A mixed picture for the construction market

‘How is the market at the moment’? It’s one of the most frequently asked questions, yet also one of the most difficult to answer. We’ve all experienced a rough ride in the past 2 years. The housing market all but collapsed, the cost of energy and raw materials rose and many large commercial projects were moth balled. This inevitably led to many businesses closing their doors. According to a report published by Deloitte, the number of construction companies going into administration in January 2009 was up 73% compared to 2007.

However, like so many elements of the market right now, there is another story to tell. Recruitment activity is always a good yard stick to measure what’s going on and as a business we’ve seen a steady rise in the number of technical sales jobs business are looking to recruit for in 2010. We also expect this to continue for the remaining of this year and into next. There are many other positive signs too, here’s just a few….

•    Recent government figures released show construction output for Q3 was up 4% on the
     previous quarter.

•    The £430 million Mersey Gateway bridge project is still going ahead and has received an extra
     £80 million in funding.  

•    A 4 year regeneration framework is being created covering new build and refurbishment
     schemes across London.

•    Approval has been given to 7 new hospital projects amounting to £1bn.

•    A number of commercial projects are kick starting in the retail and leisure sectors with new
     supermarkets and hotels being built. 

•    The Scottish construction market grew at 10% in Q2 compared to Q1 this year.

•    The government has pledged £200bn into infrastructure projects over the next 5 years.

•    The £16bn funding for the Crossrail scheme remains untouched

Rose tinted glasses I hear you cry? Well perhaps, and clearly there is an opposite end to those above mentioned statements  -  the housing market is down 9% as autumn fails to deliver the housing sales expected, the chancellor has axed capital funding for schools by 60% and the Crossrail project has been delayed by a year. But the point is, is that any business that can reduce costs and deliver long term value could be in for a bumper performance over the next few years.

For example, whilst the number of new builds may fall this could create opportunities for the refurbishment and renovation market. Schools and hospitals are turning are already turning to offsite manufacturing and modular buildings in the face of tightening budgets. Indeed, a recent interim report to education secretary Michael Gove is set to recommend reliance on just this for schooling projects, and is likely to be replicated in other sectors, including health and defence.

The message here is that it’s not as ‘doom and gloom’ as some of the press might lead you to believe and it depends what sector you’re in and what services a business’s offer. One thing is sure, it’s still a very mixed up market but businesses are recruiting.