A shortage of one crucial resource threatens growth worldwide.
On every continent, skills and labour shortages are hitting hard. In 2018 this could force permanent, decisive changes in how construction does business and meets demands.
The recent global Turner & Townsend international construction survey showed that 23 of the 43 markets studied faced skills shortages, up from 20 the previous year, with only four regions reporting a surplus: Muscat, Perth, Santiago and São Paulo. In the same period, non-agricultural industries improved by 153 per cent.
This was also brought up in the UK in 2016’s government-commissioned report, the Farmer Review, which detailed how skills shortages drive costs up, quality down and lead to poor productivity.
Offsite offers hope
However, there is hope. The Farmer Review sets out many innovative examples of where the merger of manufacturing and construction has opened up new markets and revenue streams with creative solutions.
One such modular construction is GSK’s ‘factory in a box’, designed by modular and BIM construction studio Bryden Wood. The solution is a color-coded, easy-to-assemble pharma factory that can be shipped in a crate and put together in emerging markets, which may have demanding local compliance standards but limited money available for large specialist onsite teams.
Designed through BIM, the factory in a box is a great example of how design-led innovation in construction can produce more assets with fewer resources.
In 2018 we will see a perfect storm of factors – an ageing workforce, a lack of new entrants and restrictions on free movement of labour – begin to decisively accelerate the uptake of construction-integrated manufacturing such as this.
“The Spanish industry’s strong tradition of joint ventures and global partnerships gave it a powerful competitive advantage”
Governments, regulatory bodies and the industry alike will start to realise that, while getting more people into the industry is important, the most strategic solution would be to fundamentally change the way we build in the first place.
Investing and prioritising modular build and logistics-centric construction is one way to achieve this, and will also be a catalyst for increased globalisation. Currently, 95 per cent of projects are carried out by local firms sourcing local materials. But this is changing.
Customised, large-scale components and elements will increasingly be sourced globally, meaning increases in competition and, potentially, margins. It’s a big shift for an industry that has traditionally been highly country-specific. But for operators agile and disciplined enough to start planning and handling logistics, the gains could be huge.
Take Spain. With a significantly smaller GDP than, for example, the US or the UK, seven of the world’s top 100 construction companies are Spanish. Yet while the country’s recent economic difficulties knocked out many companies, Spain’s construction sector fared remarkably well.
One of the main reasons is that Spanish construction companies often partner globally and thereby reduce the risks of exposing the business to domestic economic challenges. Here, the Spanish industry’s strong tradition of joint ventures and global partnerships gave it a powerful competitive advantage.
New technology is making it easier to work profitably on a global level as well. With 3D printing, for example, costs for both material and long transports are decreasing substantially.
Using technologies such as these, industry partnerships will focus more on global competence exchange rather than long-haul transports.
Kenny Ingram is global industry director of construction and contracting at IFS