Survey reveals two-speed construction industry

Aaron Morby 12 years ago
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Prospects for contractors are dividing in two camps with building work stuck in the doldrums and civil engineering on a slow but sure recovery.

The industry’s latest combined construction state of trade survey shows workloads are still subdued overall and also a split in the fortunes of firms operating in the north and south.

But main contractors and specialist delivering civil engineering, particularly in water, rail and energy work are seeing a recovery while traditional building firms face a slide in workloads.

Noble Francis, economics director at the Construction Products Association, said: “It’s good to see that some companies are benefitting from schemes such Crossrail, Europe’s largest construction project, and projects in the energy sector such as nuclear and renewables.

“Yet, government cuts have begun to hit many parts of the construction industry and public sector construction will only deteriorate further given the scale of the cuts.”

He warned: “Private sector construction is not growing quickly enough to offset this, especially with the largest construction sector, private commercial slowing.

“Work in the £22bn commercial sector is relatively subdued outside of a few high profile offices projects within Central London and even in London, work is beginning to slow with projects, such as The Shard, finishing and relatively few replacements in the pipeline near term,” added Francis.

UK Contractors Group director Stephen Ratcliffe said: “Market conditions remain challenging but we must not lose sight of the fact that there is still a £100bn per annum market in construction.

“The opportunities could be more evenly spread – between both north and south and infrastructure and building.”

He added: “Central Government could help in getting on with delivering the much delayed school building programme and more local authorities need to wake up to the fact that investment in infrastructure means local growth and jobs.

The Local Government Association’s rejection of the benefit of publishing a pipeline of infrastructure investment shows how out of touch some local authorities are with the need to work harder to deliver investment and growth.”

The picture for smaller general builders was far more bleak. Julia Evans, chief executive of the National Federation of Builders said: “We are not looking at a recipe for growth but at another challenging quarter when bank holidays, Jubilee celebrations and the Olympics will all affect productivity, making it unlikely that Q2 and Q3 figures will be any more encouraging than those for Q1.”

    Key trade survey findings

    • 19% of large and medium sized building contractors, on balance, stated that workloads reduced, on an annual basis in Q1 (compared with 2011 Q1).
    • Orders weakened compared with the last three months of 2011 according to a quarter of large and medium sized building contractors, on balance.
    • 21% of SME builders, on balance, saw workloads reduce in Q1.
    • 3% and 17% of specialist contractors stated that, on balance, orders and enquiries rose in Q1.
    • Employment prospects are subdued for large, medium and small building contractors but manufacturers and civil engineers expect to increase headcount.

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