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Construction Leaders Forum: Politicians don't understand fiscal importance of construction

Politicians are failing to understand the contribution the construction industry could make to the health and recovery of the economy as a whole, was a strong consensus view from the forum.

There was anger that industries such as automotive have been given major government assistance while construction has been left to fend for itself - despite a workforce of more than a million people and major indirect employment via manufacturing.

Many blamed the fragmentation of the industry in failing to get a consistent voice across to those in power although there was support for the early work of the CBI Construction Council.

There were calls for councils to work with construction in recognising the impact investment on local economies in repairing local infrastructure such as housing, roads and social facilities.

Comments included:

  • “I know companies do write to MPs but we should be doing it every week so they understand how important the industry is to the local economy. We’re lousy at that. It’s why the car industry, for example, gets away with what it does. We don’t know how to tell our story.
  • “There isn’t a consistent message because everyone has a different slant, even on the big themes. We needed the CBI behind us two years ago.”
  • “I believe four million unemployed is where it will get to - three million by the end of this year. That’s why one million jobs in construction is a big deal. It’s the difference between stability and disorder in the country.”

Consolidation

The downturn will see major changes in the industry as companies go out of business and some sectors see consolidation, according to the Construction Leaders Forum.

More than two-thirds of attendees said they expected to see main contractors collapse due to cashflow problems in the coming year - even higher proportions expect plant and materials suppliers to fail for the same reason.

There were also fears that although their order books would keep them strong for the next 12 months, they would suffer from a rash of subcontractors going bust.

There was a belief that a cadre of specialists were operating on the brink with many having little or no work beyond three to four months. The concern was not just that companies in supply chains would fail but that they would fail very quickly and expectedly.

About half of leaders from main contractors said they expected “a serious competitor” to fail between now and the end of next year.

About a quarter said they thought it was likely they would make an acquisition in the same timeframe.

There was also a strong sense that giant European contractors would use the downturn to take a bigger stake in the UK market.

As one chief executive put it: “There’s a storm brewing. Some of us are in a rowing boat at the front and Balfour Beatty is in a liner at the back. But we’re all going to be hit.”

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