Business

Restoration of Stormont Executive cited as the key factor for growth of north's construction sector

The restoration of the Stormont Executive has been highlighted as the key factor in the development and growth of the north's construction industry, according to a new survey
Gareth McKeown

THE restoration of the Stormont Executive has been highlighted as the key factor in the development and growth of the north's construction industry, new research shows.

The latest CEF (Construction Employers Federation) / BDO trade survey, which covers the first half of the year, has revealed the continued frustration over the lack of devolved government, with 65 per cent of local respondents describing the restoration of the Executive as the most critical development for ensuring success in the industry over the next 12 months. The vast majority (82 per cent) of respondents also agreed that the failure to form a local Government has resulted in a loss of capital projects/tenders.

The survey, which represents half of the north's construction output, shows that Brexit is very much a focus within the industry, with a third of respondents (34 per cent) confirming they have commenced planning for its impact. Almost half (48 per cent) believe the UK will stay in the Customs Union post-Brexit or agree a new Customs Union deal.

According to the research profit margins within the sector have remained stagnant since 2017, with 55 per cent indicating they have stayed the same, while a quarter said they have got slightly worse.

Rising costs remain a concern, with materials increasing for 91 per cent of businesses, labour for 87 per cent and plant costs for 74 per cent of respondents. A lack of finance within the industry was also highlighted as a concern, with almost two-thirds (60 per cent) believing it is affecting their business.

Looking ahead there is little optimism for growth, with the expectation for the next 12 month generally flat and pessimism slightly outweighing optimism on the immediate future of the industry. The outlook for the industry outside the north is more optimistic though, with 39 per cent of local firms expecting business to at least get a little better. There is also optimism reported in relation to future recruitment, as 39 per cent of businesses expect to growth their workforce. However this is heavily caveated with the growing shortage of the required labour.

Partner at BDO Northern Ireland, Sean Lavery said businesses within the construction industry are struggling on a daily basis against many challenges.

“The availability of funding is a major issue for many, with lending institutions sighting the construction industry as a higher risk. This lack of funding combined with the absence of a Northern Ireland Executive is a critical area of concern for the industry with a number of major infrastructure projects delayed and departments unable to approve projects that have funding already allocated," he said.

"We need to see some clarity going forward in who can make decisions, which will allow these public sector infrastructure projects to commence. "

John Armstrong, CEF managing director added:

“The concern expressed within the survey as to the urgent need for a fully functioning Northern Ireland Executive, which can take decisions on infrastructure projects large and small is reinforced by the current iteration of the Northern Ireland Executive Departments Procurement Pipeline.

“With only 59 schemes in-procurement at the mid-point in the financial year, there is a crisis point coming within the industry."

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