We have said it before and we’ll say it again, it’s too easy to knock Scotland’s construction sector. It’s not the end of the road when the monthly Markit surveys show that construction and engineering employment is growing in both the perm and contractor markets. The June figures show Perm at 64.8 and contractors at 60.8, where anything over 50 is growth.
So why do we constantly read of “Scotland’s struggling construction sector”? Last weekend I read an article on the industry which used precisely that phrase in its very first sentence. It was in a piece which suggested that RICS in Scotland are keen for the industry to adopt international measurement standards, specifically, the ICMS (International Construction Measurement Standards) to provide global consistency in the classification and analysis of the costs of a project (and, yes, that makes sense).
However, yet again, this article (in The Sunday Times) noted the oft-quoted fact that “many big infrastructure projects have ended or moved into their final phase (and) as a result construction output was down 3.5 per cent in the first quarter.” Yes, we know that, but it doesn’t alter the fact that there are other areas that are really doing rather well. Housebuilding for example – with its huge demand for bricks.
Which leads me nicely to another article in The Sunday Times; this time about Stephen Harrison, CEO of Forterra, one of the leading brickmakers in the UK. Mr Harrison is an interesting businessman. He started in the wine trade, before getting into bricks. Then, in only 13 months, he moved up from regional manager to floating and leading one of the country’s most strategically important companies. What was refreshing about this article was that his attitude is positive, despite the fact that he acknowledges that the volume of bricks needed to hit the government’s housebuilding target (300,000 new homes a year) is 2.85 billion while current production (of which his firm accounts for about a quarter) is only 2.1 billion. He is also aware that the outcome of Brexit may bear down on the economy, but Forterra is developing new plants and sees increased demand (even if we don’t meet the housebuilding targets) for bricks across the economy, especially if they can gear up to replace the volume of exports that are current meeting the shortfall.
We shouldn’t be blind to the industry’s problems. Obviously, the ending of the infrastructure projects will, naturally, lead to year-on-year declines in construction output, given that the previous year’s stats were so high. But let’s look for opportunities, like Forterra under Stephen Harrison. We need those houses, and they don’t build themselves.
Chris Peace, MD, Peace Recruitment