapshot at the bigger national picture, he said: "Very soon we will have the non-energy sector. The question would be how do we transfer from oil to the non-energy sector. How will we ensure the country's survival and development?
Tips to stimulate construction sector
• Construction stimulus must be tied to diversification platform
• Imperative to find new ways to generate revenue
• It is crucial for government to see the links between construction and revenue generation
• Create a development strategy; for example, the tourism sector would require personnel to fix heritage sites and enlist the services of architects, landscapers, and gardeners.
• Don't go into overdrive; better to have orderly development than jolt of a growth
• It would be better if people had to expand a company by 30 to 40 per cent and suddenly it comes to a crashing halt
• Focus should shift to housing, building and construction
• It should entail a wide cross section of planning