Monday, 9 June 2008

Harsh Realities Are Hard To Live With!

Today I experienced at first hand the devastating effect, on employer and employee alike, of having to make people redundant as a result of the economic downturn affecting the UK's construction sector.

The prospect of laying off any member of staff, particularly those you know are sole earners in their household, is simply something no one could enjoy - and it is certainly something that left me feeling totally empty as I arrived home tonight. And you know it's an immensely upsetting experience when you can see in the eyes of rough and tough Glasgow businessmen that they are being moved, as much as they would care to publicly show, by having to action this tough decision.

Every well run business has a wealth of reports and statistics on which to base its business plans and there is nothing more difficult that seeing figures that say an overhead needs to be trimmed, particularly when that overhead is in terms of members of staff. The Directors of the construction companies I manage have undertaken the painful process of laying off staff on the basis of the reports I provide and I feel completely devastated at the impact this is having on good people I have enjoyed working with.

And the reasons for the need to take such drastic action? Quite simply it is a complete lack of leadership and support for the sector from our Labour government.

Despite government set targets for a huge amount of new build housing over the next decade, and beyond, all our major house builders are suspending work on existing sites of pulling altogether new start sites on which they have placed orders. The reasons for this are two fold:

1) Our banks and financial institutions are reducing their exposure to risk in the sector by pulling funding from a huge number of construction projects;

2) It is so difficult for prospective home buyers, particularly potential first time buyers, to secure a mortgage because our banks are reducing their exposure to risk here too!

So, even though our financial institutions know there is bright future for the sector in the medium to long terms none of them are prepared to be the first to help stimulate recovery in the construction sector as they hold our Labour government responsible for the financial unrest they are experiencing as a result of the Northern Rock fiasco. Worse still, they see no leadership by government to encourage an economic upturn in the construction sector or the mortgage markets, which they appear to me to be taking as a sign that government is content to live with the current downturn - even though this will mean the UK misses the governments own new build housing targets!

I really can't predict what the effect on morale, as a result of today's lay offs, will be. My only consolation is that I know these businesses are fundamentally sound and that the remaining employees should enjoy job security, all things being equal. One can only hope that our governments doesn't do anything further to ruin economic confidence in which case the entrepreneurial spirit that built the companies will ensure long term job security for them all!

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