Industry Roundtables: Construction
Findings Report March 2018
CONTENTS Introduction & Background of Paper ....................................... 3 Agenda, Key Questions & Findings…………………………………………………4 ’State of Industry’ Survey……………………………………………………………4 Question & Answer .............................................................. 7 Q1: Are you ready for the Builders Law registration deadline?................7 Q2: What difficulties do you face when interacting with the Planning Department?...................................................................................8 Q3:Are you able to obtain the work permits you require from the Immigration Department?.................................................................9 Q4: Is banking within your industry fair? What do your clients say about re-financing?............................. ....................................................10 Q5: Do you have any difficulties dealing with customs?........................10 Q6: How well do you think vocational and skilled trade careers are promoted in the Cayman Islands?.................................................... 10
Summary & Key Issues..…………………………….…………………………………12 Appendices…………………………………………………………………………………….13
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INTRODUCTION & BACKGROUND OF PAPER The membership of the Cayman Islands Chamber of Commerce is vast and diverse, and as such there is an essential need to better understand the concerns and issues facing each member and their industry sector. To ensure that the Chamber is advocating on behalf of all members, the Council agreed to hold a series of ‘Industry Roundtables,’ during which experts and business owners from specific industry sectors would gather at the Chamber offices to discuss the most pertinent issues and concerns. The first of these workshops was held on March 17, 2018, and focused on the Construction Industry. The meeting was recorded for the Chamber of Commerce, and photos also taken to document the event. Although the video will not be released to the general public, it will remain on file at the Chamber for later use if/when necessary. The above information was presented to the construction experts in attendance by President Paul Byles, who also informed them that the responses and concerns raised during the session would be documented in this report and submitted to caucus. All members present consented to being recorded, and were happy to have their concerns documented in this report anonymously.
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AGENDA, KEY QUESTIONS & FINDINGS President Byles informed each of the members in attendance that the afternoon’s discussion would begin with a ‘State of Industry’ survey, and then follow an order of key questions developed by the Chamber.
‘State of Industry’ Survey The session began with the survey, during which attendees were given a five-to-ten minute window to provide their answers. The survey began by asking each of the representatives whether or not they believed the economy had improved over the course of 2017, and whether or not the economy will improve over the course of 2018. In both instances 96% of the groups felt that the economy had and would continue to improve, whilst only 4% felt the opposite. No one present for the session disagreed with the statement. Moreover, 83% of the representatives taking part in the survey felt that the current state of the economy was above average or excellent. The attendees were then asked to assess government’s level of responsiveness. As Chart 1 below indicates, over a third of attendees felt that the government had been more responsive to issues in recent times. Just under a third thought the opposite, whilst a quarter of the group remained undecided.
Chart 2: Profits in 2017
Chart 1: The Government has been more responsive
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17 35
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70 30 Agree
Disagree
Undecided
No Response
Increased
Decreased
Remained Flat
No Response
The business owners present in the room were asked to assess their profit levels in both 2017, and 2018. As Chart 2 illustrates, 70% of those surveyed felt that their profits had increased during the prior year, whilst only 9% felt that they had decreased, and 17% felt that they had remained flat. In regards to their profits in 2018, 91% of the attendees felt that their profits would increase over the course of 2018, and only 9% felt that they would remain flat.
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Attendees were asked about their plans for the next 12 months, including areas such as operation expansion, increased spending, and hiring locally. Regarding expenditure, 78% of the representatives’ present said that they intended their businesses to spend more in 2018. Regarding hiring local talent, 70% of those surveyed said that they would seek to increase the number of Caymanians and current residents under their employ. The survey asked the respondents whether or not they would increase their office space during 2018. Over half (56%) of those surveyed said that they would maintain their current office space, whilst just over a third (35%) said they were looking to increase it. When asked whether or not they would expand their business’ operations in the Cayman Islands, nearly two thirds (61%) of respondents said that they would seek expanding their local operations, whilst 39% of others said that their operations would stay constant. The survey asked the representatives to expand on this point by asking them whether or not they felt the Cayman Islands are a suitable place to expand a business. A combined 70% felt that the Cayman Islands are an above average or excellent place to expand, with just under a third of respondents stating that the location is just average for business expansion.
Chart 3: The leading constraint for my business growth is: 9 4
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Operational Costs
Cost of Doing Business
Bureaucracy
Government Fees
Operational, Business & Government Fees
No Response
One key concern when running a business, as illustrated in previous reports developed by the Chamber of Commerce, is the costs of doing business. Whilst previous reports have compiled opinions of this matter from a cross-section of industries, the Chamber wished to identify the key areas preventing growth in each industry. As Chart 3 shows, the leading constraints for the participating businesses’ growth were operational costs, day-to-day costs of doing business, and bureaucracy (i.e. paperwork, government related approvals, etc.). Additionally, almost one-tenth of respondents felt that government fees were hurting business growth. The construction industry representatives were also asked to rate the Cayman Islands in regards to conducting business. As Chart 4 indicates, 87% of those who completed the
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survey said that the Cayman Islands are an above average or excellent place to conduct business. Less than 10% of respondents felt that the Islands were simply average.
Chart 4: Cayman Islands as a place to do business in: 4 9 26
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Excellent
Above Average
Average
No Response
Whilst the survey was predominantly multiple choice based, it did offer those in attendance an opportunity to express what concerns they are facing in their own words. Each respondent was asked to identify their top two concerns regarding immigration, infrastructure, and industry regulations. When addressing immigration matters, the top concerns appeared to be about customer service when interacting with representatives of the Department of Immigration, as well as processing times and inconsistencies. Other responses expressed concern that work permit costs were too high, and that different interpretations of the immigration law and work permit categories were leading to confusion. Responses also indicated that business owners were feeling that the Department was acting in an unfriendly manner when processing applications, and that, too often, reasoning behind refusals was poor.
76% of members said they would increase hiring in 2018.
Regarding infrastructure, the main concern was traffic on the roads and access to the airport and seaport. Others noted how some infrastructure projects were slow in being finalised, and that there seemed to be poor coordination among stakeholders in regards to overall planning. There was also concerns raised regarding George Town’s ability to sustain growth, its revitalization, and the lack of long term planning regarding the area.
Finally, the respondents were asked to identify their top two concerns regarding industry regulations. Among the top concerns were lengthy delays in processing applications, inconsistencies leading to losses for businesses, increased costs, stringent laws, and being over-regulated. Other concerns ranged from unnecessary or excessive due diligence requirements to government not addressing illegal companies that are competing against compliant businesses.
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Ultimately, the survey showed that the industry representatives who attended the roundtable saw a lot of positivity coming from government, and that the Cayman Islands are an ideal place to start, maintain and grow a business, as well as a good location to engage in trade. However, there are also issues that need to be addressed in order for the construction industry to continue to thrive and grow. All statistics and points raised in the survey have been attached in the Appendix (see appendices).
Question & Answer The questions were presented to the group on the session’s agenda, and each representative had time to think about their responses before providing feedback. The key list of questions were as follows: 1. Are you ready for the Builders Law registration deadline of March 31? 2. What difficulties do you face when interacting with the Planning Department? 3. Are you able to obtain the work permits you require from the Immigration Department? 4. Is banking within your industry fair? What do your clients say about re-financing? 5. Do you have any difficulties dealing with Customs? 6. How well do you think vocational and skilled-trade careers are promoted in the Cayman Islands? This section of the report will examine each of these questions in more detail, and explain the responses given by the construction experts in attendance for the session. It should be noted that questions five and six listed above were put forward by President Byles after he asked the group if there were any other areas of concern that the Council had not addressed. The questions have been added above for the convenience of this report. For anonymity, all names have been redacted. Q1: Are you ready for the Builders Law registration deadline of March 31? President Byles asked the group if they were prepared for the deadline of registration (March 31) to which the general consensus among the group was yes. Several representatives noted that there should be no problems faced by those in the industry,
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unless they have not yet applied. One attendee recommended that a temporary period be introduced to allow those who have not yet registered to still have access through the old system. Others noted that some business owners had been tardy when registering as the deadline had already once been extended, and they perhaps thought the date would change for a second time. The group informed President Byles that a new website and database will be introduced that lists all of the businesses registered and accepted under the new Builders Law. Q2: What difficulties do you face when interacting with the Planning Department? President Byles asked the group to explain some of the problems they have faced when dealing with the Planning Department. The group unanimously agreed that there are problems with processing applications, time delays, and a lack of consistency. President Byles noted that these issues have been raised with the Chamber before during focus groups held in 2016 and 2017. A representative from the electrical industry said that examinations and inspections are a cause for concern. He said that booking inspections on They argued that work sites has been particularly problematic, as the Planning Department do not have enough government does not have inspectors and are facing staffing issues. This the time or resources to leads to lengthy delays in projects and receiving complete these inspections approval. Others said that the attitude of to the standard expected‌ inspectors during a routine inspection can be poor. Some inspectors arrive at a site with no apparent interest in assisting the business, and that sometimes it seems that they are purposefully slowing down developments. President Byles noted that the Chamber had once received feedback that projects seem to run smoother when you know someone from the Planning Department. The group complained of consistency issues, and that some inspectors will treat a business poorly if they themselves are having a bad day. Some members of the group agreed that working with the Planning Department had gotten easier over the last few years thanks to the integration of an online platform. They said that the website proves a useful tool for businesses, and that there are obvious signs of improvement. More work needs to be done, but the Planning Department are obviously working on it. Other members of the group complained that there is no official place to go to complain or submit appeals to rejected proposals. They argued that projects are being rejected by the Department for no apparent or obvious reason, and that this is causing problems with their developments. They suggested that government consider allowing businesses to work independently on larger and more important projects, outsourcing inspections to other companies. They argued that government does not have the time or resources to complete these inspections to the standard expected, and that developers are wasting a lot of time, money and manpower in the process. It was noted that the government does allow third party inspections in some industries, but not others (e.g. electrical). The group also raised issues stemming from the Cayman Islands Fire Service. Some
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representatives noted that drawings of plans are being submitted to Planning, but that the Department is not sending them on to the Fire Service for review as should be the case. They acknowledged that there has been some marginal improvement recently, but that there are still many problems in this regard. For example, plans for pool installation are taking a long time to be approved. The group agreed that the ability to submit drawings online has reduced the time in having plans submitted, but that government is struggling to locate and employ trained plan reviewers. One representative said that his plan drawings were reviewed nine times, and that this process slowed down the development of his project to a near halt. The Professional Registration Law aimed to appoint professionals to help remove liability from government. The group said they were concerned about competency in having drawings and plans reviewed. Some industry representatives complained of the high water mark and how it is required to be updated every six months. One member of the group explained how he obtained the water mark, but due to delays in having plans approved he had to keep updating said water mark. He explained how this process becomes infuriating for businesses as it feels like a waste of time. Other representatives complained that some employers and businesses are held liable, regardless of whether or not the Planning Department have approved their plans. They argued that other businesses are not, and that some employers are not adhering to proper codes and regulations. They argued that better access to resources and information is vital to ensure that all businesses are acting in accordance with the law. They noted that legislation has been put forward to introduce a code of ethics for the construction industry, but that it has not yet reached caucus. Q3: Are you able to obtain the work permits you require from the Immigration Department? One representative described the Immigration Department as his company’s HR department. He noted that businesses must have permit holders for some roles, and that it’s important for the development of projects, that will benefit the community, that these permits are granted. Some members of the group noted that some businesses are required to submit a Staffing Plan, whereas others are not, depending on their size. They noted that permits are often granted more swiftly when a business does not have a Staffing Plan, and that it is unfair. The Staffing Plan is not working as it was intended to. One representative acknowledged that government had promised that changes would be made regarding Staffing Plans, but that these changes have not yet been made. One member of the group noted how his business had two vacancies to fill, and that there was only one eligible Caymanian available. As such, he required a work permit holder to fill the second vacancy. The application was denied as the Immigration Department wanted the Caymanian to fill both vacancies, even though the business owner had explained the issue and why this was not possible. He noted that his business is still one employee short because government did not accurately examine the application. The group unanimously agreed that temporary six-month permits are very easy and quick to obtain, but that extended permits (e.g. one year, two year) are much harder. These permits often encounter lengthy delays or rejections. The group also unanimously agreed that there must be an easier way for businesses in the
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construction industry to hire Caymanians. They noted that it is near impossible to hire Caymanians for small projects that will be completed quickly, as a Caymanian employee must be kept on once the project is completed. For example, a project may take three months to complete, and the next project of that business may not begin for another six months. The Caymanian employee will be required to stay in their role, regardless of whether they are completing a project or not, meaning that businesses could be paying an employee to do nothing. The group noted that temporary employees on work permits can finish a project and then be sent away if there is no other work to be completed. Some representatives acknowledged that they had faced some difficulty in hiring expatriates for jobs. Even though they were perfect for the role, they had dependents on their permits who were children. The government requires child dependents to be placed in private schools, but the employer said that many of these schools have waiting lists and that expatriate children might not be accepted. Members of the group recalled that, if a business was a part of the Contractors Association, then work permit holders could be transferred from business-to-business without the need for new permits and more fees. Others noted that work permit fees seem to fluctuate for no reason. For example, a work permit holder may complete one job and, although their job title has not changed, the permit fee has. One employer claimed that the Immigration Department seems to be determining the job title of a business’ employee. Q4: Is banking within your industry fair? What do your clients say about re-financing?
Other members of the group noted that, with the arrival of online and electronic services, employees of the Department have lost a sense of urgency.
The majority of the industry representatives present did not express any concern when it comes to banking. One representative of an LED company did however experience some issues. The individual noted that he had met with all of the banks and delivered a formal presentation. He said that he was trying to advertise ‘niche loans’ for more technical/specific areas, such as LED lighting. The banks reportedly liked the idea, but would only offer presenting a broader loan which might not prove beneficial to that company. He argued that it may be easier for some businesses in the industry if banks offered more specialized loans. Other members of the group noted that electronic banking can sometimes be a challenge, and that there is often limited access. They noted that some banks are better with electronic banking than others. Q5: Do you have any difficulties dealing with customs? President Byles asked the group if there were any other concerns that the discussions had not covered. Some representatives raised concerns with customs, noting that the new codes/system had made the clearing process for incoming items significantly longer. One representative noted that the customs clearance for his items used to take one day, and that now it takes roughly four or five days. Other members of the group noted that, with the arrival of online and electronic services, employees of the Department have lost a sense of urgency. They acknowledged that online submissions are much easier for the business, but that the urgency among the Department’s employees must improve.
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Q6: How well do you think vocational and skilled-trade careers are promoted in the Cayman Islands? Another concern raised by members of the group was the introduction of an official trades school. They said that there must be an institution located in the Cayman Islands that teaches Caymanians the different vocational professions. One representative noted that Caymanians are told that there are plenty of vocational jobs available to them, but that they are not given adequate information or training opportunities. They argued that a structure is needed so that the process and requirements for each trade is clear, and so that employers know precisely how qualified a Caymanian is when it comes to the hiring process. One member of the group acknowledged that Public Works had started a pilot programme regarding vocational training, and President Byles said the Chamber would investigate this.
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SUMMARY & KEY ISSUES Having spoken with representatives and experts from the Construction industry directly, it is apparent that, despite some improvements in regards to efficiency and online advancements, more work is required to ensure that businesses can successfully and effectively complete their projects. Among the key issues needing to be addressed are:
A: Lengthy waits for applications to be processed and a lack of consistency. As noted in the report, this is an issue that has been raised by Chamber members and local businesses for many years now. Whilst these might be some of the more challenging issues to address, they are perhaps some of the most essential to resolve. Businesses reported that they are making losses due to delays in the application process, and this could start to deter companies starting projects that will benefit the community. Likewise, a lack of consistency is leaving business owners frustrated and alienated. Improvements in customer service and department efficiency will reap benefits for all.
B: Communication between government departments is lacking. This issue was raised several times throughout the session, perhaps most noticeably regarding the Planning Department and the Cayman Islands Fire Service. Businesses are finding it frustrating when they abide by the regulations and the rules, but are then facing delays or losses due to an issue that is out of their control. Improved communication between governmental departments will ensure that businesses are having their applications dealt with properly, and this will in turn increase their confidence in the departments.
C: Enforcement of Government regulations. Perhaps similar to the issue of inconsistency, enforcement of regulations will ensure that all businesses in the construction industry are being held to the same standard. As indicated in this report, some business owners are feeling that non-compliant businesses are benefitting, whilst they themselves are not although they are acting in accordance to the regulations. By enforcing regulations and holding every business to the same standard, government can restore faith in the community.
D: Lack of vocational schools and education on skilled trades. One of the biggest concerns raised during the session, business owners in the construction industry do not feel that there are sufficient educational opportunities for students and residents to learn how to acquire skilled trades. The establishment of vocational schools will allow students and residents to learn more about these trades, and better promotion of these vocational careers in schools will encourage others to go out and seek these types of jobs.
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APPENDICES Appendix 1: Businesses invited to participate in the Construction Industry Roundtable Name of Business AMB Construction Ltd. A.L. Thompson’s Building Supplies Ltd. Apex Perimeter Protection Ltd. Arch & Godfrey Andro Group Artisan Metal Works BCQS Ltd. Corporate Electric Ltd. Charterland Chalmers Gibbs Construction Management & Engineering Company Design Cayman Architects Douglas Construction DDL Architects Encompass Ltd. Edgewater Construction Flowers Group General Maintenance & Repairs Go Gas Ltd. Island Paving Ltd. ITC International Kozaily Designs LED Specialists LFLM Architects McAlpine Ltd. OBMI Paramount Group Quayside Surveyors Ltd. Surebuilt Construction Ltd. The Phoenix Group
Number of Employees 20 148 4 30 100 9 23 42 10 0 10 4 1 5 14 17 86 2 43 21 9 2 6 68 3 50 2 6 60
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Appendix 2: ‘State of Industry’ survey results
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Unit 4-107 107 Governors Square 23 Lime Treey Bay Avenue West Bay Road P.O. Box 1000 Grand Cayman KY1-1102 T: 345 949 8090 E: info@caymanchamber.ky www.caymanchamber.ky 18