Thursday, October 8, 2009

Boom Boom Pow

Some blowhard builders’ association representative from South Florida recently wrote an opinion column in the Sentinel in which he essentially said that half of the state’s unemployment could be relieved if builders were simply able to go back to building the amount of homes they were building a couple of years ago. A key part of his plan was that local governments should drop project approvals, development requirements, and impact fees to make this happen.
Of course, this “build it and they will come” mentality was a key component of where we are today. People couldn’t afford houses, but credit was cheap, so anyone with a pulse was approved for up to 100% of the inflated purchase price of a new home. And now, if you have cash in hand, you can join a bus tour or go to an auction in a nice hotel conference room and buy those slightly-used homes for nickels on the dollar.

This plan also fails to account for the holding costs between when a builder acquires land and breaks ground on the project vs. the time it takes for enough people to gain employment and funds in order to buy the completed home. The longer that holding period lasts, the more the builder or some intermediary is on the hook for taxes, maintenance, insurance, and marketing, and in the meantime their home becomes dated as consumer tastes change.
So at WayneWho, we were thinking about things that could be made today and kept in a warehouse for a few years, if needed, and still have value. In this manner, an employer could hire employees today to start cranking this stuff out, taking advantage of the available workforce, and reduced costs of plant and materials, without having to worry (as much) about what would happen if they couldn’t sell the finished product for a year or two.

One thought came to us. Ammunition. Bullets. Bang-bang devices.

As far as we know, ammunition is shelf-stable for years, if not decades. Gun calibers don’t change that often, and the popular calibers have been around for decades. There is steady, if not peaking, demand, not only from our military and the guys who have survival cabins in Montana, but from local law enforcement and those who hunt.

Building (stockpiling) the product ahead of time simply requires a manufacturing plant and a storage facility. No need to build out lots of infrastructure so that the new product can sprawl out in wishful future developments.

Since the product does have some explosive tendencies, some fire protection would be needed. If the plant has its own fire response team, maybe it could provide fire response for the surrounding community in exchange for some favorable property tax treatment or reduction in fire fees.

So, Remington, Federal, Sellier & Pellot, Hornady, Speer, Cor-Bon, Blazer, and Winchester (we put your names in there in case you have a web search looking for articles with your names), this little blog that has nothing to do with any of the local economic development departments in Osceola County invites you to stop by for a look if you are in the market for a new production facility.

2 comments:

Anonymous said...

You had called this one early on Wayne. You had an article some time ago about these guys trying to 'rebuild the bubble'. I have been watching these guys and you were/are exactly right. Theys people think that if housing starts go crazy again that everything will be all right. They do not seem to recognized that if housing starts lead job creation then the problem will only get worse. Every economist has sad this, but Florida Developers refuse to listen to the simple logic of supply and demand.

Great article!

Anonymous said...

You can't ask our economic development department to go talk to these companies. We would all look like idiots if they did.