Economic downturn affects construction


Recent economic downturn affects construction. The last 24 months has seen the construction industry hard hit by the downturn in the economy, largely due its near stagnant growth rate. So says building refurbishment company, Indawo. The year 2019 saw well-established, large and JSE-listed construction businesses downsizing and even closing doors.
Indawo chairman, Peter Jäck, regards the past 2 years as the most difficult he has had to navigate in his 37 years in the business. “While we were able to trade through the toughest part of our history, the immediate outlook still looks fairly bleak for our industry,” he says. “While contracts are being revived in 2020, after suspended corporate and government tenders, contractors still alive from the economic massacre we have just lived through, have to put the spotlight on cost saving to keep their workforces employed.”
The hardest hit are the thousands who find themselves unemployed from the industry’s poor performance in general, with record high retrenchment rates and job losses. That being said, the industry remains a major employer, and skills developer, in South Africa and requires significant impetus to its growth rate to keep South Africa employed.
A major contributor to the industry slowing down is the combined homeowner, corporate and government’s reluctance to approve building maintenance contracts. The postponement of building maintenance contracts poses significant risks to structures. Building maintenance ensures our city’s and your home’s infrastructure remains sound. This is crucial for long term investment value and especially true for tourism in the case of a tourist hotspot like Cape Town.
Most, if not all, construction companies and related businesses have had to undergo significant cost-cutting measures to ensure survival in the toughest economic times construction has seen in South Africa for many years.
Jäck says that economic downturn affects construction and building development and maintenance continues to be a major contributor to GDP, and it falls on corporate South Africa to play its part in ensuring our country’s infrastructure remains a global envy. We have some of the most iconic and modern buildings on the continent, rivalling many in developed countries. Maintenance is, by far, a more cost-effective solution for building owners seeking long-term investment value.
Jäck concludes by saying that the industry can return to profitability in 2020, but it needs a concerted effort from industry players, corporate South Africa and government. As one of the country’s major contributors to employment in South Africa, construction still has a big part to play in the success of our country. Infrastructure development and maintenance are key drivers for the turnaround.
Indawo can be contacted on 021 941 5000 or email




Pic: Peter Jäck, chairman Indawo