The past twelve months have proved to be a bit of an annus horribilis for the construction industry. It started with the collapse of Carillion back in January 2018, a seismic event which caused shock waves to ripple through the market. The knock-on effect caused many smaller firms contracted to Carillion to struggle to make payments with many being forced to close as a result.
Recent data released by the government confirms the malaise currently affecting the industry. It shows that the UK construction industry lost more firms to insolvency in 2018 than any other sector, with a staggering 2,954 construction firms collapsing into administration during 2018, an increase of 12% over the previous year.
It is no surprise that specialist contractors bore the brunt of those insolvencies with 1,857 (62%) of the firms affected involved in specialist construction activities such as demolition, groundwork, electrical and plumbing. Of the rest, 934 were building firms while just 163 were civil engineers.
With Brexit uncertainty continuing to affect inward investment in the UK it is not expected that 2019 will provide much relief for the embattled sector. In fact, with much of the industry reliant on the free movement of labour from Eastern Europe, there is a strong possibility it could be much worse.
But it’s not all doom and gloom
Considering all this, it would be easy to write the construction industry off. But there is a glimmer of hope on the horizon. There are some bright spots for construction around the country which could provide a model for how the industry can grow and thrive in the uncertain years ahead.
As noted in our last news piece, one such area which is currently experiencing a construction boom is Manchester. A recent report by the Office of National Statistics found that construction output across the North West region is 10 times the national average. We reported on this earlier this year when we highlighted that there are more tall buildings under construction in Manchester than Paris, Berlin, Rotterdam, Lisbon and Munich combined.
This fact will not have escaped the attention of Manchester residents, who have seen tower cranes filling the skyline as highrise construction projects get underway. And with more high-profile projects set to get the go-ahead in 2019, the next twelve months could provide more growth than 2018.
Much of this building boom can be attributed to the Northern Powerhouse which has seen huge amounts of investment for infrastructure and housing in the region. And with the new HS2 rail link set to bring further investment into the city starting in 2026, there is every sign that the current boom will continue well into the next decade.
Manchester is a beacon of what can be achieved when government and industry get together to build a Britain fit for future generations. The local economy is benefiting from this investment with well-paid jobs being created and valuable skills being transferred. Residents also benefit from improved infrastructure and housing which takes pressure off existing housing stock.
The Manchester model shows how the construction industry can thrive in an uncertain post-Brexit world. But for it to work across the country, the government needs to partner with industry to provide a long-term plan for future investment. Get it right and there is no reason why the likes of Birmingham, Newcastle and Bristol can’t replicate the success of Manchester.