Only a week ago Taylor Wimpey announced that it was planning to raise up to £500m to bolster its finances.
Today the BBC reports that shares in the house builder have halved in value after it failed to secure the extra funding, and the company is looking to its suppliers to help out by cutting prices.
There’s no shortage of trouble all round in the building sector right now, and it highlights again the dangers when industry begins to believe a bull run can and will continue forever. Another house builder, Barratt Developments, is a prime example of the kind of mad optimism that can prevail in such times. The company has a debt burden of around £1.7bn having bought rival Wilson Bowden last year - when the housing market was at its peak. The combined group’s market value currently sits at £140m.
The human fallout is that there’ll be thousands of families badly affected through layoffs already announced by Wimpey and others, and the echoes will reverberate through the supply chain too.
On the flip side, organisations that have continued to pay close attention to their purchasing and supply chain strategies through the good times, should now at least be well placed to take advantage of the market share opportunities that always present themselves in a downturn.
