Sector - Consultancy
Construction output numbers concerning
Simon Ayers is Chief Executive of TrustMark, where he is spearheading the future direction of the organisation. In this latest feature for Construction Online, he speaks about the latest set of ONS construction output figures.
The news that the construction industry had its worse month for output since records began, should not come as a shock. The coronavirus pandemic has hit us all very hard in many more ways than one. The figures from the Office for National Statistics (ONS), released last week (12 June) showed the industry saw a 41.2% fall in new work while repair and maintenance work tumbled by 38.1%. With the construction industry making up nearly 9% of the UK’s GDP, the drop in construction output mirrored the latest economy figures which showed a slump of 20.4% in April.
There’s no way of sugar-coating it, all this is extremely concerning and makes pretty grim reading. There are valid concerns about how the industry will recover and how quickly. For example, even though some larger construction firms are getting back to work, many smaller companies will struggle against reduced supplies and less demand from a consumer market that will be low on confidence and reluctant to spend money on home improvements or new developments.
There are tough times ahead for the construction industry. During the 2008 recession, 1 in 3 small to medium-sized (SME) house building firms left the sector. Strong support and guidance from central government, scheme providers and trade federations are acutely needed to make sure firms survive this crisis and the road to recovery is smooth.
The government’s announcement in May, that people could get back to work, with appropriate social distancing, was a welcome one. In fact, by late May, Build UK reported that 86% of its sites in England and Wales were operational again. That, coupled with reports of some firms continued some form of work throughout lockdown, is hugely encouraging and will have a positive impact on construction outputs over the next few months.
More recently, guidance from the Construction Leadership Council has been released. The Roadmap to Recovery sets out a two-year strategy of how to increase activity, achieve it safely, and build capacity. This should give confidence to firms that getting back to work is achievable.
The recent ONS figures will hopefully act as a watershed moment for many companies and encourage them to modernize. As firms adapt to the new circumstances in which we all find ourselves operating, we need to find ways of working more efficiently. This is a chance to update outdated procedures, retrain our workforce to combat the shortage of skilled traders and technicians to deliver both existing and new technologies as they come to the market, and develop and install new products in our working practices. The time for innovation and development is with us and if we can embrace it, the industry may emerge stronger from the crisis.
The recovery process will face significant challenges from a market place of consumers who will be low on confidence. The key for the construction industry’s recovery will be where demand comes from after lockdown eases, given unemployment is expected to rise as some furloughs turn to unemployment. Will consumers want to pay for home renovations? And will they want contractors working in their homes?
It is up to us as an industry, to bring back confidence to our consumers. Tradespeople will need to prove that they can deliver high-quality work, that consumers can trust. Financially, consumers will be faced with difficult decisions about whether to invest in their homes or not. Accessible green finance options are needed to allow homeowners to move forward with developing their homes, instead of holding them back. On a more personal level, householders will want reassurance that it is safe to invite tradespeople into their homes. Firms will need to demonstrate new ways of working that show homeowners it is sage. TrustMark will launch its new Work Safe. Safe Work charter later this month which will provide a new set of practices that demonstrate how work can be carried out in people’s homes and both tradespeople and customers will be protected from infection.
With the threat of coronavirus still on everyone’s doorsteps, attention has turned slightly away from the government’s target of being carbon neutral by 2050. Unlike the situation we are currently living in, this will not go away, and we should keep this in our minds as the construction industry’s recovery starts moving forward. The challenge of upgrading around 24 million homes over the next 30 years is still the best opportunity to not only meet the Government’s 2050 deadline but to build a stronger and better rewarding sector out of the coronavirus pandemic. This should remain our focus as we move forward together.
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