islandhopper00
Active Member
Hmmm, this is the type of bussiness I think I'm familiar with. Sad but true.
The truth about the dismal construction industry...
- Thread starter tobnpr
- Start date
Hmmm, this is the type of bussiness I think I'm familiar with. Sad but true.
In the housing industry, title ins. companies are requiring notarized letters from subs stating that they have been payed in full. Going to a closing without it means no closing. From the surveyor who drew the plot plan to the final cleaning crew. It is a GD mess trying to get all these people to get this letter done and notarized.
tobnpr
New Member
Jim's correct; lowballing a job based on the knowledge that the plans/specs are incomplete, or incorrect is pretty much SOP, and has always been an "accepted" bid consideration. We completed a large mixed-use shopping center/office building last year where there were numerous design problems, including a couple of biggies where the roof deck wasn't designed at the proper height and the structural steel ended up below the height of the storefronts... oops... Last I heard the Developer was suing the Architect for the tens of thousands of $$ he ended up over budget.
But this is all going far beyond the "usual" games we play. A lot of the work I'm seeing being underbid is not "one-offs" where there's often problems, but proven prototypes that have had many completed, all the "bugs" worked out, and zero opportunity for change orders.
Working for "cash flow" is pointless in this economic environment- unless you like working for free.
But this is all going far beyond the "usual" games we play. A lot of the work I'm seeing being underbid is not "one-offs" where there's often problems, but proven prototypes that have had many completed, all the "bugs" worked out, and zero opportunity for change orders.
Working for "cash flow" is pointless in this economic environment- unless you like working for free.
- Nov 26, 2006
- 7,628
- Boat Info
- 2008 44 Sedan Bridge
- Engines
- Cummins QSC-500's
Straight Drives
Everyone, welcome to the airline industry! Ever notice that the cost for any given route is the price set by the entry level airline? Everyone else matches the rate or advance bookings drop off radically which decreases cash available for operations.
So what do communities do? They bribe low cost carriers to enter their local markets. Wichita pays Air Tran $1 million / year to come in and beat down Delta's cost. F 'em. Delta pulled out. Wichita is now stuck with a $1 million / year contract with Airtran who is now gouging them worse than Delta ever did.
How does this continue to work? Airlines do NOT make money. They are cash machines. They go year after year creating cash for banks, engine manufacturers, upper level management, and a few others. A new airline's planes are under warranty. Their labor is on 1st, 2nd, and 3rd year pay rates. They don't have any retirees. Labor gives up normal benefits in return for rapid expansion and huge seniority in a very short time.
As long as they continue to grow, they keep a large percentage of their costs at entry level rates. Once they max out their business plan, like SWA did 4 years ago, they either change their business plan or fall into the category of "Legacy." They are weighted down by older work forces, high maintenance costs, gouging by venders due to the large carrier's inflexibility, and similar, mature company problems.
How do they survive? They continue to pump cash like a big machine and hang on until there is a few-year boom during which time they make more money than all airlines in all of history. What would they do if they were smart? Pay off bills. Buy their planes for cash. Hedge fuel... What do they do? Reward management, accept really sour deals for quick delivery of assets that will arrive too late for the boom, and encumber themselves beyond their abilities to continue to pay.
Two key aspects of the above practice: Management decides to reward themselves dearly - set for life - golden parachutes - just like Congress. Make un-affordable deals which make outside companies wealthy - GE... When too many down years are strung together (last 10), companies go bankrupt. They shed debt, re-organize labor contracts to entry level rates, renegotiate gouging contracts by venders to reasonable levels. The big, profitting companies pass the losses onto their investors, and then buy back into the airline at cut rates to nurture their cash machine for the next big run.
It's a vicious cycle that preys on the worker and the public investor, all to the unimaginable profit of the few. These few risked nothing. They contributed nothing. They were born into the circle, bought the thieve's playbook from the Ivey League institutions, sit as board members for eachother's companies, and reward eachother huge salaries and bonuses in good times and bad. They, my friends, are modern robber-barons. You and I make it happen.
So what do communities do? They bribe low cost carriers to enter their local markets. Wichita pays Air Tran $1 million / year to come in and beat down Delta's cost. F 'em. Delta pulled out. Wichita is now stuck with a $1 million / year contract with Airtran who is now gouging them worse than Delta ever did.
How does this continue to work? Airlines do NOT make money. They are cash machines. They go year after year creating cash for banks, engine manufacturers, upper level management, and a few others. A new airline's planes are under warranty. Their labor is on 1st, 2nd, and 3rd year pay rates. They don't have any retirees. Labor gives up normal benefits in return for rapid expansion and huge seniority in a very short time.
As long as they continue to grow, they keep a large percentage of their costs at entry level rates. Once they max out their business plan, like SWA did 4 years ago, they either change their business plan or fall into the category of "Legacy." They are weighted down by older work forces, high maintenance costs, gouging by venders due to the large carrier's inflexibility, and similar, mature company problems.
How do they survive? They continue to pump cash like a big machine and hang on until there is a few-year boom during which time they make more money than all airlines in all of history. What would they do if they were smart? Pay off bills. Buy their planes for cash. Hedge fuel... What do they do? Reward management, accept really sour deals for quick delivery of assets that will arrive too late for the boom, and encumber themselves beyond their abilities to continue to pay.
Two key aspects of the above practice: Management decides to reward themselves dearly - set for life - golden parachutes - just like Congress. Make un-affordable deals which make outside companies wealthy - GE... When too many down years are strung together (last 10), companies go bankrupt. They shed debt, re-organize labor contracts to entry level rates, renegotiate gouging contracts by venders to reasonable levels. The big, profitting companies pass the losses onto their investors, and then buy back into the airline at cut rates to nurture their cash machine for the next big run.
It's a vicious cycle that preys on the worker and the public investor, all to the unimaginable profit of the few. These few risked nothing. They contributed nothing. They were born into the circle, bought the thieve's playbook from the Ivey League institutions, sit as board members for eachother's companies, and reward eachother huge salaries and bonuses in good times and bad. They, my friends, are modern robber-barons. You and I make it happen.
Last edited:
sprink56
New Member
- Oct 28, 2008
- 1,288
- Boat Info
- 1979 255 Liberator
- Engines
- twin Mercruiser 450 HP I/O on Bravo I Drives
tmhudson2
New Member
To which I will add, as done many low bid GC's in our market, wait until the architect/engineer/building inspector/owner's rep isn't looking, and cut corners. Pour the floor slab 1/2" skinny. Dig the footings an inch shallow, and don't lap your rebar splices as much as the specs call for. Collect paint left over from previous jobs in 55 gal. drums, and add a little tint to match the designer's color chip. you get the picture....
sprink56
New Member
- Oct 28, 2008
- 1,288
- Boat Info
- 1979 255 Liberator
- Engines
- twin Mercruiser 450 HP I/O on Bravo I Drives
....and don't forget Chinese Drywall!!! I changed out some of that crap for a major home builder here earlier this year and have not been paid retention yet...been 6 months.:smt013 I have filled liens but I don't have the heart to foreclose on people that have moved back in their homes...another law suit I have to pony up for to get paid.:huh:
Float&Fly
New Member
You left out Duane Woerth and his half a mil salary and expense account while running ALPA as the profession disintegrated.
I had to laugh when ALPA wanted to add 401 contributions to the percentages they used for dues.
Last edited:
- Nov 26, 2006
- 7,628
- Boat Info
- 2008 44 Sedan Bridge
- Engines
- Cummins QSC-500's
Straight Drives
Good point.
