Thursday, March 15, 2012

Can The Construction Industry Absorb Capital Intensive Fabricator Failures?

The recent defaults and plant shut downs by curtain wall fabricators Trainor Glass of Farmers Branch, Texas on February 22, 2012, and ASI Ltd. of Whitestown, Indiana, just before last Christmas, raise the question whether fabricators and suppliers of cladding, structural steel, precast concrete and various piping products, all of whom have relatively large capital investments in plant and equipment, can survive in this market of shrinking orders for their products on major construction projects.

While a performance and payment bond surety may step forward to keep production flowing for a time, as apparently happened in the case of ASI Ltd’s. subcontract  for cladding on the Brooklyn, N.Y. Barclays Center, it is especially unclear where such financial assistance could come from on privately funded jobs without performance bonding protection. Besides the tragedy of hundreds of skilled tradespeople suddenly out of work, and general contractors scrambling to locate and mobilize alternative fabrication sources, the collapse of fabricator availability for such critical building systems bodes very poorly for any construction industry recovery to economic health in the long run. Specifying architects, construction managers, and general contractors bidding for work on future construction projects of any sort need to exercise extreme care in evaulating the economic viability of their fabricators of critical systems across the entire timeline of any project. Otherwise, the economic difficulties of one fabricator can spill across the entire project, and threaten the survival of every trade involved.

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