Evidence of Green Shoots in Construction Sector

As the green shoots of recovery begin to tentatively appear, Simon Robinson, who founded Red Diamond Executive Headhunters a decade ago with his wife Emma, looks at how the UK’s construction sector can emerge strongly from the pandemic.

2020 has been a year like no other, with the construction sector – like so many others – devastated by the coronavirus pandemic. Alongside hospitality and education, it was arguably among the sectors hardest hit by the crisis.

Since lockdown began, activity has shrunk by around 70%, according to the construction purchasing managers’ index, with the majority of housebuilding sites and other schemes put on ice to ensure employee safety. The industry uses high numbers of sub-contractors, many of whom are self-employed and who were laid off back in March.

For this reason, the true impact of COVID-19 is unlikely to be revealed until the furlough scheme ends later this year.

However, as lockdown regulations ease and the first green shoots of recovery begin to appear, these workers are set to be re-hired as the industry begins its journey on the road to recovery. House prices climbed 1.7% during July compared with a 1.5% fall in June[1] with the average price of a home estimated at £220,936.

Chancellor Rishi Sunak’s decision to scrap stamp duty on homes above £500,000 is proving to be a catalyst in getting the industry moving again. Another plus point is that the government has moved to support smaller businesses through favourable loan terms and while nobody wants to rack up debt, equally it’s vital that businesses aren’t forced to pull out of developments.

Construction companies still have KPIs to meet, particularly in the lower echelons of the market, with starter homes especially in demand. Therefore, the appetite is there to reopen the market and I would expect to see a very busy autumn of activity, albeit with changes to the number of people allowed on site to enable social distancing.

We are a proud building nation and, as we are told that people need to spend their money, what better investment is there than a house? First-time buyers especially can get great mortgage terms with no stamp duty – which means they can in turn spend more on their furniture and fittings.

The jobs market

With Brexit around the corner, more restrictions are likely to be put in place on foreign labour coming into the country, providing an opportunity for people who may have lost their jobs back in March to be rehired.

Senior management teams have taken pay freezes and even cuts to keep as many employees as possible on the books so from a recruitment point of view, there is likely to be less hiring going on further up the ladder at this stage.

However, infrastructure is a different ball game and once long-term projects begin there will be significant contracts up for grabs. The government’s hospital building programme is just one example of this, suggesting that 2021 could be a very big year for the industry.

It is unfortunate but inevitable that as a result of the pandemic, more people are likely to need to access social housing. This is another likely are for growth as the government looks to kick start more provision.

Quality, not quantity

Within the construction product industry, we now have a unique opportunity to address the issue of quantity over quality. British manufacturing is revered throughout the world and now is the time to reap the rewards of a backlash on cheap foreign imports.

The UK needs to invest now in its home-grown producers rather looking elsewhere for the cheapest option. UK-made products may cost more but it’s money well spent and the ‘made in Britain’ stamp is rightly associated with quality and longevity.

It’s time to move away from the false economy of buying the cheapest item on the market. Imagine, for instance, you fix a leaking sink with a cheap valve, then go away on holiday – you could come back to a flooded home.

In the UK, we manufacture a vast range of materials used in the construction industry, from plaster board and glass to wood products and valves. The government now needs to step up its support for the product manufacturing side of the sector – lowering tax in the long-term, for instance – to encourage businesses to invest.

Workplace diversity

Another opportunity to effect change for the better lies within the workplace itself. The construction product industry in particular is an aging one, dominated by people who have been in the trade for many years, are in their forties or fifties and know the sector inside out.

Which is great, but we need younger talent coming through – and female as well as male. In a traditionally male-dominated industry, we’ve seen that female candidates often have to be twice a good as their male counterparts. Therefore this is the ideal time to increase diversity in the workplace while discovering the leaders of tomorrow.

[1] Figures released by the Nationwide

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