Business

Fresh measures needed to ensure construction industry's survival

Government support measures need to be stepped up in the weeks ahead to protect the future of the north's construction industry, according to Rics
Gary McDonald Business Editor

FROM worries in previous months about skills shortages and slim margins, it's now all about survival for the north's construction sector.

For with building sites closed and workers having downed tools, and no prospect of an immediate return, the sector is facing an ominous future.

And the sector says government support measures "need to be stepped up in the weeks and months ahead" to safeguard and protect the industry, its skills and its potential for the future.

The findings are included in the latest quarterly survey by industry body the Royal Institution of Chartered Surveyors (Rics) and legal firm Tughans, which is based on feedback from across the local industry, and is considered an accurate barometer of the current health of the construction sector here.

Unsurprisingly, Northern Ireland contributors to the survey - which gathered its data before the lockdown - envisage a fall in workloads and profit margins as well as a freeze in new hiring in the coming year.

A net balance of minus-36 per cent expected workloads to be lower and 45 per cent expect profit margins to dip in a year's time.

This is despite a relatively upbeat picture in quarter one until the social distancing measures were introduced, with an overall positive net balance reported.

Overall, workloads in housing (both private and public) were reported to have risen in quarter one according to Northern Ireland respondents, though private industrial and infrastructure workloads declined.

Jim Sammon, Rics' regional construction spokesman, said: “It's hardly a surprise that expectations for the local construction sector have fallen.

“The fact that the forward-looking metrics have softened materially suggests that it will not simply be a case of returning to where the industry was prior to the onset of Covid-19 as the government begins to ease the lockdown.

“Partly this reflects uncertainty about the likely state of the economy at this point and how this will impact on development, but it is also indicative of the challenge the sector is currently under as it attempts to access government funding to keep heads above water.

“One of the key things government could do is to gear up for the post lockdown period by working now to get as many projects shovel-ready as possible for when that time comes.”

Tim Kinney, partner at Tughans, added: “Construction is a crucial contributor to the local economy in terms of economic output and its role in building our infrastructure and our competitiveness.

“But the lockdown is having a deep impact on the sector's ability to operate, including allowing people to work on site, the availability of labour, and the supply of materials.”

Rics says the support measures the government introduced in the immediacy for the built environment – covering pay, rent, and business operating costs to name a few – were welcome, but it has become apparent there are gaps that need addressing; not least parity in approach across the UK.

Spokesman Hew Edgar said: “The UK government must start exploring how the sector could taper the reopening of non-essential construction sites within stringent parameters of health and safety adherence; introduce grants; and review how repair and maintenance work could proceed whilst public buildings are not fully occupied.

“A combination of these will support professionals, the workforce, manufacturers and supply chains by providing a pipeline of work and vital cash flow in the short term.

“Fiscal stimulus is most effective once construction starts on site; only then does finance start to flow down the supply chain. As such, the government should explore how best to accelerate and enable the design, planning approval, and procurement of construction projects to ensure construction-ready schemes can start when the pandemic subsides.”

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