Insolvencies up 27% in first 6 months of 2010

George Orwell 1982

Are we witnessing an orderly wind-down of the domestic economy?

From the Irish Times website:

The number of businesses going bust rose by 27 per cent in the first six months of 2010, with four companies closing down every day.
New data from InsolvencyJournal.ie, a website run by accountancy firm Kavanagh Fennell, showed the construction, hospitality, retail and services sectors accounted for the majority of the business failures, and the majority of them were based in the Dublin area.
A total of 792 companies went out of business between January and June, compared to 622 in 2009. In contrast, 773 failures were recorded for the whole of 2008.
Based on this trend, insolvencies could reach 1,800 by the end of 2010.

One in three failures during the six-month period occurred in the construction industry. However, export-led sectors - manufacturing, wholesale and transport - did better than expected, accounting for only 13 per cent of failures.
Forty per cent of the businesses were in Dublin.
The number of receiverships also rose in the first six months of 2010, with receivers appointed to 118 companies, a 174 per cent increase on the first half of last year.

"The latest statistics show that banks are moving into recovery mode to recover distressed loans," Tom Kavanagh, a partner in Kavanagh Fennell. "The figure of 118, however, only reflects corporate receiverships and does not include personal asset receiverships.
"We're seeing a similar increase in personal asset receiverships, if not a bit more, so there were probably twice as many receiverships in the first half of the year if personal asset receiverships are included."
Examiners were appointed to nine companies.
Some 240 construction firms failed in the first half of the year, an increase of 17 per cent on 2009. The sector is predicting further dismal prospects, with the Construction Industry Federation (CIF) predicting output will fall below €7 billion in 2011.

Meanwhile, the car scrappage scheme did nothing to stem the tide of insolvencies in the motor sector, with 22 businesses failing over the period. Thirteen of these were in May and June.

http://www.irishtimes.com/newspaper/breaking/2010/0702/breaking8.html

thebman

The only way to keep the construction workers off the dole is to start introducing minimum standards for housing energy efficiency at least for rental properties.

All the retraining initiatives can only reduce the size of the problem, the construction workers need another section to get work from due to the oversupply, the surplus after that will have to retrain or emigrate.

gawd thats depressing !

Sleepy

thebman wrote: »

The only way to keep the construction workers off the dole is to start introducing minimum standards for housing energy efficiency at least for rental properties.

All the retraining initiatives can only reduce the size of the problem, the construction workers need another section to get work from due to the oversupply, the surplus after that will have to retrain or emigrate.

And who's got the moeny to pay for improving energy efficiency standards in a home that's odds-on worth less than the mortgage already held for it?

It's all well and good to try and come up with ways of supporting an industry to downsize in a slower fashion so as to make the transition easier on the workers but average Joe homeowner doesn't have the money for home improvements, their bank won't increase their mortgage to an even higher level than the home's worth and, with so many rental properties already sitting empty (and margins so low) it wouldn't be worthwhile for most landlords to carry out the work. You'd be making criminals out of people for not being able to afford to make builder's lives easier...

Far more worthwhile to look at capital investment in our school buildings, transport links, broadband, water pipes etc. imho.

MrDarcy

If you want to see the real impact that this is having, take a trip through any of the industrial estates around Dublin, especially around the D12/Ballymount/Bluebell area. These have typically been what I have considered anyway, to the where a lot of the real heavy lifting has been done in the domestic economy, where the furniture warehouses are, the motor industry has a major presence in this area. Start at the Bluebell stop Luas stop on the Naas road, almost immediately you'll pass all the closed motor dealers on the left there at the start of the Naas Road, from there, take a drive through the Ballymount Industrial Estate, a depressing place now with more closed business units than open ones. The only activity that seems to be happening in these open estates now is the traveller lads in Hiace and Transit vans looking for scrap metal and pallets after a unit has shut.

The_Thing

Meanwhile, the car scrappage scheme did nothing to stem the tide of insolvencies in the motor sector, with 22 businesses failing over the period. Thirteen of these were in May and June.

The Irish Motor Industry is a private sector cartel, guilty of price fixing. I have no pity for them. Let them live off of the obscene profits they made, or, failing that, they and their families can starve as far as I'm concerned. Fcuk 'em.

peasant

Many, many businesses have been hanging on by their fingernails for the last year or so.

The celtic tiger spending spree is long since over, but even normal private consumption is down, people have to save.
Public sector spending has been cut, so sales are falling off there too.
Spending by larger companies is down too, downsizing, projects being put on hold, even watercoolers are being sent back.
Banks are not only not lending any money, but they're putting on the thumbscrews on loan and interest repayments, trying to claw in as many outstanding loans as they can without mercy.
Other businesses are slow to pay or don't pay at all.

So more and more businesses finally fall off the cliff, making life even more difficult for those they owe money to.

This is far from over yet ...as long as the unemployment figures keep rising (and thus more consumers stop consuming more than beans & toast) more businesses will go down the drain.

George Orwell 1982

peasant wrote: »

This is far from over yet ...as long as the unemployment figures keep rising (and thus more consumers stop consuming more than beans & toast) more businesses will go down the drain.

Exactly. So many businesses have been hanging on trying to whether the storm. Can't keep that up forever. It seems perfectly plausable now that unemployment could go over half a million by the end of the year.

thebman

Sleepy wrote: »

And who's got the moeny to pay for improving energy efficiency standards in a home that's odds-on worth less than the mortgage already held for it?

It's all well and good to try and come up with ways of supporting an industry to downsize in a slower fashion so as to make the transition easier on the workers but average Joe homeowner doesn't have the money for home improvements, their bank won't increase their mortgage to an even higher level than the home's worth and, with so many rental properties already sitting empty (and margins so low) it wouldn't be worthwhile for most landlords to carry out the work. You'd be making criminals out of people for not being able to afford to make builder's lives easier...

Far more worthwhile to look at capital investment in our school buildings, transport links, broadband, water pipes etc. imho.

You simply do it for rental properties to start.

Those people have high incomes and their properties are businesses.

They should be treated as such with minimum standards for energy efficiency.

In a few years we can apply the same to other home owners on a phased in basis to slow the impact of the current problems.

MrDarcy

peasant wrote: »

Many, many businesses have been hanging on by their fingernails for the last year or so.

The celtic tiger spending spree is long since over, but even normal private consumption is down, people have to save.
Public sector spending has been cut, so sales are falling off there too.
Spending by larger companies is down too, downsizing, projects being put on hold, even watercoolers are being sent back.
Banks are not only not lending any money, but they're putting on the thumbscrews on loan and interest repayments, trying to claw in as many outstanding loans as they can without mercy.
Other businesses are slow to pay or don't pay at all.

So more and more businesses finally fall off the cliff, making life even more difficult for those they owe money to.

This is far from over yet ...as long as the unemployment figures keep rising (and thus more consumers stop consuming more than beans & toast) more businesses will go down the drain.

I have a simple enough theory on all of this that is explained by two consumer behavioural components :

(1) The sheer insanity of what was going on over the last few years... Just to name a few, absolute brain dead half criminal idiots working on pub and nightclub doors refusing people entry for no reason at all, p*ssing people off and ruining their nights out, restaurants charging 30 Euro for a bottle of wine you can get in LIDL for 5.89 Euro, leaving you sitting at your table with your partner for 45 minutes without coming near you to take an order, then you have to get up and ask them to take your order and they hand you a bill for 200 Euro at the end of the night for crap service and two bottles of LIDL wine... Ten odd years of this kind of stuff I reckon has left people feeling angry and also very vengeful. I personally feel great as I walk past the pub in my hometown that wouldn't let me into the place a few years ago and I was sober. The same owner that stood over turning people and their hard earned money away a few years ago because in his opinion they didn't "look right", now stands outside like an absolute loser and smiles at people as they walk past getting his lounge staff to hand out leaflets for cheap carvery lunches, hoping that his pathetic attempt at being nice to passers by, will urge them to come into his place for lunch or a drink. The same clown was standing very smugly at his door hiding behind two burly bouncers only a few years ago, laughing at the locals that he didn't want into his pub. The same idiot thinks now that I'm going to go in and buy lunch?!?!?!?

This kind of stuff I reckon is causing people to retaliate. It is certainly causing me to think very long and hard as to where I spend my even harder earned money.

(2) The other part of all of this I reckon is the lack of political leadership. We need a leader who can genuinely (as opposed to being media managed as is the case at the present), identify with people and how angry they are and who can direct that angry from the sheer terror and fear that is out there at the present, into a positive direction. You didn't need to be refused from a pub or to have experienced absolutely sh*t service at an expensive restaurant in the last few years to be angry. Maybe you are angry at that estate agent who convinced you to buy a 600K property "that can only go up"... Maybe you are angry at the car dealer who arranged finance two years ago for that BMW 3 Series that your neighbours probably saw being loaded onto the back of a repo truck last week. Maybe you are angry that you have the last 5 years of your life to a company that let you go last month...

I reckon anyway that until we get to grips with the degree of anger out there, we are on the road to a hiding... It is very obvious that those that have the few quid to spend are being very selective with their money... Then there are half a million of us who cannot afford a stamp.

Sleepy

thebman wrote: »

You simply do it for rental properties to start.

Those people have high incomes and their properties are businesses.

They should be treated as such with minimum standards for energy efficiency.

In a few years we can apply the same to other home owners on a phased in basis to slow the impact of the current problems.

I think you over-estimate the ability of most landlords to be able to afford the upgrades tbh.

• Rental yields are dreadful as is.
• There's loads of unrented property around the country.
• Rental prices are only as high as they are due to the state subvention.
• A high percentage of rental property in Ireland was bought as a pension investment by ordinary middle class people. The value of that property has (rightly) taken a nosedive and now they're stuck with a depreciating pension plan and no other savings to invest in upgrading it.

thebman

Sleepy wrote: »

I think you over-estimate the ability of most landlords to be able to afford the upgrades tbh.

• Rental yields are dreadful as is.
• There's loads of unrented property around the country.
• Rental prices are only as high as they are due to the state subvention.
• A high percentage of rental property in Ireland was bought as a pension investment by ordinary middle class people. The value of that property has (rightly) taken a nosedive and now they're stuck with a depreciating pension plan and no other savings to invest in upgrading it.

Well as a renter, I should have the right to reasonable accommodation and not be paying massive electricity bills because the landlord refuses to invest in good insulation.

Sure I can move but I have no way of knowing easily if the new house will be any better which is why we need standards.

If they can't afford it fine, I'll move to a landlords house that can afford it and I should be able to view energy ratings for these houses.

I still think a certain level should be mandatory for a house to be deemed habitable. Many of the student houses around are a joke when it comes to heating and they don't have the money to pay large heating bills so just go cold and wear blankets in their homes in winter to try to get by so people can retire on their rent money.

Its not fair either way but we have to become more energy efficient anyway so lets just introduce some standards now and some people will get hurt but some people are getting hurt now too.

jock101

Well no money no funny, Bye Bye shops etc..!:(

Why anyone would want to even try and run a business, especially an SME in this country with all the Government taxes and cartels that operate here, why!!!!

Sleepy

If you were proposing this 10 years ago, I'd have been fully behind it. I just don't think it's possible at the moment. Most rational people won't throw good money after bad, most landlords won't have the cash on hand and the banks won't (and shouldn't) lend further cash to the owners to finance the work so the only way it could be financed is via state grants which we can't afford.

Never mind the fact that imposing this on landlords would lead to vast swathes of them selling up and the resulting firesale would go against the current government's policy of re-inflating the housing bubble so I can't see them going for it.