This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - Oct 31, 2011

Alex Carrick
Categorize economics to the dismal sciences or the sexy humanities?

It’s a topsy-turvy world in the economy these days.

A great deal of relief comes on the heels of the accord reached in Europe to deal with the sovereign debt problems of Greece and a few other nations.

Currency exchanges and stock markets have expressed their approval.

Some question marks remain nonetheless.

They can be summarized as follows.

Even with the haircut on its debt, can Greece actually grow as hoped for? That nation has very limited industrial capacity, deriving much of its income from the tourist trade.

If Greece wasn’t locked into the Euro, it would be able to lower the value of its currency and attract more visitors that way.

But that’s not an option.

Will Italy do what it’s supposed to? Will it adopt the measures to restore fiscal responsibility that Germany, in particular, is calling for?

Or will it continue to talk about cutting spending and getting its fiscal house in order while delivering a lot less than promised?

Will a credit event be initiated? The communiqués after the meeting of European leaders stress that agreement has been reached with major banks that they will “voluntarily” accept a cutting-in-half of Greece’s debt commitments.

All the players must present a united front in this deception. If a major bank breaks ranks and says it was forced into accepting fifty cents on the dollar, messy and enormously expensive insurance payments may be triggered. 

These will be automatically invoked by dreaded and barely comprehensible, at least in laymen’s terms, credit default swap provisions.

Finally, a huge increase to the European Financial Stability Facility is being planned.  China, with over $3 trillion in foreign currency, is being counted on to supply some of the funding. This may be nothing more than wishful thinking. 

Nor are present economic circumstances around the world without their droll aspects.

For example, economics is often referred to as the dismal science. On a day-to-day basis, it holds only limited sex appeal.

That may not be an entirely accurate depiction.

Moral turpitude has been playing a role in some of the recent shenanigans that have been taking place around the world.

For example, the current head of the International Monetary Fund (IMF) is a newbie – Christine Lagarde of France – because the former boss, Dominique Strauss-Kahn spent a chunk of time earlier this year locked up in a New York jail cell for questionable conduct with a hotel maid.

On that charge, he was eventually released when doubt was thrown on how credible a witness the maid would be in court, having lied on some of her immigration documentation.

But his problems didn’t end there. DSK, as he’s known in France, has been accused by various women in his home country of unwelcome advances, if not a great deal more.

In China, high-speed railroad construction has been halted after a couple of crashes resulted in mortalities that shocked the nation.

Some investigative digging has revealed that the czar responsible for awarding contracts for the possibly shoddy construction work was taking bribes, probably to support the 22 “girlfriends” he’s alleged to have been involved with.

As for Italy, hands up anyone who thinks Silvio Berlusconi has been fully concentrating on better managing the finances of that country rather than being side-tracked by some of his other “affairs”.

He’s gained far more notoriety lately as a party-hardy playboy than a statesman. He’s another one who’s had to step pretty lively to stay out of jail or avoid forced removal from head of parliament.

This kind of behavior is nothing new. In the free-wheeling Ken Burns documentary, “Empire of the Air”, which sets out the golden days of radio in the U.S., there is some revealing commentary about how to “grow” a business.

Guglielmo Marconi may have discovered radio waves – although there is apparently some controversy about that claim, with many experts thinking Nikola Tesla should get the credit – but it took others to recognize the potential and take advantage of the business opportunities.

One of those men was David Sarnoff, who assumed the reins of the Radio Corporation of American (RCA) and turned it into a powerhouse, eventually also founding the National Broadcasting Corporation (NBC) at the outset of the television era.

When first hired by the forerunner of RCA, according to the documentary, one of Sarnoff’s jobs was to deliver flowers to the mistresses Marconi had stationed all around New York.

So let’s move on to a more high-minded subject and I’ll close by setting out why I like being in the construction industry.

There are three primary reasons.

Economics is often said to be an art form more than a science. If that’s true, then there is a good fit with construction on the cultural front.

Thanks to the design professions, construction truly is an art form. When one studies fine art in college or university, there are three branches – painting, sculpture and architecture.

Then there’s the matter of how construction is so forward-looking. It’s about investing in the future. Even demolition work is to make way for the new.

Finally, and this will come as a surprise to many in the industry who have experienced its cyclical highs and lows – and the shocks that can come with losing work and experiencing a bankruptcy – there is the exceptional stability.

Other industries come and go (e.g., video rentals), but there will always be construction.

Furthermore, in a developed country like Canada, the majority of the materials and labor will continue to be supplied semi-locally at the very least.

I have a saying I like to use when on the road and speaking before live audiences. “You can’t import a skyscraper.”

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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