It takes two to tango in property as developers reel from labour crisis
The home-building industry was enjoying robust growth until the major flooding hit Thailand in late 2011, which completely disrupted the construction business. But this was only the only tip of the iceberg when it comes to the crises this business, especially among small and medium-sized enterprises, is confronting.
The flooding resulted in a great exodus of construction workers from Bangkok to their home towns in the provinces to find more secure jobs in factories. Some found work in urban-extension construction, especially in Northeast provinces such as Khon Kaen and Udon Thani. Others took on flood-repair work and government-funded flood-prevention projects.
Part of the workforce that went back to the provinces found jobs were also available in the farm sector thanks to the rising prices of agricultural produce.
This is precisely why many workers have not returned to Bangkok and its suburbs months after the flood.
With the rise in the minimum wage in Bangkok and nearby provinces since last April, labour became not only scarce but expensive. And now that the higher minimum has been imposed nationwide since the beginning of this year, the labour crisis has gone wild and is getting out of control.
This is the worst labour crisis in 52 years since the home-building business was introduced in Thailand. Without a clear solution from the government, consumers will eventually either have to bear the brunt of higher construction costs or experience delays in the delivery of their houses.
In retrospect, the labour crisis as mentioned above has had a direct impact on home-building business. The sector's growth has been stalled since last year and will continue to be stagnant this year.
This is forcing the industry to adjust its business plans to take rather a defensive approach that reflects the economic reality.
In this proactive business model, home-builders need short- and long-term plans. One must prepare to embrace home-building technology and ready-made home construction systems including ready-made construction materials that are designed to reduce dependence on manual labour and speed up work.
Major players in the construction-materials business are now trying to develop a construction-system industry. The current construction-contractor-based service gives big fries an upper hand over small fries because the former can operate at lower cost and with shorter construction periods than the latter.
It is equally urgent for home-builders to create uniqueness in their business to build brand strength or a selling point that departs from their competitors. This will add strength to the business brand and increase the chance of sustainable growth.
One thing home-builders should consistently attempt, no matter how hard and time-consuming, is to change customers' behaviour and attitudes. This is to encourage them to accept the use of more substitute materials to reduce construction costs, since these materials, such as ready-made lightweight gypsum walls, can reduce labour costs and save construction time as compared with cement-coated interior walls.
There has been a success story in Japan, where customers opt for ready-made construction materials and prefab technology to save cost and time in home construction. Most of the houses there are built using knockdown systems.
Closer to home, Siam Cement Group has been trying to introduce modular knockdown home-building technology since it entered the home-building business three years ago.
So, in this labour crisis, it takes two to tango if we want to keep construction costs within our reach.