A self-pitying Lenihan faces a Black Friday
Gaffe-prone minister is urged to get a grip as thousands of builders confront summer lay-offs
Related Articles
THE shocking scale of the collapse in Ireland's economy is becoming clearer, as major construction firms struggle to handle unprecedented losses and thousands of workers face being laid off.
Finance Minister Brian Lenihan was yesterday bluntly told to “stop whingeing” and “get a grip” on the scale of the crisis.
Last Friday, a deeply morose Mr Lenihan said the building boom had come to a “shuddering end” and described himself as “having had the misfortune” of taking control of the nation’sfinances at this time.
The extent of the meltdown will soon be laid bare when workers in the construction sector take annual holidays.
Many will not be re-employed after builders’ traditional holidays begin — on a day that has already been dubbed ‘Black Friday’. Several large firms are now close to liquidation and others are negotiating job losses across the board.
Last night Labour Finance spokeswoman Joan Burton said it was the wrong time for Mr Lenihan to throw “a wobbler”. “He needs to get a grip and start being real about the figures. He described consumers as whingers when they gave out about the cost of living and food prices — now he has turned into the biggest crybaby himself. He needs to level with the people ... things are too dangerous now to be misleading people,” she said.
Mr Lenihan’s moment of self-pity followed his second attack in two weeks on former Taoiseach Bertie Ahern. At a conference on Friday, he referred to Dublin Castle as a venue for tribunals into “corrupt politicians”.
Two weeks ago, Mr Lenihan controversially stated that Mr Ahern’s financial affairswere “not a pretty picture”. There are some close to Mr Lenihan who believe that beneath his veneer of confidence and sophistication, he is under stress in his new role and is pre-occupied with distancing himself from the Ahern era.
Meanwhile, Tom Parlon of the Construction Industry Federation (CIF) said many of its members are now trying to cope with severe cashflow problems, with some believed to be “weeks from liquidation”. He said the Federation is actively assisting a number of firms in “serious difficulty”. The CIF is to meet Mr Lenihan in the coming weeks to put proposals to him, aimed at reviving the building industry. It is understood they will call on the Government to inject funds into the main banks to allow them to lend to homebuyers caught in the credit crunch and also ease the pressure on cash-strapped builders. The CIF is also expected to ask for further reform of stamp duty — both for residential and commercial developments.
The country’s biggest union, Siptu, confirmed yesterday that it has held talks with prominent construction firms such as Pierse Construction, Clery Doyle and Sisk over proposed job losses.
“Will lay-offs happen? Of course they will — they already have,” says Matthew Gallagher, of developers Ravenshall and Earlsfort.
Economists have predicted up to 30,000 jobs will go over the next 18 months due to the slowdown in the residential housing sector.
Banks are also circling developers in trouble. A litany of smaller building firms have already gone to the wall, while larger, asset-rich but highly indebted builders are finding themselves “micromanaged” by banks as they struggle to repay loan interest.
KPMG auditors said that a third of companies liquidated in the first five months of the year were in the construction industry.
The prevailing mood of gloom was not helped by the Minister’s declaration at the construction conference on Friday that the boom had come to a “shuddering end”.
Eric Fleming, Siptu's construction branch secretary, accused the Minister of “narrating” the country into an economic crisis.
“We don't need an advocate of doom. We need a more positive response,” he said, calling on the Government to keep the building sector alive by pressing ahead with infrastructural and capital projects already in the pipeline.
Despite assurances from Mr Lenihan that the Government remains committed to the National Development Plan (NDP), the construction industry is “deeply fearful” that the tax revenue shortfall will cause the Government to stall key parts of the NDP which would have a “devastating impact” on their business.
“Many people are holding on for the NDP because they were promised. Any delay in the roll-out would be a crushing blow,” said CIF president Hank Fogarty of SIAC.
Bigger developers claim the “crisis” is a correction from which the sector will recover. Richard Barrett, cofounder of international property conglomerate Treasury Holdings, said: “If things were absolutely dire, then we would anticipate that we would be getting requests for payment in advance or offers of discounts for cash. No firm we are using in Ireland has made those requests.”
He believes adjustingstamp duty and introducing measures targeted at firsttime buyers would maintain activity in the sector. The survival of construction firms depends “on the finances of individual firms being able to cope with the length of readjustment,” he said.
“If the finances are precarious, the firm won't survive,” he added. Tom Parlon said Ireland will never again see the building levels of 2006, when 93,000 houses were built. The number of houses to be built this year is expected to fall below 30,000 which will significantly affect the economy.
Every 10,000 houses built represents €1bn in tax revenue or 1 per cent of economic growth. Labour leader Eamon Gilmore said that the time has come for Brian Cowen to address the people on the state of the economy and the public finances — as Charles Haughey did in 1979.
