Sunday, September 28, 2008

The Ball Gets Rolling…….

Jordie had his construction paraphernalia carried over to Rawang from Datuk’s house. This was the last week of September, 2008. He was happy. He managed to complete the renovation works of the house in Kelana Jaya. He met his deadline and Datuk could move back in time for Hari Raya.

His workers too have all gone for the Hari Raya break. Some even back to Medan apparently. However, Jordie is confident they should be back in one week as they normally do. A number of the workers have been with him for a few years now. He had good chemistry and good rapport with them. That is not a problem for him.

The same cannot be said for the construction industry though. It had gone through harrowing times these recent years. With a slew of events and occasions spanning the past decade it had been trying times. The 1997 financial crisis triggered off the rot. What with the price of cement, steel and other materials all on the upswing. And if that’s not all, the oil price broke the psychological barrier of US$100 a barrel just months ago.(culminating in US$145, the highest on July 02, 2008) It led to higher costs all round.

And President Bush had summoned both the contending parties, Obama and McCain just days ago pondering over the impending financial crisis looming over the horizon. The incoming President, whoever he is, runs smack into it come January 2009 when he takes office.

With the sub-prime hiccup on the starting blocks, it led to the demise of Bear Sterns, Freddy Mac, Fannie Mae, Lehman Brothers, Merril Lynch, and AIG for starters. Dubbed the ‘mother of all bailouts’ Congress had to agree to a US$700 bil (RM2.38 trillion) payout and it is still ticking. It is leading to the likes of the 1930’s Depression years of bank failures, fall in property prices, widespread foreclosures and unemployment. The difference this time around is slated to engulf not just the Americans but the whole world.

And to think the IMF (read the US) had refused ‘bailout’ for the 1997 Asian Financial Crisis as a way out for Asian countries. They are now taking a ‘leaf from the book’ of what Dr Mahathir did in averting us from the brink of disaster. The other asian economies were then left in the lurch when they sought IMF help. Some help it was!

There would be a fire-sale for the picking they must have thought gleefully. And it sure did! Asian corporations and companies fell by the wayside like ten-pins and the Americans had a heyday grabbing the juicy ones for themselves.

A global crisis… where will all these lead to. The ripples from the West may take a little time but it will eventually reach us. The recession is coming definitely. Hollering hoarse against the fuel/oil price rise is a lot of hot air. (though sweetened with 2 price cuts lately)

“This is a good time for us” Jordie said without batting an eyelid. The world will be in crisis, yes. It will take valiant efforts on their part.The ripples had already reached British shores, the 4th largest economy, and ultimately the whole of Europe. There’s nothing we can do about it!

“Wrong!” Jordie countered triumphantly. “We can.. The bird house industry can” he said. The birdhouse business is reputed to be recession proof. This was one of the arguments put forth for the business. Now is the opportunity to really put this to test - whether it is recession proof. Is it just sheer bunkum or will it prove otherwise? We will not have to think about it. We will not have to debate on it. We will not have to wait for it.

We will just follow our own time-line diligently knowing fully well there is an impending glitch in the financial markets and its resulting recession. We cannot influence it nor go against it. The big economies can work it out for themselves.

The birdhouse business will remain unscathed. So it seemed. Demand will remain as our market is mainly China and Hong Kong.The Chinese economy-plus (with Hong Kong,Taiwan and the overseas Chinatowns ) is supported by a 2 billion population and is sheer magic. It will have a life of its own and can sustain itself come what may in other parts of the world. So it is believed. The tainted milk scare/scandal is just a temporary setback which will be quickly forgotten.

The Rawang job should take about 4 weeks going into the whole of October. A spillover to November may occur but it will not matter.

After Rawang, we have assigned a reasonable lead time of 6 months for the next 2 jobs, one in Sabak Bernam and the other, my land in Kuala Pilah. Unlike Rawang which is a renovation of sorts both will take longer as we are starting from scratch.

By end of June 2009, we should have 3 birdhouses duly completed each of a different kind ie a converted shoplot (Rawang), by the sea (Sabak Bernam) and in an inland /rural setting (Kuala Pilah)
It would be interesting to discover if the 3 different settings could translate to different amounts in production ie whether ‘by the sea’ as often believed will be more productive than the other two? It can certainly be a guide in future network expansion.

Jordie has interests in all the 3 while I have only 1 with him. At this stage it is somewhat premature to strategise on a network build-up but it is in the offing. We’ll cross the bridge when it comes.

In the meantime, Selamat Hari Raya Aidil Fitri and may the ensuing year be blessed with good productivity and prosperity.


abdulhalimshah said...

Well your partner must have loads of faith otherwise he would not have been an entrepreneur. That's the trademark of such a guy who takes risks and he is the first convert to embark on any venture becore he can convince others.
All I can say is that when the world is in turmoil, no one is spared it's ripples. It's a matter of degree and extent of it's impact. Just like the past financial meltdown of the late 90's, our economy was in tatters and it took the Govt some time to come to grips with such a situation, whence we should have anticipated the tsunami because the neighbouring countries were the first to be attacked.
Even for the current economic tumble taking place in the G7 countries, we are still in a denial stage, where Nor Yakcop said that our economic fundamentals are intact and able to face the chaos. What an attitude and his statements are just as hollow as his head, especially when he wasted about RM 9 billion in foreign currency speculation by Bank Negara when he was the adviser.

kaykuala said...

Yes, we have to have a firm grip on our doings for the impending 'recession years' coming our way. We just can't ignore it.I will not comment here. As u had verbally suggested I'll make a posting outside the confines of 'the birdhouse' at my next one.
Apologies 4 late response.