President of the Bahamian Contractors Association (BCA) Michael Pratt said yesterday that the winding up of Cavalier Construction Company Limited and its sister company, Bobcat Bahamas Limited, is a blow to the construction industry that he fears may impact “the confidence” in the industry.
“One of my concerns is that we struggle enough, we have enough competition from foreign contractors who come in from regulated countries and they come to compete against us. So one, we’re not regulated and we go out there and we’re competing against fierce competition that’s continuous,” Pratt told Guardian Business yesterday.
“Now with that in mind, with the closing of Cavalier I’m concerned about the confidence in our industry. If Cavalier closes its doors, then how does that speak to all the other contractors that are out there fighting to survive and the other big contractors, will this have an impact on the confidence in the construction industry? The construction industry is the third pillar in our society and if that’s the case, we don’t need anything right now to impact us in this way.”
Cavalier announced on Monday that it had ceased trading as of last week Wednesday and that all employees and staff have been made redundant – primarily the result of significantly reduced turnover/workload for the company, which it had been experiencing for a number of years.
“When you think about it, you’re talking about a company that goes through about $100 million a year on their books. Now at the same time, think about the other companies they subcontract to. It goes right down the chain, because you know, I believe that all those other contractors who are now owed monies, they’re going to be severely impacted and who they owe money to are going to be severely impacted, so it’s trickle-down effect,” he said.
“They’ve already indicated that funding was a problem. How far it goes in terms of trickling down, you won’t really see the impact right away. And at a time when we’re also trying to regulate our industry to take care of Abaco and to take care of Freeport, the blow would probably be more devastating.”
Pratt said this hit to the industry also comes at a time when the BCA is trying to attract more Bahamians to become involved in an industry that is becoming increasingly threatened by the foreign component.
“As an association we’re trying to get more and more Bahamians involved in the reconstruction of our country. There are some who are saying we don’t have enough contractors and we don’t have enough builders and we need to bring in a lot of other people to support the industry now, which is true but when we have a major company like Cavalier step back, you know I’m concerned that it can validate the concerns of some NGOs and foreigners that they need to ask now for access to bring in more workers,” he said.
Pratt said his association will work overtime to restore whatever trust might be lost in the industry as a result of losing a giant like Cavalier.
“There is a lot of good construction going on in the country. When you look at the projects that have been completed by companies like Cavalier, Bahamian contractors, one of the things we are fighting for is that when we go for financing, the people who provide our financial resources would be comfortable investing in and continuing to invest in construction companies; it’s very tough now to find proper financing and our cost of financing is very high,” he said.
“That confidence, we probably wouldn’t lose drastically but that’s one of the concerns that I have, that we don’t need to lose any type of edge now when we’re competing against people who come in and compete upfront and they have major advantages already, they have cheaper funding, they can bring equipment in and bring it back out where with us we have to buy our equipment, it’s very difficult for us to rent equipment out of the United States and we have heavy duties on our equipment.
“So, all the other variables in terms of giving us a competitive edge, we don’t need to lose any confidence. But at the same time our association is pushing that we get proper access to funding by regulating our industry and showing our strength just through regulation.”