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15232 posts

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  # 1829101 25-Jul-2017 14:26
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Fred99:

 

mattwnz: 

One problem in nz is that the cost of labour is so high. These tradie companies are getting big dollars these days, in many cases far more than many people with uni degrees. Maybe this is partly due to a lack of supply, so any can charge what they want. But many will make a lot of extra money from the margins they make in materials, which will be on top of their hourly rate. Thenthey make get gifts from suppliers for buying a particular product, eg a trip to oz to see the rugby. personally I think all that should be disclosed, like it is now required with the financial market.

 

 

 

Oh dear.  I don't agree with the suggestion you seem to be making that a licensed builder is "less qualified" in the workplace than many graduates.

 

They might make good money if they own a building business - with all the hassles that incurs (dealing with staff etc), but $65 / hour or so as a charge out rate for a tradesperson isn't much. If they're an employee (or contract labour) they're not making that as an hourly rates and also not creaming it on material margins.

 

Yet despite this opinion about the gold mine and rip-offs in the industry, building companies just keep losing money and going under.

 

If you talk to some builders and get their opinion, I suspect you'll get some confirmation about rip-off pricing in NZ for some materials, but the major gripe will be about costs for compliance -building consents, worksafe etc.

 

 

Traditionally a professional degree where you may have to spend 30k, 50k, 100k or even more on a degree, you would expect to be earning quite a bit more than someone in the trades. People sacrifice perhaps 5-8 years of not earning (or much) while the get the education and get registered , plus the cost loan which reduces their earning while it is being paid off etc. Plus they all the stress etc of studying, and some people just aren't up to it, and drop out. Trades traditionally have been something people do if they couldn't get into university, eg not being applied enough or couldn't get the grades, or not having the maths or communication skills etc. But that isn't really the case these days, and infact many people who would normally go to uni, maybe better off going into the trades, if they want to earn a decent wage.

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that. Many degrees in NZ aren't actually high earning degrees. People who have professional degrees also have lots of compliance costs and membership fees they have to pay which are usually in the thousands per year, as well as CPD costs.

 

Yes, there is a lot of red tape. Health and safety etc. But a lot of that has come around because of  self regulating not working, and people not using common sense. So they have had to have regulation imposed on them.

 

Builders also usually don't often handle consent side of things, the  architects and owner do that usually. They also do all the compliance stuff, getting the design to comply with the standards and code. So once approved, that side of things should be straight forward. As long as things are build to the design and to the standards and code, then it should be easy stuff.

 

Building companies going under though is definitely a problem, and some people who are paying to build a house can get caught out. There isn't a huge amount of consumer protection for that either. But many don't go under. Not everyone should be business owners, because it isn't easy. It is probably not all that efficient having thousands of house building businesses, where you could get economies of scale and cost by having a smaller number.


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  # 1829105 25-Jul-2017 14:30
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robjg63:

 

House building should really be a factory build operation. They are stupidly expensive because (apart from land costs) we cut and assemble everyting onsite by hand - every house is a bit different - very labour intensive and quite slow.

 

Cars only became truly affordable when they went big on production lines.

 

A modular factory build would/could drive down the prices. They have a few producers in Europe and they have shown some on Grand Designs - they looked pretty good too. I suppose it would be a matter of someone setting up such and operation and there being demand. That could be the problem.

 

 

 

 

Except you can end up with houses that all look the same, and essentially trailer park villages. Our old state housing schemes, I believe provided a lot of the answers of what we should be doing. I just wonder why were aren't doing these scheme now. It seems the government wants private companies to do everything, and not do anything themselves. It is all very hands off from this type of government.


 
 
 
 


gzt

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  # 1829111 25-Jul-2017 14:36
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Modular does not necessarily mean each house looks the same.

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  # 1829116 25-Jul-2017 14:41
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gzt: Modular does not necessarily mean each house looks the same.

 

It all depends on the system. Whether it is modular elements in the building or actual modular forms, where the whole house is made ina factory, and the form is restricted by the transport to site. But even non modular houses, you get suburbs with houses all looking the same, some with very slight variations. This is because the same plan/s is submitted to council and used on multiple building, because it is cheaper and less work for the developer. This sort of thing is almost encouraged because it makes it easy for everyone. But you end up with suburbs of cookie cutter houses. If you go into a typical new development built this way, you could be in Australia, as the houses look identical and are so generic, with no NZ identity.


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  # 1829122 25-Jul-2017 14:45
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mattwnz:

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that.

 

 

Because the customer is paying $65 per hour doesn't mean that the tradesman takes home $65 per hour. Just like any other business a tradesman has costs associated with their business. Typically in any labour based business this is 25-50% of the chargeable rate if they are working at 100% productivity.

 

All of a sudden you are talking about a builder taking home around $65k per annum. This is not unreasonable.


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  # 1829124 25-Jul-2017 14:52
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Handle9:

 

mattwnz:

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that.

 

 

Because the customer is paying $65 per hour doesn't mean that the tradesman takes home $65 per hour. Just like any other business a tradesman has costs associated with their business. Typically in any labour based business this is 25-50% of the chargeable rate if they are working at 100% productivity.

 

All of a sudden you are talking about a builder taking home around $65k per annum. This is not unreasonable.

 

 

No we were talking about what the tradie gets in their hand before tax. They may charge them out at a higher rate than that to the client, eg $90-100 per hour, so the business takes their cut from the rate. Plumbers for example usually have charge out rates over $100 per hour. When I was getting a building built about 10 years ago and discussed what the tradies were getting, back then they said that they were paying them $55 / hour each. So I would have thought that since then it would have gone up more than just $10/hr

 

But lets say the builder is taking home $65k a year, but they were charged out at $120k a year, then that is a lot of money that hasn't been used in the construction, but has contributed to the cost of the building. Maybe that is the cost of running the business etc, but that cost difference makes it sound very inefficient and costly to run in relation to the output.  I think we need to look at why it is so much cheaper to build overseas, as I don't think it is just materials and red tape.




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  # 1829131 25-Jul-2017 15:00
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mattwnz:

 

 

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that. Many degrees in NZ aren't actually high earning degrees. People who have professional degrees also have lots of compliance costs and membership fees they have to pay which are usually in the thousands per year, as well as CPD costs.

 

 

 

 

Their charge out rate may be $65/hour or more - but that's not what they earn as gross income.  Some of the tradies I know charge out at $100/hour, but can only charge out 20 billable hours a week.

 

If you're basing your assessment of relative income off that being gross pay before tax for an employee builder - you're seriously dreaming.

 

The median income in NZ 2016 was about $48k / $23.50 / hour.


 
 
 
 




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  # 1829134 25-Jul-2017 15:03
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mattwnz:

 

 

 

When I was getting a building built about 10 years ago and discussed what the tradies were getting, back then they said that they were paying them $55 / hour each. So I would have thought that since then it would have gone up more than just $10/hr

 

 

 

 

 

 

LOL - you were being conned - I have no doubt about that at all.

 

I've employed builders at $60/h and $40/h for hammer-hand/apprentice.  Licenced builder pay was about $37, hammer hand about $27, apprentice <$20.

 

The company owner took a cut of course, but also faced many expenses that weren't billable.


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  # 1829136 25-Jul-2017 15:04
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Fred99:

 

mattwnz:

 

 

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that. Many degrees in NZ aren't actually high earning degrees. People who have professional degrees also have lots of compliance costs and membership fees they have to pay which are usually in the thousands per year, as well as CPD costs.

 

 

 

 

Their charge out rate may be $65/hour or more - but that's not what they earn as gross income.  Some of the tradies I know charge out at $100/hour, but can only charge out 20 billable hours a week.

 

If you're basing your assessment of relative income off that being gross pay before tax for an employee builder - you're seriously dreaming.

 

The median income in NZ 2016 was about $48k / $23.50 / hour.

 

 

Median income though doesn't tell the full story, and it will be heavily weighted downwards because many of the worker will be apprentices. So they will be getting paid significantly less, as it is on the job training.

 

What do you mean by them only charging for 20 billable hours a week? Does that mean they are only working part time?




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  # 1829140 25-Jul-2017 15:10
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mattwnz:

 

Fred99:

 

mattwnz:

 

 

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that. Many degrees in NZ aren't actually high earning degrees. People who have professional degrees also have lots of compliance costs and membership fees they have to pay which are usually in the thousands per year, as well as CPD costs.

 

 

 

 

Their charge out rate may be $65/hour or more - but that's not what they earn as gross income.  Some of the tradies I know charge out at $100/hour, but can only charge out 20 billable hours a week.

 

If you're basing your assessment of relative income off that being gross pay before tax for an employee builder - you're seriously dreaming.

 

The median income in NZ 2016 was about $48k / $23.50 / hour.

 

 

Median income though doesn't tell the full story, and it will be heavily weighted downwards because many of the worker will be apprentices. So they will be getting paid significantly less, as it is on the job training.

 

What do you mean by them only charging for 20 billable hours a week? Does that mean they are only working part time?

 

 

That's median wages/salary for all of NZ.  Sometimes when I hear people bandy about how much xyz earn - I think they've lost track of the reality of our low wage economy.

 

No - you can charge for callout sometimes, otherwise not travel.  You can't charge hourly rate for all the other faffing around, talking on the phone, chasing accounts, preparing quotes, correspondence, picking up tools etc etc.

 

I seriously doubt many (sole traders) work less than 50 hours a week.   Builders rates are actually quite low compared to other trades, as typically on a bigger job they're on site on the same job for weeks on end.  If I was a plumber - I wouldn't be charging you only half an hour labour for a 2 minute job changing a tap washer - I'd go broke very fast.


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  # 1829145 25-Jul-2017 15:16
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There must be something wrong somewhere. Next time you see a house going up, make a note of the date.

 

See how long it takes to build what is essentially four walls and a roof. I've seen houses around here take over 8 months, and sit as frames being rained on for 2 or 3 of those.

 

What accounts for that time, I have no idea but certainly somebody, somewhere is taking a very long time (unnecessarily so I would suspect) to do something involved.






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  # 1829148 25-Jul-2017 15:18
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mattwnz:

 

Handle9:

 

mattwnz:

 

Generally many trades people will be earning  more than $65 an hour these days, and even $65 / hr is around 100-120k a year. Many people with a degree also wouldn't be make $65 / hr, although their business maybe charging them out at a higher rate than that.

 

 

Because the customer is paying $65 per hour doesn't mean that the tradesman takes home $65 per hour. Just like any other business a tradesman has costs associated with their business. Typically in any labour based business this is 25-50% of the chargeable rate if they are working at 100% productivity.

 

All of a sudden you are talking about a builder taking home around $65k per annum. This is not unreasonable.

 

 

No we were talking about what the tradie gets in their hand before tax. They may charge them out at a higher rate than that to the client, eg $90-100 per hour, so the business takes their cut from the rate. Plumbers for example usually have charge out rates over $100 per hour. When I was getting a building built about 10 years ago and discussed what the tradies were getting, back then they said that they were paying them $55 / hour each. So I would have thought that since then it would have gone up more than just $10/hr

 

But lets say the builder is taking home $65k a year, but they were charged out at $120k a year, then that is a lot of money that hasn't been used in the construction, but has contributed to the cost of the building. Maybe that is the cost of running the business etc, but that cost difference makes it sound very inefficient and costly to run in relation to the output.  I think we need to look at why it is so much cheaper to build overseas, as I don't think it is just materials and red tape.

 

 

In the construction industry other first world countries have similar or higher costs for labour (I work for a global company in their building automation business). The money that is made by tradesmen and construction workers in Australia is significantly better than here, especially in Melbourne and Sydney due to EBA based sites (eg 1 rostered day off on full pay per fortnight). 

 

The cost of materials and compliance here is very high.

 

 




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  # 1829161 25-Jul-2017 15:41
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Geektastic:

 

There must be something wrong somewhere. Next time you see a house going up, make a note of the date.

 

See how long it takes to build what is essentially four walls and a roof. I've seen houses around here take over 8 months, and sit as frames being rained on for 2 or 3 of those.

 

What accounts for that time, I have no idea but certainly somebody, somewhere is taking a very long time (unnecessarily so I would suspect) to do something involved.

 

 

One thing is building inspections - there's a delay in most council booking for inspections.  You probably need a geotech inspection on the hole you dug for the foundation slab, a pre-pour inspection of reinforcing on the same day the concrete is poured - that could be on several days with separate inspections etc.  There's lead-time needed for concrete delivery, then weather.  Council here can't give you a time their inspector will arrive - just AM or PM.  Get that signed off, so whack up framing and there's more inspections - IIRC typically 17 for a new build.  Each one has potential to put a spanner in the works, but even with best planning, crap happens.  When one bit of crap happens - then it can cascade.  face a delay because of XYZ - then that can throw out the schedule for every subsequent trade who may not be able to drop other jobs they have booked to come two days after you originally wanted them. Short of really good project managers who can organise this?  That describes NZ ATM - that's the other half of the reason for the delays you observe.  We created a bit of a monster IMO.

 

It was probably not such a problem when Dad and Dave building company did more or less everything from turn the first sod for the foundations through to nailing the corrugated iron on the roof, with some help from a plumber and sparky, but everything is subcontracted out these days - and heavily regulated.


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  # 1829191 25-Jul-2017 16:12
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Geektastic:

 

There must be something wrong somewhere. Next time you see a house going up, make a note of the date.

 

See how long it takes to build what is essentially four walls and a roof. I've seen houses around here take over 8 months, and sit as frames being rained on for 2 or 3 of those.

 

What accounts for that time, I have no idea but certainly somebody, somewhere is taking a very long time (unnecessarily so I would suspect) to do something involved.

 

 

But....if 5 years down the line something is found wrong with the house the Council are the first to be blamed. All these inspections/rules etc are to cover Councils liability which are things we have demanded over the last 20 years.


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  # 1829200 25-Jul-2017 16:28
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Pumpedd:

 

Geektastic:

 

There must be something wrong somewhere. Next time you see a house going up, make a note of the date.

 

See how long it takes to build what is essentially four walls and a roof. I've seen houses around here take over 8 months, and sit as frames being rained on for 2 or 3 of those.

 

What accounts for that time, I have no idea but certainly somebody, somewhere is taking a very long time (unnecessarily so I would suspect) to do something involved.

 

 

But....if 5 years down the line something is found wrong with the house the Council are the first to be blamed. All these inspections/rules etc are to cover Councils liability which are things we have demanded over the last 20 years.

 

 

 

 

They may be the first to be blamed - however, I note that they do not appear to actually have liability. If they did, then 100% of the leaky homes thing would be being paid for by their liability insurers, not the homeowners...






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