In a recent post, I wrote that capital expenditure (capex) spending, which includes the money allocated for building physical structures such as offices and manufacturing plants, is down, due in large part to uncertainty. That was a very blanket statement that doesn't apply to all companies. Take Amazon, for example. In the past five years, Amazon has spent $5.3 billion on capex, with $2.4 billion (43%) of that in the past 12 months.
So how, after such a painful economic downturn, can Amazon allocate so much money to capex? Simple: they have the cash and are using it wisely. Surely, Amazon is taking advantage of a soft construction market to stretch their capex dollars, of which they have $5.25 billion on their balance sheet. Know who else has a lot of cash on their balance sheets? Google ($16.3 billion) and Apple ($10.7 billion). Both of those companies are also investing heavily in capex. Apple had the best general contractors bidding for its proposed new campus. They get the benefit of high competition between reputable builders and relatively lower prices.
The bottom line is that the market for commercial/industrial construction is tough, but there are some bright spots. In order to get that work, though, builders need to have a strong reputation to be invited to bid, meaning only a few will benefit from these capex expenditures.
10/7/2013 05:19:57 am
When people plan to build the home then it is very important to prepare the budget. You may noticed some people who leave their building when work in process due to short budget. Here in terms of building capex the expenditure is increasing but not so bad everything. Hopefully they have already estimate the budget for this building plan which is really good thing.
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