The Impact of British Home Builders on the Economy(2)

英国Dissertation代写论文精选范文：“The Impact of British Home Builders on the Economy(2)”，这篇论文主要探讨了英国住房供需市场对社会所造成的相互作用以及对利益相关者的最终影响。

Family Circumstances

A further trend was the increase seen in separation & divorce, the latter according to the ONS has doubled in the thirty years to 2000, adding this to a growth in cohabiting couples and singles, single parent homes, an increasing number of students going away to university and larger flux of immigration. These are all putting pressure on the UK supply of both owned and rented dwellings across private and social sectors. Migrant numbers alone saw a net increase of 160'000 in 2005 for the UK, largely from newer members of the European Union seeking to capitalise on the UK's Labour shortage and (at the time) beneficial exchange rate.

Employment Trends

The construction labour market like the rest of the industry is prone to the self same cyclical perturbations of recession and boom. Due to the asymmetry in number of employees to number of firms and the way that much of the labour is sub-contracted, consultants and tradesmen alike see larger benefit from being self employed in times of boom, where the threats of risk are for the most part easily out weighed by the financial gains often through tax benefits.
If the trend through the mid 1990's repeats it is likely as the current recession gains momentum, that people will seek safer employment where they can maintain surety and consistency of earnings, perhaps abandoning Labour Only work, in exchange for sick pay, pension contributions and redundancy pay. At odds with this a construction firm attempting to reduce its costs may attempt to further contract out risk to reduce its exposure, before lastly looking to reducing rates paid to it's Labour Only employees, overheads and eventually profit. In the current slump construction workers are in large supply owing to sensitivity of the construction industry allowing companies to pay them the bare minimum.
The overall growth of employment until recently has reflected a gradual emergence from recession of the early 90's, however there has been a stark decline of manufacturing employment which was down by 13.1% in the decade to 2002 and h as been reduced by another 1.1% to 14% of the UK economy in the 3 months to July 2008. Historically this was as much to do with the strong pound weakening the UK's export viability as well as a stagnant domestic market and growth in financial services industry. More recently the UK's dependence on London as a financial capital has tremendously increased Britain's exposure to the world financial downturn and is cited by the Chancellor as the reason for the UK taking the brunt of the financial storm.

J Smart & Co. (Contractors) PLC - A UK House Builder

J Smart & Co (Contractors) PLC carry out a range of building and civil engineer works, its subsidiary companies provide separate complimentary trades including a plumbing contractor, civil engineer contractor, concrete building product manufacturer, a property company and an Investment holding with two other separate dormant companies. For the most part high housing demand is beneficial for the company provided that sales of units are made in times of boom from earlier procurement of land. However, high interest rates or unwillingness of the banks to lend quickly make a company which operates with large debt unviable.
Over the last 5 years turnover has increased by 30.3% to ￡24m by July 2007, Profit similarly increasing by 35.3% to ￡8m for the same period, indicative of the same boom across the entire economy, the slight dip this year indicating the start of a downward trend. Highlights of a peer group compiled report of 20 companies (See Appendix A) of similar turnover show their pre-tax profit and solvency ratio are the highest in the group for the same year. However despite the company having the largest amount of shareholder funding available in the group it has maintained a low ROCE indicating that shareholder funding assets are being used inefficiently.
The company's gearing dramatically increased by a factor of 133 from 2005 to 2006, within its group the figure is not astronomical but the sudden increase is worth note. The change was accompanied by a decrease in tangible assets namely land and buildings and a similar increase in value of investment to the decrease in assets. This could indicate a sale of land bank/property or re-mortgaging to free equity for further investment which may cause difficulty if inflation rises sharply.
The company's annual report cites as future prospects an expected increased rental income on both domestic and let industrial units and a further stalling in private housing. This appears likely given the size of its Edinburgh property portfolio and the ongoing decline in house sales. Further the report said the company would attempt to focus on contracting work in social housing with the rider that this will pressure turnover and margins due to the bid process. Also as more companies begin to bid for the same work margins wil l be squeezed ever tighter making redundancies inevitable.
Threats to the company are a cut or reduction in funding to the social housing programme as these could result in reduced workload and substantial redundancies. A further threat is an inability to find tenants for new developments this has previously been the mainstay, forming a steady income stream to the company to supplement speculative development. A threat not stated might also be an inability to access suitable land for development, if the planning process remains unamended. It is thought that companies with access to land tend to have better profitability depending at what time the land was procured in the economic cycle, it may not be economically viable to develop until the market picks up again.

Conclusion & Recommendations

An examination of J Smart & Co's balance sheet shows the company has a solid share & asset backing which in this period of instability could be used to consolidate the quality of their estimating and bid team thereby reducing risk in their competitive tendering process. The capital may also be used to buy land reserves, though not at this current time as they are inflated like much of the property market.
It is believed that a relaxation of planning and a mass social housing build, is key to starting the economy, however the government has opted to cut VAT and reduce interest rates to both promote spending on the high street and increase lending between banks which may lead to high inflation. A revised planning landscape maybe a more sustainable way for the funds dedicated in the Green Housing Paper to propagate to Housing associations and aid construction companies in avoiding the worst of a deepening recession. Social Housing is only a short term fix, without private housing stock the market will continue to stagnate and with diminishing service and manufacturing sectors so will the UK economy.

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