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UK building product sales show resilience

The latest data released by the Builders Merchants Building Index (BMBI) confirms a continuing positive trend for UK builders’ merchants with Q2 sales increasing by 5.3% (when adjusted for two fewer trading days in period) compared to Q2 2016. Unadjusted Q2 year on year sales figure is still positive at +1.9%. Year to date sales figures to June are 3.8% higher than for 2016, the same number of trading days.

The BMBI tracks builders’ merchants’ sales to builders and contractors using GfK’s Builders’ Merchant Point of Sale Tracking Data. The BMBI includes actual sales over 80% of the value of the builders’ merchants’ market.

The Q2 results appear to tell a different story to the trend reported by the Office of National Statistics earlier this month, in which they report actual sales representing overall construction output fell by -1.3% in the three months to June compared with Q1, and rose by just +0.4% on the same period last year. This may reflect the predominance of housebuilding and domestic repair, maintenance and improvement work carried out by builders’ merchants’ customer base.

Commenting on the results, John Newcomb CEO of the BMF said “The majority of trade indicators are finding that order books are being sustained by private housing and Repair Maintenance and Improvement (RMI) work while commercial sectors are falling behind. Even the ONS reported a year on year increase in house building of +9.4% for the quarter.

“The merchant sector is showing resilience at the moment, but it would be foolish not to consider the possibility of tougher trading conditions as we move into 2018.”

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Housebuilding soars to highest levels in almost a decade

The number of new build homes that have started to be built has surged to the highest level since 2008, as shown by government figures.

The latest housebuilding data shows that 164,960 new homes were started in the year to June 2017, up 13% on the previous year, and have increased by more than three-quarters since the low in 2009.

More than 153,000 new homes have been completed during the same period, showing an increase of 11% compared with the year before.

Housing and Planning Minister Alok Sharma said “Building more homes is an absolute priority for this government. Today’s figures are proof that we are getting Britain building again, with new housing starts reaching record levels since 2009.

“It’s vital we maintain this momentum to deliver more quality homes in the places that people want to live. Our housing white paper set out an ambitious package of long-term reforms to do just that.”

The figures demonstrate strong growth in housebuilding right across the country, with Gloucestershire, South Derbyshire and South Norfolk amongst the strongest areas in delivering high levels of starts.

The government’s housing white paper sets out bold new plans to fix the broken housing market and build more homes across England.

At Autumn Statement, an additional £1.4 billion investment was announced for the government’s affordable housing programme, increasing the total budget to £7.1 billion. Since 2010, almost 333,000 affordable homes have been delivered, including 240,000 affordable homes for rent.

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Construction company fined following life changing injuries for untrained worker

A construction company has been fined after a worker suffered life changing injuries after falling from scaffolding.

Bristol Magistrates’ Court heard how an employee of R J Scaffolding (Bristol) Limited was in an induced coma for two weeks after falling more than six metres from the scaffolding. The worker suffered several serious injuries including losing the sight in his right eye and five fractures to the skull.

An investigation by the Health and Safety Executive (HSE) into the incident which occurred on 2 June 2016 found the employee was untrained, the supervisor was unfamiliar with the current expected safety techniques and the appropriate equipment had not been provided to the worker to conduct this work safely.

R J Scaffolding (Bristol) Limited of Central Business Park, Hengrove, Bristol pleaded guilty to breaching Regulation 2 (1) of the Health and Safety at Work Act 1974. The company has been fined £26,000.00 and ordered to pay costs of £1657.76.

Speaking after the hearing HSE inspector Ian Whittles said “We want all workers to go home healthy and safe. Those in control of work have a responsibility to ensure safe methods of working are used and to inform, instruct and train their workers in their use.

“If industry recognised safe systems of erecting scaffold had been in place prior to the incident, the life changing injuries sustained by the employee could have been prevented.”

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Improved access to material markets needed now to aid building

In a quarter characterised by political uncertainty, the Construction Products Association’s Construction Trade Survey shows that despite a strong Q2 the industry’s supply chain are more pessimistic for the year ahead.

The survey of main contractors, SME builders, civil engineering firms, product manufacturers and specialist contractors found that all reported increases in sales, output and workloads in the quarter driven by increased demand. Notably however, order books were sustained by private housing and R&M work, but fell in sectors such as commercial and industrial. This was echoed throughout the supply chain, with net balances weakening for enquiries, orders and expected sales among SMEs, civil engineering contractors and product manufacturers compared to Q1.

After Sterling’s depreciation since the EU Referendum, the strongest cost pressures for the construction industry have been rising prices for imported materials. On balance, 88% of main contractors, 87% of heavy side manufacturers and all light side manufacturers reported raw materials costs rose in Q2. In spite of this, almost half of main contractors and specialist contractors opted to keep tender prices unchanged, leading to a fall in margins.

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said “This was the 17th consecutive quarter of growth for the construction industry, but a cautious stance over future expectations is not surprising. Another quarter of slow GDP growth, rising costs and a near-term outlook clouded by Brexit uncertainty have led to a fall in orders in privately-financed sectors such as commercial and industrial, and this pessimism has also spilled over into infrastructure.

“Perhaps more conspicuous in the survey data is the squeeze on margins for main contractors and specialist contractors. Strained margins had already been acute for some time given skills shortages pushing up construction wages. Now there’s the added pressure of contractors trying to avoid or delay passing on the full cost of higher raw materials prices to clients when tendering for upcoming construction projects.”

Brian Berry, Chief Executive of the Federation of Master Builders, said “Despite rising material prices and a period of political uncertainty, it is encouraging to see the SME construction sector continuing to grow. The industry is demonstrating significant resilience, especially when we consider difficulties in recruiting key trades such as bricklayers and carpenters, and shortages in other trades, such as plumbers and plasterers. Furthermore, there are real challenges ahead for the sector. The possibility of Brexit exacerbating already severe skills shortages and the continuing upward pressure on wages and salaries this brings, means construction SMEs will be cautious in their optimism”.

Richard Beresford, Chief Executive of the National Federation of Builders said “Although SMEs have found more work, project viability seems to be increasingly stifled by spiralling material costs. Construction SMEs are reporting a tightening of profit margins, which may impact productivity in the coming twelve months. The NFB’s house building members appear more confident about their immediate future, despite not having an assured work pipeline. The Government must enable constructors – particularity SMEs – to establish a pipeline of work either through more streamlined procurement or by reforming the planning process. However, the weakening pound shows that, in the long term, constructors either need improved access to material markets or short-term financing for project completions. The Government must deal with the impact of a weaker exchange rate and Brexit more urgently. It must work with industry to understand and navigate more unpredictable and potentially difficult times.”

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Construction bounces back after a recent stall in growth

After a torrid month in May for construction, figures began to move in the right direction across June, with contract awards increasing by twelve per-cent, as a number of high profile projects were given the green light.

The latest edition of the Economic & Construction Market Review from industry analysts Barbour ABI, highlights the levels of construction contract values awarded in June across all regions of Great Britain, which totalled £5.5 billion based on a three-month rolling average, an increase on the £4.9bn from May.

London led all regions with 26 per cent of the total construction contract value for June. This was greatly helped by the North Quay Poplar development contract award, worth £800 million, the
largest project across all of construction on the month.

Across the various construction sectors, it was Residential building that produced the highest value on the month, reaching £2.5 billion, bouncing back admirably after a dip in May when it decreased to £1.7 billion. Furthermore, four of the top ten biggest projects in June came from the Residential sector. There were also monthly increases in Industrial, Commercial & Retail and Medical & Healthcare. The largest decrease came from Infrastructure, which lacked a high value project on the month to help increase its figures.

Looking at construction in June across the UK regions outside of London, the dominance continued across southern England with the South East in second place for construction contract value with £713 million awarded, followed by the South West in joint third place with the North West, each tied at £627 million.

Commenting on the figures, Lead Economist at Barbour ABI Michael Dall said “The construction sector bounced back after an election-focused month in May, as the residential sector once again performed strongly, continuing the trend of it holding the construction sector steady. However with declines in value from Hotel, Leisure & Sport and in particular Infrastructure, there is continuous pressure on Residential to achieve high values every month.”

“With the Governments increasing focus on raising the levels of major infrastructure projects, it’s surprising to see a lack of development in this sector across June. The anticipation however, is that we will see larger public sector contracts come to the forefront, such as offshore wind farms, energy plants and motorway upgrades as we continue into 2017.”

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Big Ben to fall silent while essential refurbishment takes place

On Monday 21 August at noon, Big Ben’s famous bongs will sound for the last time before major conservation works are carried out. The Elizabeth Tower, home to the Great Clock and Big Ben, is currently undergoing a complex programme of renovation work that will safeguard it for future generations. While this vital work takes place, the Great Bell’s world famous striking will be paused until 2021 to ensure the safety of those working in the Tower.

Steve Jaggs, Keeper of the Great Clock, said “Big Ben falling silent is a significant milestone in this crucial conservation project. As Keeper of the Great Clock I have the great honour of ensuring this beautiful piece of Victorian engineering is in top condition on a daily basis. This essential programme of works will safeguard the clock on a long term basis, as well as protecting and preserving its home – the Elizabeth Tower. Members of the public are welcome to mark this important moment by gathering in Parliament Square to hear Big Ben’s final bongs until they return in 2021.”

The Great Bell, popularly called Big Ben, weighs 13.7 tonnes and strikes every hour to the note of E. It is accompanied by four quarter bells, which chime every 15 minutes. Big Ben has marked the hour with almost unbroken service for the past 157 years. The bongs last fell silent for maintenance in 2007, and prior to that between 1983-5 as part of a previous large scale refurbishment programme.

The Great Clock is operated by a custom built Victorian clockwork mechanism, which relies on gravity to trigger the renowned bongs. To stop the bells the striking hammers will be locked and the bell disconnected from the clock mechanism, allowing the Great Clock to continue telling the time silently. Parliament’s specialist clock makers will ensure that Big Ben can still bong for important national events such as New Year’s Eve and Remembrance Sunday. The bells will resume their regular time keeping duties in the course of 2021.

Conservation works

Standing at 96 metres tall, the Elizabeth Tower is a focal point of the Grade I listed Palace of Westminster, which forms a part of a UNESCO World Heritage site. Not only is it a world famous landmark, it is also the most photographed building in the UK. Conservation is required to:

  • Repair problems identified with the Elizabeth Tower and the Great Clock, which cannot be rectified whilst the clock is in action
  • Conserve significant elements of the Tower, as designed by architects Charles Barry and Augustus Welby Pugin
  • Repair and redecorate the interior, renew the building services and make improvements to health and safety and fire protection systems
  • Improve energy efficiency to reduce the Tower’s environmental impact

The project started earlier this year, with the start of scaffolding works. Once this scaffolding reaches the necessary height, work will begin at the very top of the Tower with the renovation of the Ayrton Light (which shines to show that Parliament is sitting) and the refurbishment of the cast iron roofing.

The team will then work their way down the building, removing scaffolding as they go, and tackling a wide range of the complex issues created by the height and heritage of this unique landmark.

The Great Clock

As part of this intricate series of works, the Great Clock itself will be dismantled piece by piece with each cog examined and restored. The four dials will be carefully cleaned, the glass repaired, the cast iron framework renewed, and the hands will be removed and refurbished. Whilst the Great Clock and the dials are undergoing conservation, it will be necessary to cover the faces for some time. However, to ensure that the public are still able to set their watches by this most important of time pieces, one working clock face will remain visible at all times throughout the works. As the clock mechanism itself will be temporarily out of action, a modern electric motor will drive the clock hands until the Great Clock is reinstated.

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Work underway on new £2.6bn offshore windfarm

Historical maritime buildings in the harbour of Wick in Caithness, Scotland, will be brought back into operation when renovated to act as the hub for one of the largest new offshore wind farms in the UK.

Work is well underway to build the £2.6 billion, 84 turbine offshore wind farm in the outer Moray Firth. Designed by world famous Scottish engineer Thomas Telford in 1807, the conservation of the onshore maritime buildings will play a key part in generating 588MW of sustainable energy from the wind farm to go into the grid.

Leading independent management, design and construction consultancy Pick Everard, based in Inverness and Glasgow, is part of the team who will be delivering the onshore aspects of the project alongside HRI/Munro Architects.

Pick Everard is delivering mechanical and engineering services for the £10 million land base which will service the windfarm commissioned by BOWL (Beatrice Offshore Windfarm Ltd). Once complete, the wind farm will power approximately 450,000 homes (around three times the number of homes in the Moray and Highland regions).

Doug Soutar, director at Pick Everard, said “This is such an exciting project to work on and one that is key in helping us to continue to deliver sustainable energy for the future.

“The onshore element of the project comprises the conservation, re-planning and part reconstruction of two blocks of the historic Old Pulteneytown area of Wick.
“These buildings are more than 200 years old and have a longstanding history of being used for maritime purposes. We are pleased to be helping to bring them back into service again following planning permission from the Highland Council.”

Wick has provided a safe haven for fishing, commercial, and leisure vessels for the last 150 years or so with the harbour consisting of three basins. The Inner and Outer Harbours are the main fishing and leisure berths, and the River Harbour is the commercial area.

Steve Wilson, senior project manager for SSE, added “Renovation of the iconic Thomas Telford buildings in Wick is well underway and has been progressing well. These buildings will become our long term Operations and Maintenance base for Beatrice Windfarm.

“These Thomas Telford buildings are a symbol of Wick’s industrial and marine past so we are really pleased to be utilising them and in doing so help continue that legacy. We’ve been very pleased with the support there has been in the area.”

The Beatrice wind farm will be operational in 2019. It is one of the largest private investments ever made in Scottish infrastructure, bringing economic and community benefits to the area. Beatrice will also create opportunities with job creations across the region, skills training, investment in Scottish ports and harbours, supply chain opportunities and community benefit funding.

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Without focusing on recruitment building firms risk going out of business

A lack of focus on bolstering the workforce could push construction firms out of business, according to industry experts One Way.

An analysis by the specialist rail and construction recruitment consultancy found that firms are recruiting on a short term basis and are therefore forced to pay day rates that are well above the standard rate. Insolvency specialists, Begbies Traynor, recently published its latest ‘Red Flag’ report which found that over 40,000 construction companies were operating in a state of ‘significant’ financial distress at the end of June. A year ago the number stood at 33,222.

Paul Payne, managing director of One Way, said “Far too many construction firms don’t have a plan in place for finding skills when they need them on a short term basis and are forced into a situation where they have to pay excessively high day rates just to get the staff they need. You can see why they do it, but by planning ahead, firms can source the best skills in the market, at a fairer price and avoid any unnecessary headaches. This doesn’t just make their lives easier when it comes to staffing projects, but also removes some of the excessive costs. When construction firms look to become more efficient they often analyse their raw materials suppliers, however those savings are relatively small in comparison to those that could potentially be saved by developing robust talent pipelines into the industry. These statistics highlight that firms are being pushed to the brink and planning effectively and concentrating on recruitment could help to significantly lower costs.”

“The main issue preventing them from building these routes into the field is that there simply aren’t enough people in the industry and very few firms are doing anything about it. That means there’s a limited supply of skills in the market and the individuals in demand can essentially name their price as they’re so highly sought after. By building talent pipelines and communities you can avoid these additional costs as you’ll have a pool of available talent to fall back on if required. The skills shortages are only going to get worse once we leave the European Union, so it’s crucial that firms start planning before it’s too late. We’ve launched two campaigns to boost the number of women and youngsters entering the construction industry respectively. However initiatives like this are few and far between and we need to see more proactive work taking place, otherwise staffing costs will continue to rise and firms could ultimately be forced out of business.”

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Government injects £65 million to support UK’s largest Build to Rent site

The biggest development of homes built specifically for private rent in the UK is set to receive a £65 million boost from the government.

The deal will help to unlock over 7,600 new, high quality homes at the Wembley Park development in Brent, London – one of the largest strategic regeneration projects in the country. At least 6,800 of these homes will be for rent.

The measures include:

  • changing planning rules so councils proactively plan for more Build to Rent homes where there is need
  • making it easier for Build to Rent developers to offer affordable private rent in place of other types of affordable home
  • introducing longer tenancies which are more family friendly to provide better security for renters – government action in this area has already seen the offer of 3 year or longer tenancies being made available to 35,000 tenants across the country according to British Property Federation estimates.
  • Build to Rent homes are built at scale for the primary purpose of being rented long-term, they can boost choice and quality in the private rented sector.

Across England the sector is expanding, with 80,855 homes either completed or planned. The industry estimates investment in the private rented sector could grow to £70 billion by 2022. This could provide a further 15,000 homes each year – with the potential to reach at least 240,000 homes built specifically for private rent – by 2030.

Housing and Planning Minister Alok Sharma said “Whether renting or owning all families should have the security they need to be able to plan for the future.

“That’s why as part of our plan to fix the broken housing market we’ve been taking action to create a bigger and better private rental market, supporting new Build to Rent developments so that tenants can have greater choice.

“Developments like Wembley Park are a great example of doing just that, boosting the choice and quality of homes on the market – meeting the needs of renters in cities and towns across England.”

The Wembley Park development is backed by a loan from the government’s £3 billion Home Building Fund. It will bring over 8,000 jobs to the area and support infrastructure to free up land for development.

Delivered in phases over the next 7 years, the flats will include a mix of studios, 1, 2 or 3-bedroom properties, all located closely to the underground station. The site next to the National Stadium will also include up to 2,350 affordable homes.

Homes and Communities Agency (HCA) Chief Executive Nick Walkely said “This autumn, the HCA will relaunch as Homes England with the ambition of creating a better housing market. We’re determined to get more homes built now and increase the rate of future development.

“This development is a fantastic example of how we fund vital infrastructure to speed up the construction of much-needed quality homes for people to rent.”

Quintain Chief Executive, Angus Dodd said “This £65 million government loan will be match funded by Quintain to provide a £130 million infrastructure investment into Wembley Park to deliver new car and coach parking, an energy centre and the first phase of the new 7 acre public park. Not only will this funding allow these critical elements to be brought forward, it will also support the more rapid delivery of new homes.

“We are delighted to welcome the Housing Minister to Wembley Park today. The area is already home to a thriving community and will become the largest build to rent development anywhere in the UK.”

Work on the new homes at Wembley Park has already begun and is set to be completed in 2026.

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Three ways to tackle construction skills shortages

Increasing levels of gender diversity, widening talent pipelines and improving the wider public image of the sector will help to tackle the ongoing skills shortages plaguing the construction industry, according to One Way.

An analysis by the leading construction and rail consultancy has revealed that the skills shortages can only be tackled by employers being proactive and going above and beyond the call of duty. This comes at a time when estimates suggest that 27,000 projects will suffer from a lack of suitably skilled and qualified workers over the next five years.

Paul Payne, managing director of One Way, comments on the required approaches:

Improve gender diversity

“It’s downright negligent to almost rule out half of the workforce from working in the industry, but that’s essentially what is happening. We don’t need to go over-the-top, but considering how we could make the sector that bit more inclusive would make a huge difference. No other mainstream industry suffers from such a colossal lack of diversity and it’s certainly a major factor contributing to the skills shortages. We have launched our #GirlsAllowed programme and we’d urge more firms to consider similar approaches.”

Promote a better image of the industry to the public

“How many people outside of the field realistically know the potential that a construction career holds? In reality, it’s very few. The main stereotype is that a job in the sector means being cold and muddy and standing outside digging a ditch somewhere. That needs to change. The skills of quantity surveyors, for example, are similar to those of an accountant, and rather than being handcuffed to a desk for the rest of your career, they have the chance to work on major infrastructure or construction projects. Unfortunately, nowhere near enough people outside of the sector know about this.”

Widen talent pipelines into construction

“This can only be achieved by improving the wider image of the industry as, currently, few youngsters actively seek out a career in construction. To solve this, firms need to be proactive, get into schools and colleges and actually speak to children about the potential a career in the field holds. The alternative is to rest on our laurels and continue to do very little, which will only lead to the construction industry in this country falling apart.”

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