Challenges for construction industry

By Carl Jones

Happy new year . . . or is it? The answer to that question seems to depend greatly on which sector of the economy you find yourself working in – and whether your company is a net importer, or exporter.

Economists reckon the construction industry is usually one of the most reliable barometers to the health of a nation, but right now, it’s painting a pretty confusing picture.

More homes are being built in the county than we’ve seen for several years, there’s evidence of infrastructure work appearing in all our towns, and most of Shropshire’s big construction firms report being rushed off their feet.

Scaffolders and bricklayers are commanding wages of up to £24 an hour in some instances, due to what recruitment firm Manpower describes as a ‘chronic’ shortage of skilled workers.

And yet, the county’s Constructing Excellence organisation claims Government plans aimed at limiting the number of foreign workers employed in the UK could place Shropshire’s construction industry in jeopardy.

It fears proposals by Home Secretary Amber Rudd for companies to declare the number of foreign nationals they employ in a bid to reduce the number of migrant workers will have a major impact on the county’s building sites.

Gareth Emberton, chairman of the network organisation for construction and supply chain businesses, says the Government must be realistic about the significant numbers of foreign workers required by construction employers in order to meet housing demand.

“The proposals announced by Amber Rudd at the Conservative conference are worrying to say the least. Her message was that British people should be filling those jobs.

“But there is already a huge skills gap which exists in the UK in the construction sector and we need to find practical ways of tackling that issue.

“To then potentially reduce the number of migrant workers in the sector by deterring businesses from employing them could have a serious knock on effect to our industry and impact on the rate of building and development in Shropshire.”

The Government’s initial consultation paper produced in a drive to reduce net migration and encourage businesses to hire British staff caused an outcry from business leaders.

It has now said data on foreign workers would be used to inform policy rather than to name and shame companies.

But Mr Emberton says with the impending exit from the European Union – whenever that may eventually be - there is still cause for concern in the industry.

“The Government has nailed its colours to the mast with its attitude towards migrant workers and, with the planned Brexit in two years, the construction industry could have a massive shortfall in available labour.

“More needs to be done by those in power to address this as soon as possible or it will have a huge impact on future development and economic stability.”

The Federation of Master Builders believes the Government needs to start by ‘turbo charging’ the SME house building sector in 2017.

The rise in house building completions is helping to tackle the housing crisis, but more work needs to be done if the Government is to hit its one million new homes target, the federation believes.

Chief executive Brian Berry says: “Figures showing that 189,000 additional homes were created in 2015/16 is positive progress towards solving the housing crisis.

“However, the total created still falls below the number needed each year to deliver the Government’s stated aim of building one million new homes by 2020.

“The current figures also show a strong reliance on the conversion of existing buildings to residential use, which is a trend that can’t be sustained indefinitely.

“Recent Government policies to boost house building are helping, but there is still plenty of room for more radical solutions to meet the one million target.

“The Government needs to turbo-charge the SME house building sector. Smaller firms, once the main drivers of house building in this country, have become only marginal players in the market, which has hampered the capacity of the industry.

“The Government has already recognised the importance of revitalising SMEs through its attempts to improve the availability of finance for smaller firms, but much more can be done.

“In particular, we need to see a renewed focus on enabling planning permission for more small sites, which are the bread and butter of SME builders.

“We’re hopeful that the Government will listen to the voice of SME builders in its forthcoming Housing White Paper and put measures to enable more small scale development at the heart of the country’s house building strategy.”

Picking up the skills and resources points, Jonathan Carr-West, chief executive of the Local Government Information Unit, says: "There is a large untapped potential in small sites, but resource and capacity pressures in planning departments make it difficult to unlock.

“We need new approaches and new partnerships to build the homes we need. By working with a wider range of local builders, councils can stimulate local economic growth, while providing jobs and training for young people in the area.”

Yet right across Shropshire, major construction projects are pressing ahead without any sign of Brexit-fuelled doubt, including speculative industrial units in both Telford and Shrewsbury.

Work has also begun, for example, on a new caravan holiday home park on the edge of Ludlow, with Morris Leisure investing £200,000 in developing the park for 36 caravan holiday home alongside its Ludlow Touring Park, which already has 135 pitches.

First phase work is expected to be completed over the next couple of months and will 20 see pitches created.

The touring park is estimated to generate around £2 million a year for the local economy. It is one of six parks in Shropshire and North Wales owned by Morris Leisure based in Shrewsbury.

“We are delighted to report that our bookings at Ludlow Touring Park are increasing every year, mostly through personal recommendations and repeat business,” said Edward Goddard, Morris Leisure’s managing director. 

“It’s great to be able to develop a caravan holiday home park alongside the touring park and we now feel the time is right to press ahead with the work to bring even more sustainable tourism to Ludlow, which is a very popular destination.

“We believe the new park is going to further enhance the local tourism offer and generate extra income for Ludlow and the surrounding area, which has got to be good news for the local economy.”

Andy Gough is sales and marketing director at one of Shropshire’s biggest and best known house-builders, Galliers.

He says: “Although generally there are some mixed predictions for the residential property market in 2017, due to continuing Brexit uncertainty, as far as Galliers is concerned we are expecting to enjoy one of our busiest and most exciting years.

“There is no doubt that competition is fierce in the sector and companies such as ours are having to offer customers exceptional service, which can mean assisting them with their move and making incentives available.

“And it goes without saying that our product has to be of exceptional quality in order to stand out from the crowd, and that new developments have to be sited in carefully-chosen locations.

“When you combine all these factors, you can succeed as a house builder in uncertain markets.

“We are pleased to say that we saw steady growth in 2016 - and this will carry on over the coming 12 months - with our developments in Belvidere, Church Aston and Hadnall continuing to thrive and new schemes opening up in Newport, Baschurch and other locations.

“This of course will mean new jobs being created within the company and for sub-contractors, translating as good news for Galliers and for the economy of Shropshire as a whole.

“Our investment in the county is important to us as a company and we are proud to be one of the region’s longest-established building companies.”

And no wonder developers are so keen to crack on with house building projects.

The latest Halifax house price index of the year shows that prices continued to climb, with an annual rate of increase of 6%, and predicts further growth in 2017

Founder and chief executive of eMoov.co.uk, Russell Quirk, says: “There is yet more signs of life shooting from the frosty ground of the UK property market.

“Many in the industry have been quick to put the boot in over the last few months where the UK property market is concerned, hanging gloomy predictions on a dwindling level of demand in the market.

“It would seem this simply isn’t the case. The driving factor behind inflating house prices is an imbalance between supply and demand and, with house prices spiking this late in 2016, it would seem there is certainly a sustained level of buyer demand present in the current market.”

So, many reasons to be cheerful, then. Less pleasing, however, are the results from a new online tool created by the Government and the Office for National Statistics allowing people to find out the gender pay gap in their profession.

It shows that construction and building trades, along with financial managers and directors, have the highest gender pay differentials.

The online tool has been launched as a fore-runner to new rules which will force large employers to report their gender pay and bonus gaps from April.

The regulations, which will affect almost 8,000 employers with around 11 million employees, will shine a light on workplace practices that could be preventing women from reaching the top in their organisations.

Minister for Women and Equalities Justine Greening says: “Britain has the lowest gender pay gap on record, there are more women in work than ever before, more women-led businesses than ever before and there are now women on every board in the FTSE 100.

“But if we are to help women to reach their potential and eliminate the gender pay gap, we need to shine a light on our workplaces to see where there is more to do to. 

“Employers must play their part in this too and take action to tackle the gender pay gap in their organisation.”