The Sunshine Coast construction industry has become a hotbed of price gouging, compounded by some tradies’ reluctance to work or choosing only the ‘cream’ of the jobs – “doing no one any favours”.
That’s the reason respected, award-winning contractor Jason Bowker remains on a hiatus from operating his Planet Homes QLD business and instead has taken up a hands-on consulting role for other builders.
Mr Bowker struck a nerve in the middle of last year when he told Sunshine Coast News he would walk away from building homes for the foreseeable future.
Despite his business completing an average five or six luxury homes valued between $800,000 and $1.5 million each year and having a $6 million annual turnover, he was no longer prepared to risk being ruined, or being unable to meet the expectations of his clients.
Mr Bowker said that due to COVID-driven global factors, there was no longer certainty of price when securing materials and labour, and it had become impossible to keep up with relentless cost hikes.
Stressed-out builders of all sizes had been caught out “under-pricing”, with some going to the wall.
Most builders, he said at the time, traditionally expected to wear a 3 to 4 per cent price increase for materials and labour over the period of a building contract – not up to 60 per cent, which was occurring in some cases.
Mr Bowker said this month that when he had decided to “down tools” and take a break from contracting, he wasn’t “Robinson Crusoe”.
“A number of people I’ve worked with have done something similar: either downsized significantly or are in the business but don’t want to be in the business … and/or have decided to take a sabbatical,” he said.
“I can tell you more than one contact who have said: ‘I’ve got my caravan. I’m disappearing for the year.’
“It’s not because they don’t want to work and it’s not because the work isn’t available. It’s just that the conditions under which we’re working are too hard.”
Mr Bowker said supply problems had eased with some materials, but prices still remained high.
“It’s getting better. I have been trying to get some aluminium extrusion for about eight weeks and I still haven’t got it,” he said.
“Certain products are difficult. Aluminium is one of them.
“Generally speaking, timber is now more readily available but still most of the trades are not.
“The supply chain is freeing up generally but the labour chain isn’t just yet.
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“Every single product which is largely run by national and multinational companies has gone up between 30 and 70 per cent.
“In some cases, it’s probably higher. People wonder why a house costs so much money now.”
But while some things had changed, new problems had emerged.
“There’s still incredible reticence in the building industry between tradesmen,” he said.
“Right now, they want top dollar. A painter wanted to charge me $150 an hour.
“There’s scalping going on. People are getting ripped off because (the tradies) know they’re in short supply so they’re tripling their rate in some cases.
“We’re all doing it tough with the cost of living but that’s literally doing no one any favours.
“It’s providing poor sentiment. It’s providing poor reputation. Everyone’s bitter as a result of it.
“Not only is it the fact they want lots of money for their work, but they want the easy work, too.
“They’re all very precious right now and they only want the cream. They only want the top dollar and they won’t accept anything else because they know they can pick and choose.”
Mr Bowker said word would get around about particular tradespeople who had tripled their quotes, walked away from jobs and generally failed to do right by homeowners and contractors in recent times. They might struggle to find work in the near future.
He believes the tide is about to turn, though.
The region had experienced a busy building environment since the start of the pandemic, as more people moved here for a better work/life balance and decided to build or to buy homes to renovate.
That enviable situation was starting to slow up.
“I had a roofer call me just a few days ago and say, ‘Jase, do you have anything? We’re starting to look for work’,” Mr Bowker said.
“Instead of people having three months of work ahead of them, they’ve got maybe three weeks of work ahead of them.
“And that’s going to spill down the contractual chain in the next six months, I guess.”
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Mr Bowker highlighted the huge amounts of pressure on builders and new projects in the current construction climate.
“I honestly don’t know how medium-sized builders are continuing to operate,” he said.
“I always think of this: let’s say if you’re turning over $10 million and you’ve got a supply chain break of between six and eight months, yet your overheads are the same, you’ve got a bigger gap to fill. You need more cash to run your business.
“Your margins are lower, you need more cash and your risk is far higher.
“So, of course, builders are going down because they can’t maintain their cash flow. Period.
“And they’re burning all their profit and their operating costs.
“Every developer at the moment is selling land as fast as they can, because their holding costs have doubled and their feasibilities don’t work because they can’t afford to even build the products they want to bring to the market, let alone make a profit.”
So, would he ever consider resurrecting his contracting business?
Mr Bowker takes a moment before answering: “Possibly. But I think that would be at least another 12 months before I’d consider contracting again.
“You’ve got gouging tradies, precious people that don’t want to work unless it’s easy and multinationals literally recovering all the costs they want to recover from poor production, cost of production and COVID instability.
“It’s horrible. Why would I as a contractor go out there and tender?
“I’m going to tender and give a client a price that they’re literally going to roll their eyes at and go ‘how much?’. Yet, the pressure is on me to cut my margin in a scenario of high risk where there’s no stability in anything – in the market, trade or the product.”
The change in position, he said, had been a “massive” relief from the uncertainty over contract pricing that had forced him to re-evaluate his life.
“(It took a toll) absolutely on my health and my wellbeing and my family,” he said in a break on a Coast construction site.
“I’m basically doing a job consulting but doing a satisfying job.
“I’m helping people out who are suffering the same fate as myself but I have less responsibilities.
“I’m dealing with their problems but I’m not responsible for the budgets, not responsible for the time frame, not responsible for running a business, not responsible for the dealing with problems as result of business matters. I’m just there to do a technical job and that is to get difficult jobs moving for them.
“There’s a big difference between working for somebody and running a business. It’s chalk and cheese. I didn’t realise how big that difference was.”
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