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Is The Local Construction Sector Collapsing?

By on Jul 2009 in Print

John Peters Share On GoogleShare On FacebookShare On Twitter

I recently spoke with a medium sized contractor about how he is surviving at these times. He went on to tell me about the difficulties with the Bank as he was unable to service his loans and if something does not happen soon he may fold up. He said something that was also very interesting. He was making the point that the Government should assist those local contractors who have invested heavily in equipment by providing them with a first call on locally funded project as against ‘creating’ new contractors.

There may be merit in his comments as those who have invested should be supported at this time of economic hardship. Undoubtedly, the Government has to move swiftly to prevent a collapse of the local construction sector. The GOSL has to face up to the fact that there is a serious problem with implementation of projects.  This has nothing to do with which party is in power, but instead the realities of the fact that the civil service cannot compete with the private sector in attracting the best minds.

Politicians must realize that the constant will always be the civil service and thus all political parties have a vested interest in a civil service that is functional and free of corruption.  A strong civil service is a fundamental plank in constructing a strong nation. It must be noted that under our constitution no Government Minister can issue a contract. The Minister of Works cannot even direct a caretaker to be employed unless it is approved by a civil servant.  It is now so important in our history that both parties recognize the importance of a strong civil service and thus be supportive of any legislative agenda which create such an institution.

The big question is: What can be done to save the construction sector from collapse at this stage?

I believe the following can be an approach to breathe some life into the industry:

VIGOUROUS HOUSING PROGRAMME

In my opinion the National Housing Corporation is in a comatose state, and sliding to become a ‘failed ‘institution. The Corporation has not demonstrated any semblance of creating a housing policy, has been unable to deliver on the projects, simply put they don’t have a clue. Recently I read an article in the Jamaican Gleaner newspaper on the state of the housing sector in Jamaica, the article presented some startling facts which included, that one out of every three Jamaicans is at present living in slum conditions. The Government of Jamaica has responded by creating new mortgage arrangement for up to 40 yrs to allow more people to be able to get shelter.

Successive governments in St. Lucia have failed to put housing as a front burner item and this negligence has resulted in the urban slums that dot the landscape of Castries. One must however single out Dr. Michael Pilgrim who as Minister of Housing did more in his tenure than any other in the history of St. Lucia. I worked with him during my two year stint as General Manager of HUDC, and I can attest to his commitment in seeing change in the housing sector.  The Monier, Postlewaithe, Inglewood, Carellie, Bonne Terre Gardens and Karibelle are some of the many projects that were implemented during his tenure as Minister of Housing.

I would suggest a three prong attack on the housing sector. Firstly a ‘sites and services’ programme which will concentrate on the development of lots throughout the island. This will suck up most of the idle construction equipment (rollers, graders, trucks etc) in the island and the drainage works will create labour opportunities for the masons, carpenters and labourers.  The second phase will be an “Infill” programme, where vacant lots in the developments previously done by the NHC will be targeted for housing construction. This programme will fall back to the developed lots in the site and services programme.

LOCALLY FUNDED PROJECTS – LOCAL CONTRACTORS

I hold the view that at this time all locally funded projects should be reserved for locally owned construction companies. This is not a selfish position but one that is no different from what some G8 countries are pursuing. I cannot agree that locally funded projects should be given to these foreign firms when the expertise exists within St. Lucia. Let the funds circulate within the country. Just for the records, and to anticipate the mischief makers in suggesting that COW should be excluded, Sir Charles Othneil Williams is a St. Lucian national for over a decade.

EXTERNALLY FUNDED PROJECTS – AGREED PRECENTAGE OF LOCAL INPUT

There are several projects in the pipeline that will be started soon. The GOSL has signed a contract with an Italian firm for the construction of the new General Hospital. Discussions should be held with the EU Delegate and the contractor to ensure that a fair share of these works involve local contractors. More importantly that the wages paid to workers are in line with market rates. I do recall during my stint as General Manager of C.O. Williams Construction Ltd, that we were handicapped in tendering against firms like CCI who were paying in some cases less that 50 % of what we were paying our workers.  Some of these foreign firms come in with a mid set that we are some poor country where wages are $ 5US/day. The Labour Code has an excellent provision to stop this from occurring in the local industry.

NATIONAL DRAINAGE PROJECT

One is of the opinion that a National Drainage Project has its benefits in creating jobs and arresting the decline in the road network. The concept is to allocate a sum of $ 10 million XCD, and divide this into 330 contracts of $ 30,000 each. This creates work at the micro-enterprise level .  As one who has worked at the Ministry of Works I can assure you that this will stimulate the economy.

NATIONAL PROJECT MANAGEMENT COMPANY

Successive Government Ministers have suffered public criticism due to the failure of their technical staff. The size of the local economy will always create a ‘tug of war’ for scare human resources, and the highest bidder will win. We need to create an entity which is run on purely commercial terms, to be responsible for all aspects of project development to project implementation.  This will reduce the time for the capital projects to be implemented.  You would be surprised at the length of time projects take to move through the process to implementation in St. Lucia. A National Project Management Company can be the vehicle to push through these projects.

UNCLOG APPROVAL PROCESS WITHIN THE DCA

The approval process within the DCA is also an important component in stimulating the construction sector. I am aware of the hard working officers in the DCA and the level of commitment of its Chairman Mr. Clem Bobb. I however am also aware of staff shortages and the resultant effect on the processing of applications. It may be possible for short term consultancy engagement for experienced Land Use Planners in the private sector to be considered to give that push of approval of development activity.

CREATING SYNERGIES WITH TOURISM RELATED DEVOLEPMENT

One cannot contest the fact that most of the economic activity in the construction sector over the last five years was driven by the tourism sector. The Ministry of Tourism must also see its role as a partner in development. The functions of the Ministry should extend beyond the mundane tasks of approval of concessions, and move to see how they can facilitate construction activity.

Many of the tourism projects in St. Lucia have stopped or slowed down significantly over the last 12 months.  The cause of the slowdown is purely as a result of sales. The Ministry of Tourism therefore should be holding discussion with all these developers with a view to see how they can assist in the marketing of their projects. It is not only those that exist but those that will be coming on the market.

A restart of these projects will provide a significant boost to the local construction sector.

Something has to be done, something creative in the short term to prevent this slide of the construction sector into purgatory.