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Installation Or Erection Of Building Equipment, Not Elsewhere Classified

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Special trade contractors primarily engaged in the installation, erection, or dismantling of miscellaneous building equipment make up this industry, which encompasses numerous firms that offer a wide range of services. Common activities include the installation, repair, and dismantling of conveyor systems, dumbwaiters, dust collecting equipment, elevators, incinerators, industrial machinery, power generation devices, revolving doors, and vacuum cleaning systems.

Businesses classified in this industry include more than 4,400 establishments, according to the latest figures available from the Statistics South Africa. The installation or erection of building equipment industry produces nearly R10 billion in total revenues.

 

Most contractors in this industry rely heavily on new commercial, industrial, and institutional construction. Industrial buildings account for nearly one-third of the value of construction work done by this industry, followed by office buildings and other commercial buildings.

 

When building markets boomed during the mid-1980s, most specialty contractors realised healthy growth in billings and profits, and demand for items such as industrial machinery, elevators, and revolving doors increased. Contractors in this business, however, have to cope with the extremely cyclical nature of the nonresidential construction market, and this fluctuating cycle was most clearly evident during the late 1980s and early to mid-1990s. For example, industrial building construction expenditures in the United States advanced from R15 billion in 1987 to R23.8 billion in 1990. In 1991, however, construction in this category fell to R22.3 billion and continued falling to R20.7 billion in 1992 and to R19.5 billion in 1993. Nonetheless, the industrial building market bounced back in 1994, to R21.1 billion and R24.1 billion in 1995.

 

The cycle in office building construction, the second largest market for contractors has been even more pronounced. Construction in this category peaked in 1989 at R31.5 billion. By 1993, however, construction expenditures in this category had dropped by half, to just R15.4 billion, before recovering slightly to R17.0 billion in 1994 and R19.4 billion in 1995.

 

This cycle has a profound impact on contractors in this industry category. During good times, specialty contractors enjoy healthy profit margins, expanding business, and steady demand for their services. In bad times, many contractors manage to stay afloat only by taking on installation and repair jobs at very low profit margins. In the early to mid-1990s, for example, elevator contractors were emphasizing elevator retrofits that integrated advanced technology. They were also striving to increase their share of the airport and health care elevator markets.

 

The long-term outlook for this industry appears to be mixed. While commercial construction benefited from the extended economic expansion of the late-1990s, over-building in many regions dampened the industry’s performance in the early 2000s when the economy weakened considerably. While residential construction was boosted by interest rates that dipped to rates not seen since the 1950s, nonresidential construction experienced no such cushion. Businesses of all kinds began to curb spending on new and existing construction projects. Particularly hard hit was office construction. Spending on office building construction slowed considerably, from R47.5 billion in 1999 to roughly R3 billion in 2002 and

 

Installation or Erection of Building Equipment, Not Elsewhere Classified to R39 billion in 2003. Between 1999 and 2003, office vacancy rates jumped from 8.9 percent to 16.5 percent.

 

One bright spot in this downturn was institutional construction, fueled in large part by healthcare facility construction, which didn’t begin to wane until 2003. Compared to industrial construction spending, which declined by 3.2 percent in 2001, and to commercial construction spending, which dipped 1.6 percent that year, spending on institutional construction grew 10 percent. In 2003, however, total nonresidential construction spending dropped by 6 percent, as even the strongest sectors, such as healthcare construction, began to see previously rapid growth rates slow.

 

Privately owned companies dominate this diverse industry. The largest companies in the industry tend to be diversified contractors that have interests in many different areas. As a result, their activities in this industry category are just a small part of their overall business.

Special Trade Contractors, Not Elsewhere Classified

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The special trade contractors, not elsewhere classified industry is comprised of a plethora of firms that provide a broad range of miscellaneous construction services. Examples of industry activities include bathtub refinishing, gasoline pump installation, grave excavation, swimming pool construction, post hole digging, wallpaper stripping, mobile home setup, house moving, fire escape installation, bowling alley construction, artificial turf installation, and sandblasting.

The special trade contractors industry includes roughly 25,000 establishments according to the most recent data available from the Statistics South Africa. The average firm is small, employing less than 10 people. Annual industry revenues total roughly R84 billion.

 

While this diverse industry is hard to classify, a Department of Commerce survey notes that the industry’s leading business category (based on value of construction work) is other commercial buildings, such as stores, restaurants, and auto service stations. This category is followed closely by outdoor swimming pools, industrial buildings and warehouses, fencing, single-family houses, and office buildings. A variety of other construction work accounts for the remainder of the total.

 

Although each sector of the industry is impacted by different factors, most specialty contractors are heavily dependent upon housing starts or new commercial and institutional construction. During the mid-1980s most contractors enjoyed steady expansion as commercial and residential building flourished. Likewise, when housing starts and commercial development stalled in the late 1980s and early 1990s, many contractors suffered immense setbacks. Total  S.A construction expenditures, in fact, actually declined 10 percent in inflation adjusted  between 1986 and 1992.

 

However, the construction industry saw strong growth between 1992 and 1999, as the general economy recovered, interest rates stayed relatively low, and housing starts boomed.

Another industry sector, home remodeling, had grown into a R153 billion industry by 2002. Growth in this segment was expected to average roughly 5 percent per year, due in part to rising home values, against which consumers could borrow. This forecast boded well for special trade contractors, many of whom served this market segment.

 

However, nonresidential construction began to slow considerably in the early 2000s in response to recessionary economic conditions in the South Africa. Spending on industrial construction declined by 3.2 percent in 2001, and commercial construction spending dipped 1.6 percent that year; institutional construction, bolstered by a few strong segments such as healthcare construction, grew 10 percent in 2001. However, even institutional construction spending had started to wane by 2003; in fact, total nonresidential construction spending dropped by 6 percent that year. Particularly hard hit throughout the early 2000s was office construction due to the over-building that took place during the late 1990s. Spending on office building construction declined from R47.5 billion in 1999 to R39 billion in 2003. During this time period, the office vacancy rate nearly doubled from 8.9 percent to 16.5 percent.

Most companies in this industry were small, privately held, local enterprises. There were several industry leaders, though many of them also had interests in other industries.

Our qualifications for providing Consulting Advice…?

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There are many who profess to be consultants capable of providing expertise and knowledge in the capacity of an advanced understanding but, few have originated as apprentices in the many crafts involved in building and construction. Even fewer have advanced to a full fledged journeyman level breadth of knowledge that should be recognized as the prerequisites for qualifying anyone as a Consultant.

Many industry practices, processes, procedures, standards, engineering and applications for proper construction have often evolved through the critiquing hands and eyes of capable tradesmen. These passionate men and women are often the unsung hero’s making many architects, engineers, designers and property owners the beneficiaries of a dedicated personal attention to the finer details for what a job well done, can mean.

Plan Reviews

Frailties and incompleteness can exist in some well thought out planned directions and should involve a Plan Review before beginning a committed approach and subsequent scheduling. In doing so, plan revisions can address re-directions and provide greater clarity. The ramifications of producing addendum after addendum while in progress is the single most frequent cause for an escalating construction budget. Unfortunately, seldom are the real culprits discovered and the stigma of escalating costs are attributed to a contractor’s unfamiliarity or greedy profit taking. The reality is, Contractors are the applicators not the Architects or Engineers.

Making sure the map is good to go!

In heading off the bumps in the road and keeping your project from ending up in the ruts, the vehicle of progress is called foresight and insight. The consequences for failing to recognize the incompatibilities of a planned direction, will be hindsight.

All too often plans are produced, distributed for soliciting quotations and upon successful contract award these are then submitted for building permits purposes. The main problem here is, without a Plan Review any refinements that a Contractor could provide are only going to be perceived as a cost and typically at the Contractor’s disadvantage! In some cases this can be true but, in measuring front-end costs whereas you are fully informed to adjust other priorities, the “Known” would be much more palatable than the surprise! It’s the surprises after construction has started that can be refereed to as the rear-end costs,… and these are not so pleasant.

Truth Be-known…

Most contractors would prefer having a real good set of plans where directions are clear and they can make themselves the beneficiaries of their efficient use of labor and equipment. Incomplete direction provided by some Architects, Engineers and Designers can sometimes provide misdirections that fall short of actually assembling the sequential elements of order.

In acquiring a hands-on appreciation and advancing to a Master Journeyman’s comprehension, it requires many, many years of design building experience. Simply being a manufacturer’s representative or a product salesman for a number of years can’t get you close enough in proximity. In order to gain real life understanding you need to actually touch and feel the challenges.

In such an immersion, experience through osmosis is bestowed upon practicing performers and education is gained while enrolled in the university of real life construction challenges.